2017 in review: the retail turning point

Welcome!

Todd HarrisDirector of Marketing

Celect

Deborah WeinswigManaging Director

Fung Global Retail & Tech

José ChanVP of Business Dev

Celect

• Introduction to Celect & FGRT • Major Retail Trends• 7 Surprises of 2017• 2018 – The Breakout Year for AI?

WHAT WE WILL COVER TODAY

Celect Background

• Predictive analytics SaaS platform to help retailers optimize inventories through data-driven decisions.

• We leverage a groundbreaking advance in Machine Learning and Optimization.

• An MIT Artificial Intelligence Lab Top 50 Technology Innovation

5DeborahWeinswig Tel.646.839.7017deborahweinswig@fung1937.com

AbouttheFungGroup

PRODUCTS SERVICES DISTRIBUTION RETAILING

Li&FungLimitedListedontheSEHK

GlobalBrandsGroupListedontheSEHK

FungRetailingLimitedPrivatelyHeldEntity

ConvenienceRetailAsiaLimited

ListedontheSEHK

TrinityLimitedListedontheSEHK

BrandedLifestyleHoldingsLimitedLiFungKids(Holdings)Limited

Toys“R”Us(Asia)SuhyangNetworks

UCCALFashionGroupPrivatelyHeldEntities

FungHoldings(1937)Ltd.AprivatelyheldentityandmajorshareholderoftheFungGroup

KNOWLEDGE

FGRTFungBusinessIntelligence

FungAcademy

• TheknowledgebankfortheFungGroup

• Focusesonemergingretailandtechnologytrends

• Establishedin2014

• BasedinNewYork,withresearchteamsinLondon,HongKong, Israel and India

• Publishesthematicresearchandresearchwithaglobalscopeontopicssuchasomnichannelretail,fashionandretailtrends,anddisruptivetechnologies

• CompilestheFGRTRetailIntelligenceIndex

AboutFGRT

MajorRetailTrends

Experiences&

EntertainmentShortenedCustomer

journeys

ConnectwiththeConsumer

...andconsumerstodayarecallingfordifferentretailexperiences,bothonlineandoffline.

Shoppers’ExpectationsAreConstantlyEvolving…

Retailersmustrethinkhowtheyengageandretaintheirvisitors.

PersonalizedServices

TheConnectedCustomer

Conversations

Community

ReinventingtheRelationshipwiththeConsumer

Deliveringarelevant,personalizedexperience

RedefiningConvenience

mobileinteractionandproduct-

browsinghistory

Analyzetargetconsumer

audience

Identify productsand

services

Personalize andcontinuetrend-driveninnovation

Execute

IntheAll-ChannelUniverse,CustomerIsNowtheChannel

OrderFrom FulfilledBy WhereReceived

Elsewhere

YourStore

DifferentStore

Mobile

DirectDC

StoreDC

YourStore

DifferentStore

Vendor

Elsewhere

YourStore

DifferentStore

Source:Hudson’sBayCompany

TheRetailerasaHubforOne-StopShoppingRetailersserveasahubforconsumerstoarrangetravel,havetheirclothesdrycleaned,bookappointmentsforhaircuts,andpayforservices.

1.Shopping

2.ClothingStorage 3.DryCleaning

4.Haircut

5.Shave6.Teeth-Whitening

GlobalTrendsthatCanImpactUSRetailO2OMarketingandDirectSelling:InfluencersandLivestreaming

Line KaokaoFacebook Instagram Snapchat WeChat

169 49 111

SuperBowlViewership

MajorSocialMediaPlatforms:MonthlyActiveUsers(Mil.)

Global China Japan Japan Comparison

• Socialmediaplatformsprovideenormousreachformarketingandadvertising• Differentregionshavetheirownuniquesocialplatforms• PlatformssuchasWeChatprovidespaceforbrandstoruntheirownserviceaccountwithintheapp,sotheycanpromoteandsellproducts

Robotics Augmented Reality

Artificial Intelligence

Virtual Reality

TheNextWaveofDisruptorsinRetail

• Weforecastthatthecompany’sgrossmerchandisevolumewillreach$50billion in2020(growingataCAGRof16%).

Source:FGRT

Amazonlaunches Acquired

2002Expansionintoapparel

2015Apparel

privatelabellaunched

Amazonapparelgenerates$16.3billioninsales

20167more

Private labelslaunched

Intimatesprivatelabelin1Q

1995 2006Acquired2011 2015 2017

Acquired

AmazonCapturestheMajorityofE-commerceGrowth

7Surprisesof2017

• Thelistkeepsgrowing,mostlyduetodepartmentstoreandspecialtystoreclosures.

1.StoreClosingsContinuetoExceedStoreOpenings

Total: 6,985 announced store closures

229% year over year

Asidefromtheannounceddeals,therehasbeenmuchotherM&Achatter:

• Nordstrom announceditisexploringa“goingprivate”transaction(June8,companypressrelease)

• AmericanEagleOutfittersisreportedtobebiddingforAbercrombie&FitchwithprivateequityfirmCerberusCapitalManagement(May25,Reuters.com)

• DeckersBrandsannouncedthatitisreviewingstrategicalternatives(April25,companypressrelease)

• BJ'sWholesaleClubputitselfupforsaleinApril(April14,NewYorkPost)

2.SurgeinRetailM&AActivity

2.SurgeinRetailM&AActivityNotableAnnouncedRetailM&AintheUS,YTD

Date Company Target Value

Dec-13 Target Shipt $550 millionDec-4 CVSHealth Aetna $69billionNov-21 Walmart Parcel UndisclosedNov-17 Williams-Sonoma Outward $112millionOct-4 OfficeDepot CompuCom Approp.$1billionOct-3 AceHardware TheGrommet UndisclosedSep-22 Albertsons Plated UndisclosedJul-17 MichaelKors JimmyChoo $1.2billionJun-17 Sycamore Partners Staples $6.9billionJun-17 Amazon WholeFoods $13.7billionJun-17 Walmart Bonobos $310 millionMay-17 Coach KateSpade $2.4billionApr-17 Petsmart Chewy.com $3.35billionMar-17 Walmart ModCloth Lessthan$75millionFeb-17 Walmart MooseJaw $50millionJan-17 Walmart Shoebuy $70million

Source:Companyreports

3.WalmartAcquisitionSpree• Afteracquiringanumberofonlineapparelcompanies,WalmartwillhostaLord&TaylorstorefrontonWalmart.comstartinginthespringof2018.

• Theintentistocreateapremiumfashiondestination onWalmart.com.

• Wal-Martisbeginningtobuildout"elementsofdiscoveryandinspiration"withinthefashionportionofitswebsite.

• Thegrowthofe-commercerevenuehastakenofffollowingtheacquisitionofJet.com.

4.WalmartExplosiveE-commerceGrowth

7.0% 11.8%

20.6% 29.0%

63.0% 60.0%

7.5% 13.0% 16.8%

69.0% 67.0%

2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3

GrowthinWalmartE-commerceSalesandGMV

Sales GMV

AcquisitionofJet.com(9/19/16)

• Alibabaguidedforrobust45%–49%revenuegrowthinitsfiscal2018(endedJune)atits2017InvestorDay.

5.Alibaba’s50%RevenueGuidance

56% 45%–49%

FY16 FY17 FY18E

AlibabaAnnualRevenueGrowth

• Fore-commerceretailers,physicalstoresaremarketingassetsthatsupporttheironlinebusinessmodels.Examplesinclude:

• Amazon

• Bonobos

• Birchbox

• Everlane

• RenttheRunway

• WarbyParker

6.OnlineGoingOffline

Source:Amazon

13 + 67 popups

1 + 1popup

16 + 1 popup

StoresandPop-Ups

StoreCollaborations/Acquisition

61 30 6

PhysicalStores

Source: Company Reports, October 2017

6.OnlineGoingOffline

• OnJune16,AmazonannounceditsplantoacquireWholeFoodsfor$13.7billionincash.

• AmazonclosedtheacquisitiononAugust28,andAmazonelectronicswereavailablethatsameday.

• Amazonreducedpricesasmuchas43%onthedayofcloseandagainonNov.15.

7.AmazonAcquiresWholeFoods

Source:GeekWire

Bonus:WalmartLaunchedtheStoreNo.8Incubator• StoreNo.8isatechnology-startupincubatorinSiliconValleyoperatingunderMarcLore.

• StoreNo.8aimstoidentifychangesthatwillreshapetheretailexperience,includingvirtualreality,autonomousvehicleanddronedeliveryandpersonalizedshopping.

• InAugust,StoreNo.8hiredJenniferFleiss,co-founderofRent-the-Runway,tooverseecodeeight,theincubator’sfirstportfoliocompany.

2018—TheBreakoutYearforAI?

• Inretail,AIcanhelpwithpersonalization,customization andlocalization.

• AIcanhelpretailersanalyzelargevolumesofdatatocomeupwithproductandservicerecommendations.

WhyDoesAIMattertoRetail?

AIMeansPersonalizationandHigherConversion

Source:Alizila.com

Alibaba saw a surge in mobile engagement during the first quarter of 2017 due to AI-powered personalization.

Its shopping app reached 529 million users in June, an increase of 22 million in three months.

6.7 billionPersonalized shopping pages were generated by merchants on Taobao

and Tmall during the 2016 11.11 Shopping Festival

20% higher conversion rate

on personalized landing pages during 11.11 in 2016 compared to non-

personalized ones.

Source:Nvidia

ABitofHistory:AIisNotNew

WhyAIisImportantToday• AIisnotnew,butnowwehavetheabilitytocollectandstorelargeamountsofdatatotrainalgorithmsinacost-efficientway.

• Dataisthekey:moredatabeatbetteralgorithms.

Algorithm

Interface

Action

DisruptiveTechnologiesApproachingaTippingPoint

Source:Gartner

ConversationalInterfaces

SmartRobotics

3DPrinting

2015 2018

% growth 2015-2018

AccordingtoGartner’sCIOsurveys,disruptivetechnologiesareincreasinglygainingadoption. % of Respondents That Have Deployed A Technology

or are in Short-term Planning of Deployment

NewRetailIsPoweredbyAI

Rolling Out O2O Services on Mobile Devices and Social Networks

Pure Plays Opening Experiential Stores

Offering New Pickup OptionsSuch as Click-and-Collect

Using QR Codes In-Store to Encourage Customers to Buy Online; Driving Online Traffic toPhysical Stores

Enhancing Mobile PaymentServices In-Store

Forming Strategic Alliances with Internet Companies to Drive Synergies

NewRetail,aninitiativeadvocatedbyAlibaba,referstotheintegrationofonline,offline,logisticsanddataacrossasinglevaluechain

AIandSingles’Day2017Applications:Alibaba

LanguageProcessing

TmallSmartSelection,anAI-poweredrecommendationalgorithm,helpsbuyersmakedecisionswhilescrollingonline.

CustomerservicechatbotDianXiaomicanunderstandmorethan90%ofcustomerinquiriesandservealmost3.5millionusersaday,accordingtoAlibaba.

UsingdeepQ- networks,Alibabacandeterminethebestfitforproductsinapackage,whichhassaved5%ofoverallpackagingcosts,accordingtothecompany.

DataAnalytics

ThredUpOfferingAI-Powered‘GoodyBoxes’• GoodyBoxes–anon-subscription,nocommitmentboxfilledwithdiscounteditemsforpurchase.

• For$20,thecustomerreceives10–20secondhanditemsandkeepsandreturnsdesireditems.

• StitchFix’smachine-learningalgorithmlearnsthecustomers’tastesandpreferencesovertime.

Source:AdWeek

ThredUP’sGoodyBoxes

KEY TAKEAWAYS:

1. Retail is being disrupted because consumers expectations have evolved: Convenience, Personalization and Speed

2. 2017 produced many eyebrow raising moments including: Store closings, acquisitions, bankruptcies with more to come in 2018

3. AI is at a tipping point, where both new and existing retailers will more readily adopt AI into their business models

SeeDeborahatNRFBIGShow2018inJanuary!

Monday,January15th

THANK YOU!

Deborah Weinswigdeborahweinswig@fung1937.com

José Chanjose@celect.com

Todd Harristodd@celect.com

2017 in review: the retail turning point

Retail

turning point by vatika - abcbuildcon.in › app › webroot...

my turning point

turning point by vatika | vatika turning point

interactive polling in the classroom: turning point cloud...

etg turning point

hr's turning point

(89) turning point

turning artificial intelligence into retail intelligence

turning point parts

indonesian turning-point

dualdiagnosisgoodpracticehandbook turning point

mekong turning point

turning turning point 2020? developing a post-growth

turning point scotland

turning point stalingrad (rules)

turning silver into retail gold - whitepaper

turning point jeopardy

a turning point

turning point-to-asean

10) turning point