The document discusses the potential "End of Retail" scenario brought about by technological disruption in the retail industry. It notes that e-commerce is growing rapidly while traditional retail sales grow slowly, and once online sales reach 20% of a retail category the transition accelerates. Weak retailers like Macys and JC Penney have seen sharp drops in stock prices while some retailers like Gap have fared better. The rise of large technology companies like Amazon and Facebook that dominate multiple industries could further drive consolidation in retail and job losses in that sector. However, the growth of tech companies may continue to outweigh the negative effects on the stock market of companies they displace.

1. End of Retail
28 June 2017
War Room

2. War Room
Idea Generation
Contextual Training
Scenario Updates
HiddenLevers runs on SCENARIOS like Facebook runs on PHOTOS

3. The Skinny
Tech Disrupts Retail
Market Impact of Tech Transformation
Scenario: End of Retail
End of Retail
NEW

4. HiddenLevers
THE SKINNY

5. New Retail Models
End of Retail – Why Ripe?
sources: HiddenLevers, CNN Money, Campaign Live,
Amazon buying Whole Foods
Retail Casualties Mounting
New Competitors

6. End of Retail – Let’s take a Look
See it on HiddenLevers

7. Tech rise
upending
every
industry not
just retail
Tech platforms
becoming most
important
companies in
each sector
AMZN b2b story
dwarfs
“AMZN eats retail”
story
tech megacaps stock price rise
outweighs death of all they kill
End of Retail – Take-aways

8. HiddenLevers
TECH DISRUPTS RETAIL

9. DISRUPTED: Retail Death Spiral?
Sources: HiddenLevers, eMarketer
Retail transforming, not dying.
15% of retail sales online by 2020
retail sales
rarely shrink
eCommerce:
20.6% CAGR
Retail:
3.4% CAGR

10. 20% Tipping Point: Once a retail category
goes 20% online, transition accelerates
DISRUPTED: Tipping Points
Sources: HiddenLevers, L2 Research, Quartz/Credit Suisse, NYU
Retail Operating Margins = THIN
General Retail: 4.7%
Grocery: 3.4%
Specialty: 6.7%
Online: 5.1%
10% drop in
same-store sales
= bankruptcy

11. DISRUPTED: Not All Retail Created Equal
sources: HiddenLevers, CNBC
WEAK SPOTS
BRIGHT SPOTS
MACYS -63%
EXPRESS -55%
JC PENNEY -45%
SEARS -45%
DEBENHAMS -37%
BURBERRY +45%
SAMSONITE +42%
CHILDRENS PLACE +34%
FAST RETAILING CO +26%
GAP +12%

12. DISRUPTED: Employment Impact
Sources: HiddenLevers, Quartz Media, Bureau of Labor Statistics 1, BLS 2
Slow rise in
manufacturing jobs not
enough to offset retail
contraction.
Retail Trade Jobs
15.8M
Manufacturing Jobs
12.4M
(as of march 2017)

13. DISRUPTED: New Kind of Competitor
Sources: HiddenLevers, Recode
Amazon share prices rises on revenue growth, not profits.
This is unlike traditional retail heavyweights.
income
revenue

14. HiddenLevers
MARKET IMPACT OF TECH TRANSFORMATION

15. IMPACT: Amazon No Longer Just a Retail Story
Sources: HiddenLevers, Business Insider, GeekWire, Revenues & Profits
80m subscribers now

16. IMPACT: Many Sectors in Transition
Sources: HiddenLevers
RETAIL
being
disrupted by
HOTELS
being
disrupted by
OIL + GAS
being
disrupted by
TV/MEDIA
being
disrupted by

17. IMPACT: Market Consolidation + Limits
Sources: HiddenLevers, Fox Business, Reuters, NY Times
- Tech megacaps (FB, AAPL, AMZN, MS, GOOG) outpacing small caps
- US govt is turning a blind eye to tech antitrust, EU not so much
- Sector-specific big box leaders getting lift from dead competitors
+12.7%
+68.7%
Retail Sector:
Electronics
ALIVE
DEAD

18. HiddenLevers
SCENARIO: END OF RETAIL

19. NEUTRAL
GOOD
SCENARIO: End of Retail
consumer
confidence
-30%
S&P 500
-20%
consumer
confidence
+18%
S&P 500
+11%
$
unemployment
4.6%
consumer
confidence
+6%
S&P 500
+5%
unemployment
4.8%
tech drives
more sales
tech cuts jobs
not growth
UGLY
job losses
hit economy
unemployment
6%

20. End of Retail – Let’s take a Look
See it on HiddenLevers

21. Tech rise
upending
every
industry not
just retail
Tech platforms
becoming most
important
companies in
each sector
AMZN b2b story
dwarfs
“AMZN eats retail”
story
tech megacaps stock price rise
outweighs death of all they kill
End of Retail – Take-aways