Taking the long view of the retail industry can be difficult. With high-speed communication, instant media and a non-stop news cycle, onlookers can be forgiven if they lose track of the big picture. Greg Maloney, CEO of JLL Retail presented a rational and thought-provoking view of the retail industry through the lens of his 35 years of industry experience at ICSC Hawaii Idea Exchange. Starting with a broad overview of the state of the national landscape and then focus on how trends, including tourism and technology, impact Hawaii’s shopping centers.

1. Finding our future
in Retail
Greg Maloney
President & CEO
JLL Americas Retail,
ICSC Board of Trustees

2. Today’s topics
 Three Forces Shaping
Retail Today
 Five Trends Impacting
Retail’s Future

3. Three forces
shaping U.S. retail
 Economy
 E-commerce
 Experience

4. Economy
As the workforce grows, so grows retail sales.

5. April 2015 Unemployment Rate
Economy
Source: Bureau of Labor Statistics
5.4%
USA
4.1%
Hawaii
3.6%
Honolulu

6. 7.9
17.1
9.6
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
1-monthnetchange(thousands)
U-6 Unemployment
Source: JLL Research, Bureau of Labor Statistics
True unemployment is still well above past lows.
Economy

7. Economy
Only 46.1% of Americans are engaged in full time employment,
with 30+ hours per week and a regular paycheck. Source: 7/14/16, Gallup Good Jobs

8. 111.9
98.0
0
20
40
60
80
100
120
140
ConsumerconfidenceIndex
Source: JLL Research, Conference Board
Consumer confidence still below its last peak.
Economy

9. Source: Conference Board, June 2016
U.S. Job Market
Economy
23.4%
Say jobs are “plentiful”
23.3%
Say jobs are “hard to get”

10. Source: JLL Research, Conference Board
A growing gap between the present and future.
Economy
Present Situation
Future
Expectations
0
20
40
60
80
100
120
140
160
180
ConsumerconfidenceIndex

11. discount luxury
“middle” stores
Discount vs. Luxury Retailers
Economy

12. Economy
Value shopping is now for everyone. Low-income families plus higher-income shoppers
who’ve now developed a taste for discounts.

13. Economy
Millennial shoppers have grown up expecting discounts and bargains.

14. e-Commerce

15. e-Commerce
2016 Headlines

16. 92.3%
7.7%
Bricks-and-Mortar
e-Commerce
7.7% of all retail sales are e-Commerce.
Source: U.S. Census Bureau
e-Commerce
U.S. Retail
Sales,
Q1 2016
What percentage of e-Commerce
sales come from traditional
bricks-and-mortar retailers?

17. e-Commerce Penetration for Select Product Categories, 2005-2030F
Source: Forrester, Bain
e-Commerce
e-Commerce Penetration
Actual Forecast

18. Experience
What does experience really mean?

19. Experience Maslow’s Hierarchy of Needs
Commoditized goods,
Internet/impersonal
shopping
Premium goods,
experiential shopping

20. Experience
An “experience” means shoppers are meeting their higher-order needs.

21. Experience
Travel and tourism is a large driver of experience retail.

22. Experience
Source: World Tourism Organisation
Global Tourism Outlook – Tourist arrivals forecast to reach 1.8 billion by 2030 globally.

23. Experience
Source: Hawaiii.gov
Hawaii Visitor Volume Will Exceed 9 Million by 2018
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
2005 2007 2009 2011 2013 2015 2017 2019
Millions
Visitor volume

24. Experience
Source: CoStar, JLL
Retail Vacancy Rate
2.3%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
2008 2009 2010 2011 2012 2013 2014 2015 2016 (Q2)
Hawaii San Francisco Los Angeles South Florida New York City

25. Five trends impacting
retail’s future
 Food, food, food!
 Touch screen transformation
 Merchandise with meaning
 Reality star treatment
 Fan base

26.  In 1992 we spent $163 at grocers for every $100 in restaurants.
 Today we spend $96 at grocers for every $100 spent in restaurants.
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
Jan-92
Jan-93
Jan-94
Jan-95
Jan-96
Jan-97
Jan-98
Jan-99
Jan-00
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Grocery stores ($M)
Restaurants & bars ($M)
Source: U.S. Census Bureau
Food, food, food!

27. food, food, food!
What’s a food hall?

28. A new food hall in Omaha’s Westroads Mall opened in December.
Food, food, food!

29. Technology is set to transform physical shopping.
Touch screen transformation

30.  Mobile payments
 Loyalty rewards
 Order-ahead
 Custom orders
Touch screen transformation

31. Panera 2.0 is fully digital. Mobile app, instore kiosk and web ordering combined.
Touch screen transformation

32.  Smart fitting rooms
 Touch-screen mirrors
 POS mobile checkout
 Communal tables with charging stations
Touch screen transformation

33. Nike’s #BetterForIt campaign focuses on female empowerment.
Merch with meaning

34. Organic sustainable food is no longer the domain of the high-end grocer.
Merch with meaning

35. Fanbase

36. lululemon creates its fan base with free yoga classes.
Fanbase

37. Starbucks Roastery is a living coffee museum at 20,000 square feet.
Fanbase

38. Consumers want to be treated like the stars they see in the media.
Reality star treatment

39. Magic mirror technology delivers a customized experience.
Reality star treatment

40. Three forces
shaping U.S. retail
 Economy
 E-commerce
 Experience

41. Five trends
impacting retail’s
future
 Food, food, food!
 Touch screen transformation
 Merchandise with meaning
 Reality star treatment
 Fan base

42. Finding our future
in Retail
Greg Maloney
President & CEO
JLL Americas Retail,
ICSC Board of Trustees