Disruptive Forces in Retail Today · E-COMMERCE SALES Source: NRF, U.S. Census Bureau and Statista 2016. $21.0 B $491.0 B Expected Growth $142.6 B $224.2 B $347.3 B $- $100,000 $200,000

DisruptiveForcesinRetailToday

MaureenMcAvey

FourForcesofChange

Ø Technology

Ø Consolidation

Ø MixingUptheUses

Ø Communitybuilding,foodandexperience

TECHNOLOGY

ANewWorld

• MobilesalesUP43%y-o-y

• Consumersspending74hrs/monthonsmartphoneapps

• HighestusageisFacebook,Ebay

• Chatbots onothersites

• 34%ofretailapptimeisonAmazon

• Walmart spendingover$1billiontocompetewithAmazon

5

BLACK FRIDAY

62%

78% 76%

46% 46%

40%

32%

TOTAL 18-24 25-34 35-44 45-54 55-64 65+

Gen X Baby Boomers

Percent of Shoppers Using a Mobile Device In-Store by Age

Perc

ent o

f Sho

pper

s

Millennials

Source: ICSC

E-COMMERCE SALES

Source: NRF, U.S. Census Bureau and Statista 2016.

$21.0 B

$491.0 B Expected Growth

$142.6 B

$224.2 B

$347.3 B

$-

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

2000200120022003200420052006200720082009201020112012201320142015201620172018

AnnualE-CommerceSales

AnnualE-…

Q3 2015 E-Commerce sales as a percent of total retail sales = 7.40% with long-term average annualized growth rate = 19.51%

in-store sales account for 90% of all retail sales, the 3.5% growth actually represented a $144 billion increase, while the e-commerce growth was only $38 billion. Furthermore, of the 10% of retail sales that were done online, half were done through retailers that have a physical store presence . In fact, retailers find their online sales increase by 3-5 times in a market when a physical store opens nearby.

2/3/16: Michael Kors CEO, John Idol admitted to WWD what other retailers have been reluctant to concede - that e-commerce isn’t as profitable as business at actual stores – and that a company long ridiculed for opening too many locations and flooding the marketplace with Michael Kors-branded purses and watches plans to keep on expanding even more. It wants to reach 1,000 stores, not including its men’s business. Idol says the company thinks online sales will one day represent 20-30% of its business – no more.

$304.0 B

2000-2018

THE SHOPPING JOURNEY

Research . Test & Trial . Purchase . Fulfilment . Return

90% of shoppers engage the physical store somewhere along the shopping journey

INDUSTRYCONSOLIDATION

GONE• Linens&Things• Bed,BathandBeyond• CircuitCity• Penny’s?????

• MontgomeryWards

OldAnchors…

2016StoreClosingsandDownsizing

• 500McDonalds• 400OfficeDepot/OfficeMax• 255HancockFabrics• 223Barnes&Noble• 200Walgreens• 154Walmart• 150AmericanEagleOutfitters• 120Chico’s• 100PierOne• 35-40Macy’s

Source: thebalance.com

NewAnchors

• Morerestaurantsofall

types

• Civicuses:library,DMV

offices

• Medicalservices

• Services:salons,fitness

• Entertainment

IntegrationofOnline/Instore

• Onlinecomesinstore

• Instorefullyintegratesonline

• Warby Parker• Bonobos• LandsEnd

ANEWMIX

Urban Walmart

Target on State St.Bakery Sq.

BigDatainrealtimeallows

• Choosingthebestlocations

• Highestperformance

• Mostprofitableleaseterms

EXPERIENCE,FOOD=COMMUNITY

One Third of all Shopping Trips Started as a Food Trip

TheSocialExperience

• Ambiance

• Engageallthesenses

• Designcounts

Multi-Activities

• Moveawayfrommallstoshoppingandentertainmentdistricts– Workout/fitness– Salon– Mealwithfriends– Shoppingingroups– “Thirdplaces”

• “A”&“B”mallsfine,“C”&“D”malls??

TheFuture?

• Continuedchange• Competitionon

– Price– Experience– Service– Location– Integration

• Lessparking• Moretrees/amenities• Morefoodandfoodrelated

• Moremixed-usedistricts

• Moreonline• Customization