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Adobe Digital Economy Project: July 2016 Update

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Adobe today released its monthly Digital Price Index (DPI) for July, which identifies new trends in online grocery shopping and the continued impact of Brexit on London flight and hotel prices. Prices across nearly all other categories the DPI tracks continued to decline. This month’s report focuses on the growth of online grocery shopping and in-store pickup , both of which hit record highs last month.

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Adobe Digital Economy Project: July 2016 Update

  1. 1. © 2016 Adobe Systems Incorporated. All Rights Reserved. ADOBE DIGITAL ECONOMY PROJECT JULY 2016 UPDATE
  2. 2. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Adobe Digital Insights Background Based on analysisofaggregated and anonymous datafrom Adobe Marketing Cloud: • AdobeAnalytics and Adobe Mobile Services Thousands ofbrands worldwide including two thirds of Fortune 50 companiesrely on Adobe Marketing Cloud: • $7.50ofevery $10spent online with top 500 U.S.retailers go through Adobe Marketing Cloud ** • Adobe Marketing Cloud powers: • 20 ofthe top 30 U.S.employers • 9 of10largest hotel groups • 7of10largest airlines **LatestIR Top 500 Report 2015 2 Adobe Analytics Adobe Mobile Services
  3. 3. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. 3 Digital Price Index (DPI) Job Seeking Index (JSI) Digital Housing Index (DHI)
  4. 4. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Economist Advisors 4 Austan Goolsbee,UniversityofChicago § Robert P. Gwinn Professor of Economics at The University of Chicago's Booth School of Business § Formerly served as President Obama’s Chairman of the Council of Economic Advisers § The youngest member of the cabinet of President Obama Pete Klenow, Stanford University § Professor, Department of Economics, Stanford University § Currently Visiting Scholar, Federal Reserve Bank of San Francisco § Member of editorial boards for Econometrica, American Economic Review, Quarterly Journal of Economics and others
  5. 5. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Main takeaways: July 5 § Six months into the DEP project, we are building a data set that tracks closely with the BLS’ CPI, even as we are able to provide highly accurate and more timely economic data. § Although the Federal Reserve has been looking for inflation, we find that most of the categories we currently track, especially in non-discretionary categories, have presented deflation year-over-year. Even for Pokémon-branded merchandise, which have seen a significant increase in demand, we saw price declines in July. § In appliances, computers, furniture and sporting goods we show significant year-over-year deflation, even more so than the CPI. § Another important category showing deflation is groceries. This month, we did a deep-dive into the category and found significant growthin the volume of groceries being bought online, especially as the option of buying online and picking up at the store expands into new regions. We found that organic fruits & vegetables are becoming more popular, with prices increasing at 2x the rate of non-organic in the past year. In addition, we found important correlations between purchases and health outcomes in a state-by-state analysis. § Some of the categories showing month-over-month inflation in July are hotels, medical equipment & supplies and nonprescription medications. § Our data shows that year-over-year flight and hotel prices to the United Kingdom have decreased significantly since Brexit. In the United States, year-over-year hotel prices have increased, with Nevada showing the largest increases (likely due to new hotel parking fees in Las Vegas). For domestic flightsall states showed price decreases in July, except for Florida. § Our Job Seeking Index shows that online job seeking activity declined by 18% YoY, a sign of a strong job market. § Our DigitalHousing Index shows that online housing seeking activity increased by 14.3%YoY, reinforcing that the housing market remains healthy.
  6. 6. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Quotes: July Update 6 “The lackof inflation in Pokémon-branded items, despite their explosion in popularity, is fascinating. Among other factors, it could be that the new buyers are more price sensitive, which hints at some of the difficulties the economy is facing in raising prices, or that they have been able to ramp up production without increasing per unit costs.” Pete Klenow, Stanford University “If you look at the growth rate of the US economy, it's only moderate -- there are a lot of international risks and there is no sign of inflation. While our long-run prospects are excellent, the next 12-18 months are likely to continue to have some significantbumps.” Austan Goolsbee, University of Chicago
  7. 7. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Special topics: Brexit and Pokémon Go 7 • Prices for flights to London (LHR) are down 13.3% since Brexit was announced, and are down 12.3% YoY. Our data shows that Brexit has significantly decreased flight prices in other European destinations, especially to Paris (-13% YoY), likely due to competition with the UK. • Prices for hotels in London decreased 9.8% since Brexit was announced, and are down 15.2% YoY. Again, prices in Paris have showed significant decrease as well (-13% YoY). • Sales volume for Pokémon-branded items has increased considerably year- over-year (June-July): • Apparel: +86% • Electronics: +210% • Toys: +170% • Surprisingly, prices for Pokémon-branded items did not increase with increased demand in July – prices decreased by 2.9% in July vs. June. Since this is even more deflation than overall for Electronics (1%) and Toys (1.2%), this indicates how much retailers struggle to raise prices
  8. 8. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Grocery Category Deep-Dive 8 § Online grocery shopping is seeing stellar growth in 2016, as online grocery shopping options expand beyond urban centers and brick-and-click retailers grow in the space § Although the mix of goods bought online has been traditionally different from those bought offline (with a bigger focus on drinks online), the mixes are growing more similar over time. § The expansion of “buy online and pick up in store” methods of grocery shopping have taken off in 2016, presenting an unique opportunity for brick-and-click retailers to reclaim some shoppers lost to online-only retailers § Prices for groceries bought online have changed little in the past year, with online prices decreasing less than offline § We also looked at how online grocery shopping patterns correlate with health outcomes in each state and found interesting correlations METHODOLOGY: § Based on analysis of 300 million visits to grocery-selling websites from Jan 2014 through July 2016 § Our dataset covers an estimated 30-40% of all online grocery purchases § Our dataset contains transactions for ~195k products
  9. 9. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Online grocery shopping is seeing strong growth in 2016 § 66% growth in spend in July 2016 vs. July 2015. Growth in online grocery spend exceeds even the highest rates of retail (15-20% during the holiday shopping season) § The grocery categories seeing the most growth are meats & cheese (185%), bakery products (150%) and fruits and vegetables (125%) 9
  10. 10. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Online grocery basket of goods becoming more like offline Although the mix of goods bought online has been traditionally different from those bought offline (with a bigger focus on drinks online), they have been converging, with bakery products, cheeses, meats, fruits and vegetables going from 40% of online grocery purchases in 2015 to 51% in 2016 10
  11. 11. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Buy online and pick up in store goes mainstream § The expansion of “buy online and pick up in store” methods of grocery shopping have taken off in 2016. Our estimates show that the share of groceries purchased through that method went from 18% of all purchases in January 2015 to 45% in July 2016. § This presents a great opportunity for brick-and-click retailers to regain customers lost to online-only retailers, as brick- and-clicks have a big advantage in the grocery shopping business due to their local presence. 11
  12. 12. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Online grocery shopping expands beyond tech-heavy centers The top states with the highest growth rates in online grocery shopping are Oregon (350%), Kentucky (340%), Washington (310%), Colorado (310%) and Indiana (300%) 12 Year-over-year online grocery growth, Jan-Apr
  13. 13. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Online grocery shopping expands beyond urban centers § The top 5 states with the highest rate of online grocery shopping include D.C., California and Washington, as well as Arizona and Colorado § Right behind are Oklahoma, Kentucky, Arkansas, Utah and Indiana 13 Online grocery spend by population, Jan-Apr 2016
  14. 14. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Online prices virtually unchanged in the past year § Prices for groceries bought online have decreased less than offline: while the CPI shows cumulative deflation of 1.3% YoY, the DPI shows deflation of only 0.1% during the same period for groceries bought online § The main categories where the DPI shows more inflation than the CPI are meats, breakfast cereal and cheese products 14
  15. 15. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. A possible reason for growth: restaurant prices up 15 § With grocery prices seeing 1/5 of the inflation rate as that of food at restaurants, busy consumers might be seeing an opportunity to save timeand money via online grocery shopping § “Restaurant food inflation is outpacing the increases at supermarkets and the gap is widening, McDonald's Chief Financial Officer Kevin Ozan said on a conference call with analysts.” http://www.nbcnews.com/business/consumer/lower-grocery-prices- good-consumers-bad-mcdonald-s-n617221
  16. 16. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Busy consumers shift to online for health § Another possible reason for this shift towards online grocery shopping can be attributed to busy consumers, who don’t have time for regular grocery shopping routine, trying to eat healthier at home (instead of at restaurants) § The data shows that the share of fruits & vegetables purchased online that are organic has grown by almost 50% year-over-year, from 7% to 10% § Over the same timeperiod, prices for organic fruits & vegetables have increased by more than 2x that of non- organics in the last year, showing that eating health is getting more expensive 16
  17. 17. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. More sugary drinks, more obesity 17 • We found a significant correlation between states with a high share of sugary drinks purchases and obesity: states that buy more sugary drinks tend to have higher rates of obesity • Mississippi, Alabama and Missouri show highest rates of sugary drink consumption as well as some of the highest rates of obesity • In the current debate about the so-called “soda tax” recently approved by the city of Philadelphia (to take effect in 2017), Pennsylvania places second on our list of states with highest share of sugary drinks purchases online
  18. 18. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. More sugary drinks, more diabetes equipment • We found a correlation between states with a high share of sugary drinks purchases and diabetes equipment purchases • Mississippi, Missouri and Louisiana present highest rates of sugary drink consumption as well as some of the highest rates of diabetes medication purchases 18
  19. 19. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. More sweets, more obesity 19 § We found a significant correlation between states with a high share of sweets purchases and obesity: states that buy more sweets tend to have higher rates of obesity § Louisiana, Mississippi and Missouri have some of the highest rates of obesity and also sweets purchases
  20. 20. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Longer commutes, more coffee 20 § We found a significant correlation between states with a high share of coffee purchases online and commute length § New York, New Jersey, Illinois and Massachusetts have some of longest commutes and also rates of coffee purchase
  21. 21. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. 21 Digital Price Index (DPI)
  22. 22. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Methodology 22 Based on analysis of aggregated and anonymous data • Fisher Ideal Price Index • Adobe measures 80% of all online transactions from top 100 U.S. retailers ** • $7.50 of every $10 spent online with top 500 U.S. retailers go through Adobe Marketing Cloud ** • Based on analysis of 15 billion website visits and 2.2 million products sold online BLS: Consumer Price Index Adobe: DigitalPrice Index Quantities Sold No Yes Products/quantities updated Every 4 years Daily Number of Products 83 thousand (all categories) 2.2 million (currently covered categories) Data Collection Frequency Bi-Monthly Daily Data Availability Monthly Daily Offline Prices Yes No Long history Yes No All categories of spending Yes No ** Latest IR Top 500 Report 2015
  23. 23. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Big data in DPI decreases uncertainty 23 DPI CPI Appliances 0.15% 0.46% Airfare 0.08% 0.51% Computers 0.28% 0.49% Furniture and bedding 0.07% 0.31% Grocery 0.10% 0.12% Hotels: domestic 0.04% 2.30% Medical equipment and supplies 0.20% 0.39% Nonprescription Drugs 0.18% 0.47% Sporting Goods 0.12% 0.31% Televisions 0.24% 0.60% Toys 0.25% 0.59%
  24. 24. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Inflation rates by price ranges 24 • Televisions have seen higher-ticket items deflate faster than lower-ticket items • In computers, models priced above $1,200 showing the least deflation in the category • Price bins are determined based on the price the product had when originally launched (first price).
  25. 25. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. The Importance of detail: Black Friday 25 • DPI captures the effect of major discount holidays like Black Friday and Cyber Monday because it measures quantities and does so in real-time • Lowest prices for TVs in 2015 were Thanksgiving and Black Friday • Data demonstrates retailers trying to start sales earlier – the Sunday and Monday before Thanksgiving saw low prices
  26. 26. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Measuring rapidly shifting consumer preferences 26 • Electronics see an average of 80% of online spend on new* products** • 16% of monthlyonline spendfor groceries on new products * Products that have been available for 1 year or less ** A product is defined as an item for purchase which has an unique identifier (such as a SKU)
  27. 27. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. June 2016 Recap 27 MoM: June vs May MoM: June vs May Difference (percentage) Same Sign? YoY: Cumulative June 2015-2016 YoY: Cumulative June 2015-2016 Difference (percentage) Same Sign? DPI CPI DPI vs. CPI DPI vs. CPI DPI CPI DPI vs. CPI DPI vs. CPI Appliances -1.8% 0.0% -1.8% No -6.5% -2.9% -3.6% Yes Computers -1.6% -0.8% -0.8% Yes -12.3% -7.6% -4.6% Yes Flights 0.4% 0.0% 0.4% No -4.2% -4.8% 0.5% Yes Furniture and bedding -1.3% -0.7% -0.6% Yes -4.0% -3.1% -1.0% Yes Grocery -0.6% -0.4% -0.2% Yes -0.1% -1.3% 1.2% Yes Domestic Hotels -1.0% 3.8% -4.8% No 0.8% 6.0% -5.3% Yes Medical equipment and supplies -0.2% 0.3% -0.5% No -0.6% -0.7% 0.1% Yes Nonprescription Drugs 0.5% -0.2% 0.7% No 0.3% -0.4% 0.7% No Sporting Goods -0.6% -1.4% 0.8% Yes -5.1% -1.1% -3.9% Yes Televisions -2.2% -2.6% 0.4% Yes -17.5% -19.4% 1.9% Yes Toys 0.3% -1.2% 1.5% No -4.9% -8.5% 3.6% Yes
  28. 28. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. July 2016 Summary 28 • Main deflation in July: • Flights, Appliances, Televisions • Main inflation in July: • Hotels (domestic), Medical Equipment and Supplies, Prescription Drugs YoY MoM Appliances -6.6% -2.4% Computers -12.8% -1.2% Electronics -10.9% -0.9% Flights -4.4% -3.6% Domestic Flights -7.5% -4.8% Intl Flights 0.4% -0.2% Furniture and bedding -3.4% -0.2% Grocery -0.8% -0.2% Domestic Hotels 2.2% 2.3% Intl Hotels -2.2% 0.4% Medical equipment and supplies -1.0% 0.6% Nonprescription Drugs 0.1% 0.3% Sporting Goods -5.4% -0.5% Tablet -19.5% 0.3% Televisions -20.2% -2.1% Toys -6.0% -1.2%
  29. 29. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Appliances 29 • Adobe DPI shows cumulative deflation of -6.6% YoY (July 2015 to July 2016) • Main YoY price decreases for Appliances pricedbetween $600 and $1000 • For July 2016, prices decreased -2.4% vs June 2016 MoM METHODOLOGY: • The data used contains transactions for~110 K products • Products include large appliances such as fridges, ovens, washers, dryers as well as smallerappliances such as vacuums, mixers, blenders etc.
  30. 30. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Airfare 30 • Adobe DPI shows cumulative deflation of -4.4% YoY (July 2015 to July 2016) • For July 2016, prices decreased -3.6% vs June 2016 MoM METHODOLOGY: • The data used contains transactions for~370 K flight routes • Includes associated fees, where applicable
  31. 31. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Airfare: domestic 31 • Adobe DPI shows cumulative deflation of -7.5% YoY (July 2015 to July 2016) • Top states with YoY price declines are Oregon (-11%), Colorado (-11%) and Washington (-11%) • Only state with YoY price increases is Florida (0.7%) • For July 2016, prices decreased -4.8% vs June 2016 MoM METHODOLOGY: • The data used contains transactions for~370 K flight routes • Includes associated fees, where applicable
  32. 32. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Airfare: international 32 • Adobe DPI shows cumulative inflation of 0.4% YoY (July 2015 to July 2016) • Regions showing the most inflation YoY are South America (7%) and Asia (2.6%) • Regions showing the most deflation are Europe (-10%) and Africa (-8.9%) • For July 2016, prices decreased -0.2% vs June 2016 MoM METHODOLOGY: • The data used contains transactions for~370 K flight routes • Includes associated fees, where applicable
  33. 33. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Electronics 33 • Adobe DPI shows cumulative deflation of -10.9% YoY (July 2015 to July 2016) • Main YoY price decreases for Electronics priced between $200 and $500 • For July 2016, prices decreased -0.9% vs June 2016 MoM METHODOLOGY: • The data used contains transactions for~1 M products • Products span across dozens of different categories such as televisions, laptops, Blu-ray players, desktops, tablets,wearables,headphones,video games,printers etc..
  34. 34. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Electronics: computers 34 • Adobe DPI shows cumulative deflation of -12.8% YoY (July 2015 to July 2016) • Main YoY price decreases for Computers pricedbetween $700 and $1200 • For July 2016, prices decreased -1.2% vs June 2016 MoM METHODOLOGY: • The data used contains transactions for~1 M products • Products span across dozens of different categories such as televisions, laptops, Blu-ray players, desktops, tablets,wearables,headphones,video games,printers etc..
  35. 35. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Electronics: televisions 35 • Adobe DPI shows cumulative deflation of -20.2% YoY (July 2015 to July 2016) • Main YoY price decreases for Televisions priced greater than $2000 • For July 2016, prices decreased -2.1% vs June 2016 MoM METHODOLOGY: • The data used contains transactions for~1 M products • Products span across dozens of different categories such as televisions, laptops, Blu-ray players, desktops, tablets,wearables,headphones,video games,printers etc..
  36. 36. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Electronics: tablets 36 • Adobe DPI shows cumulative deflation of -19.5% YoY (July 2015 to July 2016) • Main YoY price decreases for Tablets priced between $350 and $550 • For July 2016, prices increased 0.3% vs June 2016 MoM METHODOLOGY: • The data used contains transactions for~1 M products • Products span across dozens of different categories such as televisions, laptops, Blu-ray players, desktops, tablets,wearables,headphones,video games,printers etc..
  37. 37. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Furniture and Bedding 37 • Adobe DPI shows cumulative deflation of -3.4% YoY (July 2015 to July 2016) • Main YoY price decreases for Furniture and bedding priced between $100 and $150 • For July 2016, prices decreased -0.2% vs June 2016 MoM METHODOLOGY: • The data used contains transactions for~173 K products • Products include interior and exterior furniture, mattresses and other bedding products
  38. 38. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Groceries 38 • Adobe DPI shows cumulative deflation of -0.8% YoY (July 2015 to July 2016) • Main deflation YoY coming from Eggs, Milk & Coffee • Main inflation YoY coming from Fruits & Vegetables • For July 2016, prices decreased -0.2% vs June 2016 MoM METHODOLOGY: • Our dataset covers an estimated 30-40% of all online grocery purchases. It contains transactions for~195k products • The mix of grocery products bought online is not the same as offline – the top category foronline shopping is drinks (nonalcoholic), while foroffline shopping it is meat
  39. 39. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Hotels: domestic 39 METHODOLOGY: • The data used contains transactions for~250 K hotel properties • Includes associated fees, where applicable • Adobe DPI shows cumulative inflation of 2.2% YoY (July 2015 to July 2016) • Main states with price increases are Nevada (11%), Colorado (8%) and Hawaii (7.5%) • Main states with price decreases are New York (-1.8%), Massachusetts (-1%) and Texas (-0.2%) • For July 2016, prices increased 2.3% vs June 2016 MoM
  40. 40. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Hotels: international 40 METHODOLOGY: • The data used contains transactions for~250 K hotel properties • Includes associated fees, where applicable • Adobe DPI shows cumulative deflation of -2.2% YoY (July 2015 to July 2016) • Regions showing the most deflation YoY are Africa(-6%), South America (-2.7%) and Europe (-1.6%) • Regions showing the most inflation YoY are Oceania (3.9%) and North America (3.5%) • For July 2016, prices increased 0.4% vs June 2016 MoM
  41. 41. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Medical Equipment and Supplies 41 • Adobe DPI shows cumulative deflation of -1.0% YoY (July 2015 to July 2016) • Main YoY price decreases for Medical equipment and supplies priced between $45 and $135 • Main YoY price increases for Medical equipmentand supplies priced between $0 and $10 • For July 2016, prices increased 0.6% vs June 2016 MoM • For diabetes-specific supplies and equipment, we found YoY inflation rate of 1.9% METHODOLOGY: • The data used contains transactions for6,000 products • ” includes supportive and convalescent equipment, dressings and first aid kits, and medical equipment forgeneral use
  42. 42. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Nonprescription drugs 42 • Adobe DPI shows cumulative inflation of 0.1% YoY (July 2015 to July 2016) • Main YoY price decreases for Nonprescription Drugs priced greater than $40 • Main YoY price increases for Nonprescription Drugs priced between $0 and $10 • For July 2016, prices increased 0.3% vs June 2016 MoM METHODOLOGY: • The data used contains transactions for16 K products • Includes all non-prescription medicines taken by swallowing, applying on yourskin (such as topicals), inhaling, as suppositories, or enemas.
  43. 43. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Sporting Goods 43 • Adobe DPI shows cumulative deflation of -5.4% YoY (July 2015 to July 2016) • Main YoY price decreases for SportingGoods priced between $40 and $100 • For July 2016, prices decreased -0.5% vs June 2016 MoM METHODOLOGY: • The data used contains transactions for~300 K products • Products include small equipment and accessories (balls, gloves, uniforms) as well as large equipment such as treadmills, weightlifting tools etc.
  44. 44. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Toys 44 • Adobe DPI shows cumulative deflation of -6.0% YoY (July 2015 to July 2016) • Main YoY price decreases for Toys priced between $70 and $200 • For July 2016, prices decreased -1.2% vs June 2016 MoM METHODOLOGY: • The data used contains transactions for~249 K products • Products include toys, games as well as playground equipment
  45. 45. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. 45 Job Seeking Index (JSI)
  46. 46. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Online Job Seeking declines 46 METHODOLOGY: • Based on analysis of aggregated and anonymous data frommore than 1 billion visits to U.S. employment-search websites and top employercareer pages • Adobe Marketing Cloud powers 20 of the top 30 U.S. employers** • US online job seeking is down 17.9 % YoY in July • This is indicative of a strong labor market, with fewer people looking for jobs, which coincides with the government numbers
  47. 47. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. 47 Digital Housing Index (DHI)
  48. 48. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Online housing search growth slows 48 METHODOLOGY: • Based on analysis of aggregated and anonymous data frommore than 2 billion visits to U.S. housing search websites Online search for purchases and rentals up 14.3% YoY in July, reinforcing that the housing market remains healthy
  49. 49. © 2016 Adobe Systems Incorporated. All Rights Reserved. Appendix 49
  50. 50. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. June-July Official Government Statistics 50 • GDP growth: 1.2% (Q2) • Wages growth: 2.6% (YoY) • Consumer spending: +0.4% (June) • Unemployment: 4.9% (June) • Housing Sales: +1.1% (June) • CPI inflation rates (YoY): • All items: 1% • Housing: 3.5% • Medical Care: 3.8% • Gas: -15.4% • Commodities: -2% If you look at the growth rate of the US economy, it's only moderate -- there are a lot of international risks and there is no sign of inflation. While our long-run prospects are excellent, the next 12-18 months are likely to continue to have some significant bumps. - Austan Goolsbee
  51. 51. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Digital Price Index: Fisher Ideal Price Index ∑ 𝑃#$ 𝑈#$&' ( #)' ∑ 𝑃#$&' 𝑈#$&' ( #)' ∗ ∑ 𝑃#$ 𝑈#$ ( #)' ∑ 𝑃#$&' 𝑈#$ ( #)' • The Fisher Ideal Price Index uses quantities purchasedon the current period (month) and a previous period (previous month) to determine actualconsumer’s preferences. Insteadof assuming that consumers preferences for what goods to buy are constant over a certain number of years, it is able to account for the fact that they are constantly changing what they buy. 𝐹𝑖𝑠ℎ𝑒𝑟 𝜋$ =
  52. 52. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Methodology Comparison: Fisher, Laspeyres and Paasche
  53. 53. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Annual Cumulative Inflation Rates
  54. 54. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Electronics Deflation in Detail • The average price paid for an iPad mini (all models) has decreased by about 40% since the iPad mini 1 was introduced in November 2012. • Although the initial price tag of new models remains constant at around $400, the automatic discount of previous models causes the average price to consistently fall: when the iPad mini 3 was introduced at an average price of $450, the price for the iPad Mini 2 was reduced by 25% to $300. • This data only includes iPad minis sold in retail websites
  55. 55. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Inflation Rates by Price Bins, May (MoM)
  56. 56. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Inflation Rates by Price Bins, May (MoM) – Cont’d
  57. 57. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Job Seeking Online: Traffic Sources • Direct traffic to employment-listing websites is higher than search traffic • Search ranks second
  58. 58. © 2016 Adobe Systems Incorporated. All Rights Reserved.

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