Disruptive Forces in Retail Today Maureen McAvey
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