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Consumer trends
- 1. RETAIL SALES &CONSUMER TRENDS CBRE RETAIL RESEARCH
- 2. 2 CLIENT NAME| PRESENTATION TITLECBRE KEY TRENDS 1) Retail Sales are Healthy 2) Consumers are spending, but spending differently 3) Omnichannel Retail Takes the Forefront 4) Convenience is Key 5) Consumers Demand Experience 6) Consumers Demand Personalization 7) The Barbell Effect Puts Pressure on the Mid-range 8) Continued Investment in Technology to Encourage Growth
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- 4. 4 CLIENT NAME| PRESENTATION TITLECBRE 6.4% 2.9% 2.4% 4.4% 6.1%6.5% 5.3% 3.3% -1.3% -7.2% 5.4% 7.3% 4.8% 3.8%4.2% 2.5% 3.0% 4.6% RETAIL SALES GROWTH IS HEALTHY RETAIL SALES GROWTH (YOY) KEY DRIVERS OF HEALTHY SALES: Strong Consumer Sentiment Unemployment at Lowest Rate in Seven Years Source: University of Michigan
- 5. 5 CLIENT NAME| PRESENTATION TITLECBRE E-COMMERCE IS POSTING HIGHER GROWTH, BUT IN-STORE SALES ARE STILL RISING SALES GROWTH BY RETAIL CATEGORY (2010-2022) 0.00% 5.00% 10.00% 15.00% 20.00% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Ecommerce Sales Growth Total Retail Sales Growth Source: Euromonitor
- 6. 6 CLIENT NAME| PRESENTATION TITLECBRE RETAIL SALES DRIVEN BY STRONG CONSUMER FUNDAMENTALS CONSUMER SENTIMENT INDEX KEY FINDINGS: Record-high consumer sentiment Improved household financial health Record-low unemployment Consumer confidence in the economy and in future spending ability 0 20 40 60 80 100 120 INDEX Source: University of Michigan
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- 8. 8 CLIENT NAME| PRESENTATION TITLECBRE -14.3% -12.5% -4.7% 2.9% 6.5% 7.7% 13.7% 14.6% 15.7% 16.0% 19.2% 20.7% 26.4% 29.5% Department stores (excl. L.D) Book stores Electronics and appliance… Sporting goods stores Clothing stores General merchandise stores Grocery stores Shoe stores Hobby, toy, and game stores Jewelry stores Total retail and food services… Health and personal care stores Furniture and home… Food services and drinking… RETAIL SALES GROWTH BY CATEGORY 2012-2017 Source: U.S Census Bureau, Q1 2018
- 9. 9 CLIENT NAME| PRESENTATION TITLECBRE HIGH GROWTH CATEGORIES KEY DRIVERS: Consumers favor experiences and personalization when shopping Products in these categories are partially shielded from online shopping 30% Restaurants & Bars 26% Furniture & Furnishings 21% Health & Beauty 16% Jewelry 15% Shoes 14% Grocery
- 10. 10 CLIENT NAME| PRESENTATION TITLECBRE LOW GROWTH CATEGORIES KEY DRIVERS: Changing consumer spending habits + a shift toward off-price Products in these categories are affected the most by e-commerce 7% Clothing -5% Electronics & Appliances -14% Department Stores 8% General Merchandise 3% Sporting Goods -13% Bookstores
- 11. 11 CLIENT NAME| PRESENTATION TITLECBRE E-COMMERCE SHARE BY CATEGORY 15% Footwear 3% F&B 3% Home Improvement 8% Furniture 9% Beauty Products 15% Jewelry 78% Computers 38% Housewares 35% Office Products 31% Toys 24% Sporting Goods 66% Books HIGH SHARE LOW SHARE
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- 13. 13 CLIENT NAME| PRESENTATION TITLECBRE KEY RETAIL & CONSUMER TRENDS 1. Omnichannel is not an option 2. Convenience Is key 3. Focus on Experience 4. Personalization 5. Barbell effect 6. Technology
- 14. 14 CLIENT NAME| PRESENTATION TITLECBRE OMNICHANNEL IS NOT AN OPTION CONSUMER DEMANDS • Instant gratification • Channel surfing and channel agnostic • But consumers still demand the store… IMPLICATIONS FOR RETAILERS • Provide seamless and effortless customer experience • Be present both physically and digitally • Be consistent across channels • Be ready to adapt to changing consumer behaviors
- 15. 15 CLIENT NAME| PRESENTATION TITLECBRE RESTAURANTS, APPLEBEE’S • Order ahead, pay online • Allows casual dining concept to offer a fast-food option GROCERY, AMAZON GO • ”Just Walk Out” Technology allows shoppers to scan in upon entrance, grab desired items and get charged upon exit without checking out CONVENIENCE IS KEY Source: Amazon, Applebee’s
- 16. 16 CLIENT NAME| PRESENTATION TITLECBRE CONVENIENCE IS KEY Source: Lowe’s, Shutterstock HOME IMPROVEMENT, LOWE’S • LoweBot: Tango AR Technology • Navigate the store with help from robot or through phone using the Tango App • LoweBot speaks multiple language and can answer questions for you SHOES, ALDO • Partnered with Celect to optimize fulfilment of online orders • Ensures online orders don’t take from stores that are low on inventory • Reduces delivery time
- 17. 17 CLIENT NAME| PRESENTATION TITLECBRE 78%of millennials would chose to spend money on a desirable experience over buying something desirable
- 18. 18 CLIENT NAME| PRESENTATION TITLECBRE FOCUS ON EXPERIENCE Source: Bruno Magli, Sephora HEALTH & BEAUTY – SEPHORA • Beauty Workshop • Virtual Artist Tool • Customers can virtually try on different looks • Share looks through store-integrated iPads LUXURY – BRUNO MAGLI • New Manhattan store is part retail, part museum and includes a social café
- 19. 19 CLIENT NAME| PRESENTATION TITLECBRE of shoppers who have experienced personalization believe it has had a noticeable influence in purchasing 59%
- 20. 20 CLIENT NAME| PRESENTATION TITLECBRE PERSONALIZATION Source: Adidas, Gucci, SHOE - ADIDAS • Consumers can print their own design on shoes • “Knit for You” • Customers undergo a laser body scan to determine your fit and then design a custom sweater LUXURY – GUCCI • In New York Store, “Gucci Connectors” connect shoppers to the brand • DIY Setup: Personalize Luggage • AR Technology: See how products look on you
- 21. 21 CLIENT NAME| PRESENTATION TITLECBRE PERSONALIZATION Source: L’Oreal HEALTH & BEAUTY, L’OREAL • Kerastase Hair Coach Hairbrush • Analyses a users hair • Connected with mobile app to provide the user with hair tips and personalized product suggestions
- 22. 22 CLIENT NAME| PRESENTATION TITLECBRE BARBELL EFFECT CONSUMERS ARE FLEEING THE MID-RANGE BRANDS 11,000.00 15,000.00 19,000.00 23,000.00 27,000.00 2012 2013 2014 2015 2016 2017 Sales Discounters Value Sales (2012 – 2017) Amount($USD) Source: Euromonitor Country Report 2018 Big Box Brands that Announced Expansion in 2017
- 23. 23 CLIENT NAME| PRESENTATION TITLECBRE RETAIL BANKRUPTCY TIMELINE, 2015 – 2017 CLOSURES CONCENTRATED IN THE MID-RANGE Source: CB Insights
- 24. 24 CLIENT NAME| PRESENTATION TITLECBRE TECHNOLOGY CONTINUES TO CHANGE THE RETAIL LANDSCAPE 1) Focus on Automation that saves money and Drives convenience 2) Enables Digital and Physical Integration 3) Facilitates Omnichannel / Cross Channel Shopping
- 25. 25 CLIENT NAME| PRESENTATION TITLECBRE AUTOMATION & TECHNOLOGY SAVE MONEY, DRIVE CONVENIENCE Source: Café X, Eater Boston COFFEE X – SAN FRANCISCO • Robotic arm replaces barista • Increases margins for company • Reduces wait time for customers SPYCE – BOSTON • ”Culinary excellence, elevvated by technology” • Replaced all chefs with robots • Can prepare meals in 3 minutes or less • Place food order on touch screens • Focus on healthy and affordable food
- 26. 26 CLIENT NAME| PRESENTATION TITLECBRE AUTOMATION & TECHNOLOGY DIGITAL + PHYSICAL INTEGRATION Source: H&M, IKEA SMART MIRRORS – H&M • Through voice and facial recognition, customers can use voice commands to take selfies • Virtually integrated with the H&M catalogue • Gives shopping tips to users AUGMENTED REALITY SMART PHONE APP – IKEA • Allows customers to see exactly how furniture items would look and fit into their homes • Consumers can experience, experience and share how specific designs can transform a space
- 27. 27 CLIENT NAME| PRESENTATION TITLECBRE AUTOMATION TECHNOLOGY FACILITATE CROSS-CHANNEL SHOPPING Source: Walmart, Alibaba ALIBABA + GUESS • Outfitted store with Alibaba’s fashion AI technology • Each item equipped with RFID tags • Allows smart mirrors and fitting rooms to identify and respond to customer interactions • Self checkout with app scanning WALMART – PICKUP TOWERS • Receive online orders faster while saving money on shipping • Available to nearly 40% of population • Online Grocery Pickup: order online, pickup in store • Discounts on online items that you can order online and ship to store
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Editor's Notes
- #3 Retail sales continue to grow, and we expect that to continue through 2022. Today’s consumers are spending differently than ever before, leading to a shift in category spending. This charge is being led by e-commerce, which has changed consumer spending habits.
- #7 Headlines may argue that retail is dead with ecommerce gaining a larger percentage of retail sales however, this is not true. Consumer sentiment is at a 17 year high and retail sales growth is strong. While we can not deny that ecommerce is playing a stronger role in category retail than ever before, we expect that the retail categories that continue to change as consumer behaviors change will experience growth into the future.
- #9 It is clear that retail is not dead, and consumers are still spending—they’re just spending differently One key differences in how consumers are spending: They’re shifting spending away from traditional retail growth categories and toward different sectors. This has important implications for landlords of certain asset types, like power centers and shopping malls, where the tenant base is predominantly focused on the traditional growth categories
- #10 Economic bifurcation: since the recession, consumers have trended toward either end of the pricing spectrum; they’re either choosing discount/off-price OR high-end/luxury. We see this in the health of brick and mortar off-price retail and in luxury brands. More specifically we can look at the categories that have high growth versus the categories that have low growth Barbell effect – variations WITHIN each category
- #14 When looking at different retail categories there are FOUR major trends that are important to millennials and affecting growth within retail categories
- #15 (what do they have to do to be successful in omnichannel)?
- #16 Technology was supposed to make our lives easier, when in reality, it just made things faster. Convenience for the time-pressed consumer will continue to play more and more of an important role in retail category growth Convenience is an important consideration for millennials on account of their hectic lifestyle. Time is of essence for the working younger generation and is one of the key reasons for the growth in online shopping and online ordering from restaurants. With the rise of online shopping, retailers need to make sure that the consumer is able to shop effortlessly
- #18 Importance of creating an experience: - Draw consumer to the physical store - Incorporate technology Digital touchpoints Connect consumers through social media
- #19 Millennial consumers want products that are unique to them and aim to differentiate themselves from the rest of the crowd
- #20 Importance of creating an experience: - Draw consumer to the physical store - Incorporate technology Digital touchpoints Connect consumers through social media
- #21 Millennial consumers want products that are unique to them and aim to differentiate themselves from the rest of the crowd Personalization is a trend that continues to be a driver of growth in across many categories. 59% of shoppers who have experienced personalization believe it has had a noticeable influence in purchasing https://www.infosys.com/newsroom/press-releases/Documents/genome-research-report.pdf
- #22 Millennial consumers want products that are unique to them and aim to differentiate themselves from the rest of the crowd
- #23 Key Shift in spending habits since the recession Consumers are choosing to spend at the low and high end of the pricing spectrum, putting pressure on the mid-range brands This trend is reflected in real estate absorption; significant expansion among off- price, discount, and value players TJX Companies to open 260 stores – chainstoreage Dollar General plans to open 900 new stores in 2018 – CNN Ulta Beauty opening 100 new stores in 2018 Ross to open 100 new locations in 2018