This is a constantly evolving retail technology and trends presentation. From retail globalization trends to some of the latest digital trends, I explain the disruptive innovation journey. This version was delivered to a group of Japanese retailers and has a little retail loos prevention spin. Retail is a team sport. Information will place you on the winning team.

1. THE DISRUPTIVE FUTURE OF RETAIL
ようこそ
Tony
D’Onofrio

2. www.tonydonofrio.com© 2018 Retail Solutions. All Rights Reserved.
2
You are the Leaders to Shape It.
Retail Globalization
Where is the Global Shrink?
The Retail Digital Challenge
The Disruptive Future of Retail

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The Disruptive Future of Retail
JAPAN
3

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Retail
Globalization
4

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The World and Retail Find their Growth Groove
5Source: World Bank 2018, The Economist August 2017
Global GDP 2015-2020 (% growth) Retail Sales 2012-2021 ($ Trillion)

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Global Retail Sales
6Sources: The Economist Intelligence Unit 2018, Focus Economics 2018, Chain Store Age / IHL Group 2018
Retail sales growth, 2018-2019 forecasts
(real % change per year)
2012 2013 2014 2015 2016 2017(*)
Retail Sales
(annual growth %)
14.3 13.1 12.0 10.7 10.4 7.2
China Retail Sales
(*) The Economist Intelligence Unit Forecast, August 2017
India 2021(*)
$1.5 Trillion
USA 2018
+6.2%

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The Global Top 250 Retailers
7Source: Deloitte Touche Tohmatsu Limited 2018
43 $10,055 17.2% 35.1% 26.5 14%
135 $21,685 54% 21.1% 5.9 38.5%
51 $14,698 20.4% 22.4% 8.1 33.3%
21 $14,354 8.4% 20.4% 6.7 38.1%
250 $17,643 100.0% 22.5% 10.0 33.2%
Number of
Companies
Average Retail
Revenue US$M
Share of Top
250 Companies
Average # of
Country
% Of Retail Revenue
Average From
Foreign Operations
% Single-country
Operators
Top 250
Apparel and
accessories
Fast-moving
consumer goods
Hardlines and
leisure
Diversified
Product sector profiles, FY2016
Level of globalization
by product sector, FY2016

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Top 10 Global Retailers & Fastest Growing
8
Top 10 Retailer Country
FY2011 - 2016 retail
Revenue CAGR %
RANK Fastest Retailer Country
FY2011 - 2016
Retail
Revenue CAGR %
Wal-Mart Stores, Inc US 1.7 1 Vipshop Holdings Limited China 103.8
Costco Wholesale Corp. US 6.0 2 Albertsons Company, Inc. US 74.0
The Kroger Co. US 5.0 3 JD.com, Inc. China 62.6
Schwarz Group (LIDL) Germany 7.3 4 Zalando SE Germany 48.1
Walgreens Boots
Alliance, Inc.
US 6.1 5
Reliance Industries
Limited/Reliance Retail
India 34.5
Amazon.com, Inc US 17.6 6
Southeastern Grocers,
LLC
US 31.7
The Home Depot, Inc. US 6.1 7
Axel Johnson AB/ Axfood,
Axstores
Sweden 31.6
Aldi Group Germany 7.7 8 Hudson’s Bay Company Canada 30.3
Carrefour S.A. France -1.1 9
Sprouts Farmers Market,
Inc. US 29.6
CVS Health Corp. US 6.4 10 Lenta Group Russia 27.8
Source: Deloitte Touche Tohmatsu Limited 2018

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APAC Leading Middle Class Evolution
9
500M
77%
66%
New urban middle
class globally
Of new urban middle
Class in Asia Pacific
Working-age proportion
of global population (peaked in 2015)
1 2 33 Billion People Make Up
Global Middle Class
$33 Trillion Was Spent by the
Global Middle Class in 2015
2021 is the Year Most People
Could Be in the Middle Class
2016 Urban
Middle Class
2026 Urban
Middle Class
Brookings Institution, 2016JCI Estimates based on UN, Pew Foundation, IMF, & CEIC Data

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10Source: A.T .Kearney 2017
2017 Global Retail Development Index
Rank Country
GRDI
Score
Population
(million)
GDP per
Capita, PPP
National
Retail Sales
($ billion)
1 India 71.7 1,329 6,658 1,071
2 China 70.4 1,378 15,424 3,128
3 Malaysia 60.9 31 27,234 92
4 Turkey 59.8 80 21,147 241
5 United Arab
Emirates
59.4 9 67,696 73
6 Vietnam 56.1 93 6,422 90
7 Morocco 56.1 35 8,360 40
8 Indonesia 55.9 259 11,699 350
9 Peru 54.0 32 13,019 61
10 Colombia 53.6 49 14,162 90
Emerging markets are ahead in growth
of mobile shopping

11. © 2018 Retail Solutions. All Rights Reserved.
11Source: A.T .Kearney 2017
Global Retail Development Index

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Where is The Global Shrink?
12

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Retailer Losses
13Source: Senormatic Gobal Shrink Index 2018, IHL Group
33%
23%
18%
26%
Shoplifting
Employee Theft
Administrative Losses
Vendor Fraud
$99.56 B
Global Shrink
Loss
RETURNS
$643 Million
Lost in Returns
INVENTORY
DISTORTION
$1.1 Trillion
Lost Revenue Opportunity Due
To Inventory Distortion
Total Retail Losses

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Global Retail Shrink
$99.56B in losses
14
23%
18%
26%
33%
Shoplifting Dishonest
Employee Theft
Admin/non-
crime Loss
Supplier Fraud
INDIA ITALY FRANCE
Highest Global Shrink Countries
Highest Global Shrink by Segment
1.98%
1.85% 1.83%
Fashion/Accessories Variety Stores Department
Store
Source: Sensormatic Global Shrink Shrink Index, 2018
2.13% 2.32% 2.06%

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LP Growing Industry Influence
15
15%
22%
23%
26%
37%
45%
54%
79%
34%
56%
38%
52%
32%
41%
33%
14%
51%
22%
40%
23%
30%
14%
13%
7%
0% 20% 40% 60% 80% 100% 120%
RFID
Fire Solution
Video Analytics
Data Mining
EAS
Access Control
Exception-based reporting
CCTV
Ranked 1-3 in importance Ranked 4-6 in importance Ranked 7-8 in importance
Technologies Most Critical in the US
Loss Prevention and Security Functions
Base: 182 USA Decision-Makers
Gaining
Influence
61%
Remained
the same
24%
15%Losing
Influence
LP
Department
Influence Over
the Years
Base: 168 US Decision-Makers
Source: LP Magazine Study
of US LP decision
makers consider EAS
tech extremely or very
important
56%
Very
Important
32%
24%Extremely
Important
Slightly
Important
3%12
%
28% Moderately
Important
Not at all
important
Base: 157 US Decision-Makers

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The Retail Digital
Challenge
16

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Store Systems Priorities
17Source: IHL Group, 2018
Top 10 Strategic Priorities for 2018
12%
15%
16%
33%
46%
54%
59%
72%
78%
89%
Store Network Upgrades
Workforce Management
Reducing Supply Chain Costs
Digital Transformation
Single Transaction Engine
One Cross Channel Customer Database
Empowering Store Associates
Upgrading CRM/Loyalty Programs
Inventory Visibility
Personalizing Customer Experience
5.6%
Average increase
Enterprise IT spending in
2018
vs. 4.5% last year

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Emerging Technologies
18Source: IHL Group, 2018
New Technology Priorities
1.3%
1.4%
2.8%
3.5%
5.3%
5.5%
6.7%
7.0%
7.3%
RFID
Augmented / Virtual Reality
SD-WAN
IoT
Big data
Conversational Commerce
Predictive / Prescriptive Analytics
AI/Machine Learning
Proximity / Location-based Mkt
Respondents Planning To Increase Spend by >10%
Who Are Leaders
42%
57%
60%
73%
74%
76%
80%
100%
100%
Big Data Integration
AI / Machine Learning
SD-WAN
Predictive / Prescriptive Analytics
Proximity / Location Based Mkt
Conversational Commerce
IoT
RFID
Augmented / Virtual Reality
0% 20% 40% 60% 80% 100% 120%

19. © 2018 Retail Solutions. All Rights Reserved.
Age of Amazon (Alibaba): Challenges & Opportunities
19Source: RIS / Gartner Retail Technology Study 2017
You will not out-Amazon Amazon (Alibaba), but you can learn a great deal from how they constantly innovate using a customer centric lens.
THE RETAIL DIGITAL CHALLENGE
Top 5
Major
Strategies
over the next
18 months
52% 49% 48% 42%
Personalized mkt
capabilities
Leveraging
social media
Increasing customer
engagement
45%
Expanding unified
commerce
Advancing mobile
commerce
Top 5
Challenges
over the next
3 years
38%
Digital commerce as
growth channels
Optimizing stores as
a growing channel
Retiring legacy
systems
Upgrading store-level
bandwidth and
infrastructure
44% 44%
Customer data
security
35% 35%

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The $15 Billion
Innovation Challenge
20Source: IHL Group
Over 50% of US Households
have Prime membership
66 Million Households
70% of Households > $112k Income
87% - 237%
Average IT spend increase required to effectively
compete with Amazon
USA 20
Amazon’s annual spend is more than the amounts of the
following retailers combined

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The Disruptive Future of Retail
CHINA
21
Fung Business Intelligence, July 2017

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Why Clicks NEED Bricks
22
CLICKS Getting Physical CLICKS Insights
• Amazon > Bookstores > Amazon Go > Whole
Foods ($13.7 Billion)
• Alibaba $8 Billion in Physical Stores Last 2 Yrs
> Hema Supermarkets
• The Delivery Last Mile
• INNOVATION Differentiation
• Expanding Loyalty Programs
• Return Rate – Online nearly 33% / instore 9%
• The Profit is in the Store
Forbes 19 April 2017, Forbes 27 August 2017), Economist 2017 / Bloomberg Business Week November 3, 2017
Where Do Apparel Retailers Make The Largest Profit ?
In Store Online Online In Store
Pick Up
Online Ship
From Store
32%
Profit Margin Profit Margin Profit Margin Profit Margin
30% 23% 12%
For each additional percentage
point of shopping that moves
online, a retailer’s margins
shrink by about half a point.
~ Morgan Stanley

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The Disruptive
Future of Retail
23

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24
Technology Driving Shifts in Retail Power
MANUFACTURER RETAILER CONSUMER
FUTURE OF RETAILFUTURE OF RETAIL
Pre-1970s 1970s 2010s

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Innovation SPEED
25Source: Singularity.com, Economist 2017, Ericsson Mobile Report 2017
Blowing away the cloud
Connected devices, worldwide, bn
*Everyday objects
Connected to the internet

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Retail Innovation
26
Fast Fashion – 10% CAGR
Market Share
Do you own a voice-
controlled digital home
assistant?
Cowen & Company 2017 RIS Shopper Insights 360, 2017
New Channels
Biz Models
Source: Cowen & Company, Company Reports
Buying Platforms
Shopper Purchase Frequency
Through New Channels

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The Evolution of Loss Prevention
27
Store Intelligence
Item Intelligence
Item Security
Data & Video Analytics
Traffic & Shopper
Analytics
EAS Video
RFID

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Retail Loss Prevention Disrupted
28
RETAIL THEFT
OPPORTUNITIES
DIGITALLY EMPOWERED
CONSUMER
Shrink
Brand Value Differentiation
Real Time Consumer Loyalty
Immersive Unified Customer
Experiences
Smart Supply Chains
Brand Integrated Security / Video
Analytics / Machine Learning
Data / Visual Zone Deterrence
Prescriptive Data Analytics

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The Future Retail Ecosystem
29
The retailer of the future will likely be a retailer of
the past — just the most efficient version therein.
— Goldman Sachs 2017
CONSUMER
STORE DATA EXPLOSION
• POS
• Labor Scheduling
• Planograms
• Store Traffic
• Loyalty Programs
• EAS
• Video
• RFID
• HVAC
• Internet of Things
• Beacons
• Wearables
• Robots
• Unified Commerce
• Smart Mirrors
• Smart Floors
• Smart Fitting Rooms
• Augmented Reality
• Virtual Reality
INTELLIGENT FILTERS
• Video Analytics
• Artificial Intelligence
• Machine Learning
• Big Data
Seamless
Bricks & Clicks
Consumers
as Brand
Ambassadors
Associates
as Brand
Ambassadors
Unassisted
Self Checkout
Covert Intelligent
LP (deterrence)
IMMERSIVE
EXPERIENCES

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The Formulas for Retail Success
Americans spend 1.2 billion hours/week driving to mall, finding parking,
wondering around aisles, checking out and driving home
Wall Street Journal, 16 October 2017 / McKinsey October 2017

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31
Stores Not Going AWAY
Source: Economist 2017, Cowen & Company 2017 / PSFK / RSR Research
Educate & empower in-store
employees using technology
Opportunity for improving
in-store experience*
E-commerce sales
As % of total

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32
Store Reinvented - Associate Brand Ambassadors
Source: RIS Shopper Insights 360, 2017 / EKN Modern Labor for Omnichannel Success Report
Retailers reported
16.5% improvement
in KPIs related to sales,
customer engagement &
satisfaction from empowered
sales associates

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Global
Source
Tagging
33
18%
34%
37%
45%
50%
73%
50%
46%
41%
21%
9%
16%
17%
14%
29%
Latin America
Europe
Global
Asia - Pacific
North America
33%
28%
20%
12%
11%
51%
62%
67%
73%
78%
16%
10%
14%
15%
11%
Apparel and fashion Accossories
Food and Beverages
Health and Beauty
Electronics
DIY/ Home Improvement
Future Plans of Using Source Tagging Across Regions Future Plans of Using Source Tagging Across Product Categories
Not Planning to Implement Planning to
Increase
Planning to Maintain
The Future of Retail
• Theft is not going away
• Branding & Customer Experiences Everywhere
• Remove the non-customer facing store clutter
Source: Global Theft Barometer
“There is only one boss: the customer. And he can fire everybody in the company from the
chairman on down, simply by spending his money somewhere else.” ~ Sam Walton

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CHINA
34
Room for Growth
Internet usage % of population, 2016
Source: Economist

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35
ありがとうございました
“Retail Success
Is a Team Sport”
~ Tony D’Onofrio
You are the Leaders
to Shape It.
www.tonydonofrio.com