1) E-commerce is growing but physical retail is still dominant, accounting for 92% of global retail spending. 2) Stores will remain important for customer relationships and experiences. Retailers need an omni-channel strategy to succeed. 3) Retailers must redefine the role of stores and evolve through data analytics, seamless online/offline experiences, and optimizing store sizes and locations. Stores can serve as fulfillment centers and pick-up points.

1. THE METEOR IS
COMING:
How eCommerce is saving
future of retail brands?
Presentation by
V.P. Sharma
Group CEO of

2. SO TRUE FOR ECOMMERCE!
It was the best of times,
it was the worst of times…
- Charles Dickens -

3. Thanks to
impact of
eCommerce on
brick & mortar
retail.
Source: TheWall Street Journal, Monday,April 24, 2017

5. Change in Market Share
ByValue of Sales Between 2011 and 2016
Embraced digital early!

6. So, does
e-Commerce
predict
demise
of brick &
mortar?

7. On average 620 Superregional
Malls profits in the US $8.33 psf
up from $5.50 just 4 years ago
US MALLS PROFITS UP

8. Globally, 92% of retail
spending is still in stores
and in Indonesia it’s
99%!

9. Physical store is the channel of
choice for all ages, from ‘Millennials’
to ‘Senior Citizens’!

10. Even pure play online
retailers are turning to
physical stores to
provide best customer
experience.
WHAT IS
MORE?
'Amazon to set up 2000 stores in the next few years'
Example:
Amazon Books & Amazon Go,
Warby Parker, Bonobos, Gilt, etc.

11. CONSUMERS SPEND MORE TIME
IN STORES!
Source: A.T.Kearney Future of Stores study, 2013
Stores
Online
Catalog
Mobile61%
31%
4% 4%
Physical Stores

12. Source: A.T.Kearney Future of Stores study, 2013
More than
planned
The same or
less than planned
% of shoppers
Shopping
in stores
Shopping
online
60%
75%
40%
25%
CONSUMERS SPEND
MORE MONEY IN STORES!

13. % SHOPPERS USING STORES
AND MOBILE COMMERCE
Source: A.T.Kearney Future of Stores study, 2013
% of shoppers
Stores Online
55%
45%
81%
19% 24%
76%
24%
76% 83%
17%
Research Test or
Try on
Purchase Pickup or
delivery
After-sales
experience
FOR

14. PHYSICAL VS ONLINE
SHOPPING
A visit to stores is an important social event and a
motivation to spend time with family & friends and get
instant gratification.
PHYSICAL: Occasion Trips
Vs
ONLINE: Mission Trips

15. LONGER TERM PENETRATION OF E-COMMERCE
Source: Forrester ForecastView Online Retail Forecast 2016-2021 (US), July 2016; Bain analysis
Percentage of e-commerce penetration
100%
80
60
40
20
0
2000 2005 2010 2015 2020 2025 2030
Historical Forecast Example of category
with high e-
commerce
penetration
All e-commerce
Example of category
with low e-commerce
penetration
28% in 15 years
Brands

16. The business
for Physical Retailers
is not 'as usual’

17. LINES BETWEEN OFFLINE AND ONLINE
SHOPPING EXPERIENCE ARE BLURRING
Source: Ipsos OTX/Google 2012 Holiday Shopping Intentions SurveyWave 1: (Q11). In which of the following
ways do you think you’ll approach your Holiday shopping?

18. Retailers around the globe are witnessing :
• higher competition from pure plays
• cost pressures to offer products across
multi-channel
• price pressures - from price transparency!
STORES ON THEIR OWN,
HAVE BECOME LESS PRODUCTIVE

19. • Retail stores will remain at the heart of customer
relationship
• Retailers should execute a customer
centric omni-channel strategy to succeed
Customers always value 'store experience’ to build
TRUST & LOYALTY
PHYSICAL STORES NEED TO
REDEFINE THEIR NEW ROLE
AND STRATEGY

20. RETAILERS NEED
TO EVOLVE
BEST ROLE FOR STORES
• Data analytics is the key - how and why consumers shop
• keeping stores as centre of customer relationship
• as distribution centres for online orders
• as seamless touch point for convenience - order on line
& pick up at stores

21. Closing of so many malls and stores
or failure of brands should NOT
be all attributable to eCommerce

22. To provide customers the ability
to shop - when & where they want to shop
… and create exciting experiences both in
the stores and online
MANTRA

23. Good example:
Macy's - 'Ship-from-Store' initiative
Macy's planned to have 500 of 800 stores to
double as fulfillment centres
to provide omni-channel experience

24. STRATEGY ON FUTURE STORES
• Traditional SSSG and store level EBIDTA is not the right measure
• Optimising store sizes & locations
• Store formats - large stores for promoting discovery &
entertainment
• Integrating retail operations across channels
Examples:
1. House of Fraser, UK - Click n Collect Program:
stockless shop – using iPad, laptops, next day delivery,
store size optimised from 100k sqft to 1.5k sqft
2. Bonobos, similar excellent program

25. INDONESIA
LOGISTIC COSTS AND
DWELLING TIME IS VERY HIGH

26. Source: Archana Vidyasekar and Akshay Gakhar, Visionary Innovation Research group, Frost & Sullivan,
23rd Jan’13
Beyond BRIC : Next Game Changers 2025
INDONESIA – A COMPELLING PROSPECT

27. Retail Development Index
2016 GRDI country
a2rac3veness

28. Digital transac3on value
130 bil $
by 2020
A potential opportunity for all
‘eTailers’
Source: Govt of Indonesia, Ecommerce projections Source: Investvine 2014, Estimates for 2015
INDONESIA ECOM
OPPORTUNITY
80 Millions Connected to Social Media

29. INDONESIA ECOM
33%
37%
40%
43%
45%
48%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
2014 2015 2016 2017E 2018E 2019E
Fig 12 High and rising
smartphone penetration…
Smartphone
penetration
Source: Macquarie Research,
April 2017
22
25
28
32
35
39
0
5
10
15
20
25
30
35
40
45
2015 2016 2017E 2018E 2019E 2020E
Fig 13 But relatively low number of
digital buyers
Source: Macquarie Research,
April 2017
No of digital
buyers
0.0% 0.1% 0.1% 0.2% 0.2% 0.3% 0.4% 0.6%
1.6%
2.4%
3.7%
5.8%
8.9%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E 2020E
Fig 1 Indonesia online retail sales as % of total retail
Source: Euromonitor, Statista, Macquarie Research estimates, April 2017
Indonesia

30. The impact on
Retailers as
Amazon and
Alibaba get active
in the country
POSITIVE !
• E commerce is not easy and cheap
• Market places tend to improve eCom adoption and development of
eco system
• Can be leveraged by retailers in their pursuit of omni-channel
• Most small to mid retailers can hope to go online almost instantaneously

31. • with many retailers registering on the market place, scope for
counterfeit/fraud may increase
• aggressive price war - wiping out many smaller retailers, as it
has happened in other Asian countries
POTENTIAL RISKS

32. OPPORTUNITIES FOR
INDONESIA TO
EXPAND ECOM
FOOTPRINT
• Govt has announced support for eCom and Jack Ma as advisor
• With our competitive advantage of cheaper land and labor,
Indonesia should aim to become digital hub of ASEAN.

33. Vision of making Indonesia
‘eCom logistics hub’
for Southeast Asia
• Attract Foreign Brands to set up e commerce distribution
centers in Indonesia (Inditex in HK)
• eCom exports to be duty-free to promote sales to ASEAN /
Asian Consumers.
• Will promote significant logistics development in the country
OPPORTUNITIES FOR INDONESIA

34. CONCLUSION
• Disruptions all around
• Retailers need to pick up right strategy
• On line players should embrace
Retailers and have them on their market
place and make use of their stores for
omni channel
• Ecom will not take over the world;
will rather complement offline

35. CONCLUSION
• The future of the Retail will be seamless,
dynamic and transparent, esp. Retail Price
• So, please don’t take the customers for
granted!
WE ARE RECASTING THE RETAIL STORES FOR
AN EXCITING OMNI-CHANNEL JOURNEY

36. THANK YOU