Deborah Weinswig from Profitect and Jane Hali from WGSN co-hosted a conference call on their combined outlook for Holiday 2013.

1. 1
Jane Hali
Deborah Weinswig
11/25/2013

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Speakers
Jane Hali, VP of Custom Research, WGSN Group has 30 years of diverse experience in retail,
wholesale and consulting to the investment community. She has built a reputation on her
ability to translate fashion trends with the more commercial elements of retail to provide
insights, including the trends and catalysts in the industry, for institutional investors. Jane most
recently was VP of Consulting at the Doneger Group and prior to that at The Coleman Research
Group as VP, Director of Retail & Merchandise Consulting. Jane’s industry experience was
cemented through various leadership merchandising roles across multiple brands such as
Macy’s, Anne Klein and Jones’s Apparel Group.
Jane has been recognized and quoted by many publications including WWD,WSJ, Forbes,
Business Week, Bloomberg News. She has also appeared on CNBC, CNN and Bloomberg.
Deborah Weinswig is currently Chief Customer Officer at Profitect. Deborah was the Global
Consumer Discretionary Sector Head for Citi Research and lead the Retailing/Broadlines and
Food & Drug Chains teams. Deborah recently received ICSC’s Researcher Award for Outstanding
Service and was recognized as one of the 36 Best Analysts on all of Wall Street by Business
Insider. For eight of the last ten years, Deborah has received the First Place ranking for
Retailing/Department Stores and Broadlines. She has also been awarded either Third place or
Runner up in Retailing/Food & Drug. Prior to joining Citi, Deborah covered the supermarkets,
drugstores, discounters, clubs, and food distributors at Bear Stearns, and was a member of the
Global Strategy Team at Morgan Stanley.

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What Makes This Holiday Different?
 Shorter Holiday Season
 Thanksgiving Day shopping
 Black Friday deals announced early
 Cyber Monday
– E-commerce
– Increased delivery options
– M-commerce

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10 Things to Watch this Holiday Season
1. Weather – mild and dry
2. Macro economy – things improving at a slower pace.
3. Technology as a hot seller –
tablet/smartphone/computer/Xbox one/PS4
4. Other hot sellers -
5. 26 days this holiday season – 6 fewer than last year
6. Thanksgivukkah – Early Chanukah is shifting sales
7. Effects of Sandy
8. Omnichannel
9. 2 screens going to one screen-- TV upgrade cycle?
10. Earlier start to the season may reduce the frenzy

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Holiday Forecast
Boris Planer- Chief Economist, Planet Retail WGSN Group
 Despite continuing heavy bond-purchases by the Federal Reserve
Bank in the year 2013, the economy of the United States has been
recovering below expectations. As the labour market remains under
pressure and payroll taxes have been increased, households have
begun to save larger parts of their incomes leading to an only
sluggish development of aggregate demand.
 The latest shutdown of the government in October and the fact,
that this incidence might recur in February 2014 and develop into a
permanent threat for both politics and the economy, has further
weakened consumer confidence.
 Therefore, Holiday shoppers this year might be very budget-
conscious, potentially making the holiday shopping season a more
promotional one than it was in previous years. For instance,
Walmart, Target and Toys R US, among others, have already begun
courting customers with special offers and services, partly one
month earlier than in 2012.

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Holiday Sales Forecast
 For 2013, The National Retail Federation expects sales in
the months of November and December to increase 3.9%
to $602 billion.
– WGSN group projects a flat year at 3.5% for the 2 months
combined.
– WGSN group expects the 2013 holiday season to be highly
competitive, with promotions – both scheduled and
unscheduled – likely to characterize the shopping environment.
– In the US, retail spending in November and December can
account for as much as 40% of a retailer’s annual sales and 20%
of total industry sales.
 2012
– Actual holiday season sales growth was 3.5% and beats the 10-
year average increase of 3.3%.
– 24% of Department store revenue came during holiday season
– Jewelry had the highest % of sales – 29%

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Shorter Holiday Season
 Last year, consumers had 32 days to shop between
Thanksgiving and Christmas, including five weekends.
This year, they have six days and one weekend less to
check off everyone on their shopping list.
 A shorter holiday shopping season may actually
prove to be beneficial to retailers by creating a
greater sense of urgency among consumers to shop
earlier in the season
 There was a definite lull and shopper fatigue in the
month of December, 2012

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Shorter Holiday Shopping Season
 6 fewer days between Thanksgiving and Christmas

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Holiday Same Store Sales
Year Holiday Sales Change
2012 3.50%
2011 5.08%
2010 5.30%
2009 0.50%
2008 -4.41%
2007 2.75%
2006 3.33%
2005 6.20%
2004 6.77%
2003 5.11%
2002 2.12%
2001 2.07%
2000 3.40%
NRF Holiday Survival Guide 2013

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NRF Holiday Survival Guide 2013

11. 11Copyright © 2013 Weather Trends International
• The Thanksgiving weekend is the coldest in over 25+ years. This
will drive strong sales for both gifts and cold winter merchandise.
• This will like cannibalizes some December seasonal merchandise
sales.
• Previous two warm Black Fridays (2011, 2012) led to a 1-day surge
and then very weak weekend traffic as consumers enjoyed warm
outdoor weather as opposed to shopping.
Coldest Thanksgiving
Weekend in 25+ years!
Black Friday – COLDEST IN 25+ YEARS

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12
Copyright © 2013 Weather Trends International

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87%
AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR
2013
Dates are weekending Saturday
2014
BARS = year-over-year
temperature forecast
DOTTED LINE =
Actual Verification
TODAY2012
Q3: A choppy Fall but
driest in 8 years
(Favorable Store Traffic)
Q1 coldest in 20
years, snowiest in
19 years
Q2 coolest in 4
years…wettest in
25+ years!
Winter Coldest &
Snowiest in 3 Years!
NOV: Strong Sales
DEC: Store Traffic RISK!
JAN: HIGH RISK
FEB: VERY HIGH RISK
National Year-Ahead Temperature Trends/Accuracy

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Q4 National Temperature Trends
 The Nov – Jan retail calendar Q4 will trend the coldest in three years (5th coldest in 25+ years)
and much below average for the U.S. overall.
 Great for must have winter seasonal merchandise sales (up 20% to 200% over last year) but a
negative for overall store traffic (-1% to -2%).
 Mall based stores and on-line sales fare better in a cold/snowy Winter while open air centers,
stand alone retailers and home centers are particularly hard hit.

15. 15Copyright © 2013 Weather Trends International
 The critical 4-weeks before Christmas are likely to have snow storm impacts with national
snowfall forecast up 113% over last year and much above average (5th snowiest in 25+ years).
 The balance of winter is likely to bring a brutally cold and snowy January and February with
frequent Nor’easters creating significant disruptions to store traffic and overall retail sales.
Overall Retail Industry SSS will be negatively impacted by 1-2% after a strong November,
choppy December and high-risk January and February.

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Thanksgiving Day shopping
 Thanksgiving Day is a real shopping day this year with
more retailers opening as early as 6pm
 Stores open on Thanksgiving to counter shorter calendar
and slow growth
 One of the fastest growing shopping days.
– Accenture Survey results indicate that Thanksgiving Day has
emerged as an established season event, with 38% of shoppers
likely to shop on the holiday. Of those shoppers, 41% indicated
that they will be out shopping between 6 p.m. Thanksgiving Day
and 5 a.m. on Black Friday.
 Fastest growing shopping day with more than $633
million spent in 2012
– Retailers are trying to get customers in the physical store instead
of shopping online from home

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Black Friday Deals Announced Early
 On 1 November, Walmart.com shoppers were able to access
rollbacks on brand-name electronics and home goods,
typically reserved for Black Friday and Cyber Monday. In
addition, the site is also offering more than 300 early-bird
specials at exclusive online-only prices.
 51.1% of retailers plan to start Thanksgiving weekend online
promotions at least 5 days early
 Home goods are the number one pick for Black Friday deals
this year
– Comprise 35% of home and garden deals in 2012
– More than double the number of Editors' Choice deals on large
appliances
– Vacuums will be heavily discounted, especially refurbs
– Small appliances and tool deals for under $10
– It will be the best time to buy tools but many will require in-store
pickup

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Cyber Monday
 Predicted to be the biggest shopping day by sales
 According to Adobe, Cyber Monday sales beat Black
Friday sales in 2012 because of social media and
Pinterest
– 77% of sales were generated from social media referrals
 13.1% sales growth 2013 vs 21% in 2012
 Customers shifting from physical stores to online
shopping
 The most-frequented searched retailers on Cyber
Monday include Walmart, Best Buy, Amazon, Sears
and Target, according to CNN Money.

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Ecommerce
 Online sales predicted to increase 13-15%
– Expected to spend 20% more than other holiday shoppers
– US web shoppers will spend as much as $82 Billion online this holiday season
 Amazon leading the pack
– Partnership with USPS for Sunday delivery in select markets. This gives them an
even greater competitive edge over others, and other retailers need to ensure that
shipping rates are low or free and that delivery times are minimal
 Increased deliver options
– While free shipping has become an accepted cost of doing business online, more
operators are introducing a variety of shipping options, such as same-day or next-
day delivery, and click & collect.
 Click & Collect
– Online and Mobile Shoppers Can Now “Reserve in Store” at More Than 600 U.S.
Gap and Banana Republic Locations
 Types of online offers, according to NRF
– Email campaigns (44.2%)
– One-day sales (41.9%)
– Gift with purchase (23.3%)
– Free shipping (20.96%)
– Discounted shipping (20.9%)

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Mobile
 Defined as “wildcard”
– Leading area of e-commerce growth
– Accounted for 18% of ecommerce in 2012
 Some predictions have mobile sales up as much at
60% account for 16% of online sales
– Tablets will account for 62.5% of m-commerce
– desktop converts at a rate of 2.5 percent, tablet converts
at 2 percent, and phone is really small at just 0.8 percent
 More Price Matching to combat showrooming
– Look for more retailers to roll out price matching offers this
season in attempt to better embrace consumers using
their smartphones to locate local deals

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Other Opportunities and Challenges
 Layaway
– Continuing to increase in popularity
– Drive incremental traffic to stores
 Managing risk with returns
 On-shelf availability & Inventory Distortion
– 7 in 10 retailers expect to carry higher inventory levels this year
– 18% are increasing access to inventory via drop-shipping
– Build up of excess inventory may lead to order cancelation
 Consumer confidence still low
– More than half of female shoppers are focusing on what they need vs
what they want
 Lack of must have gifts may increase purchase of gift cards
 Food stamps to be cut by $5 billion (5% decrease per
household)

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What People Will Be Buying
Top Toy Trends
Boys Girls
LEGO Barbie
Video Games Dolls
Cars & Trucks Monster High Dolls
Hot Wheels Disney Princesses (T)
Xbox One Tablet/Apple iPad (T)
PlayStation 4 American Girl (T)
Skylander Lalaloopsy (T)
Remote Controlled
Vehicles
Furby
Action Figures LEGO/LEGO Friends
Bicycles (T) Elmo/Big Hugs Elmo
Teenage Mutant Ninja
Turtles (T)
Hello Kitty
 Popular product categories
– Computers and electronics
– Smartphones
– TVs
– Tablets and eReaders
– Fashion

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KEY FASHION ITEMS FOR THE
HOLIDAY SEASON

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Jenny Packham Rachel Zoe
THE SPARKLE SWEATER
3.1 Phillip Lim
JUNIORS CONTEMPORARY MISSY
HOLIDAY 2013

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THE DRESS
Cameo Dress Tibi
JUNIORS CONTEMPORARY MISSY
HOLIDAY 2013
Ports 1961

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Reed Krakoff Elie Tahari
LEATHER ACCENTS
Dakota Collective
JUNIORS CONTEMPORARY MISSY
HOLIDAY 2013

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Charlotte Ronson
LACE
DKNY
JUNIORS CONTEMPORARY MISSY
HOLIDAY 2013
Ellie Saab

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Lela Rose
NOVELTY- BAROQUE
Raoul
JUNIORS CONTEMPORARY MISSY
Joes Jeans
HOLIDAY 2013

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Seven For all Mankind
NOVELTY- COATED, LUXE SATEEN
Versacel
JUNIORS CONTEMPORARY MISSY
Lerock
HOLIDAY 2013

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Celine
Elie Saab
HANDBAGS
COACH
Philip Lim
HOLIDAY 2013

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Kate Spade
JEWELRY- BOLD STATEMENTS
Michael Kors
Anthropologie
Luv AJ Anthropologie
HOLIDAY 2013

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LanvinIvanka Trump
J. CrewJ. Crew
FOOTWEAR
Vince Camuto
Sacai
HOLIDAY 2013

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Summary
 Holiday sales increase 3-4% from 2012 despite low
consumer confidence and lack of must have gifts
 Shorter calendar playing a key role planning
– Early start to holiday season
– More stores open on Thanksgiving day
– Weather is a plus this year
 Home goods are the key product for Black Friday
deals
 Cyber Monday should out pace Black Friday in sales

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Questions?
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