retailoasis 'big breakfast' presentation

BIG BREAKFAST BRIEFING

#retailoasis

TITLE

NRF: BIG SHOW

#retailoasis

CHALLENGE YOUR THINKING ON THE FUTURE OF RETAIL

#retailoasis

Pippa Anna Mark DJ

4 ‘TOURISTS’ VIEWS:

Customer Investor Retailer Technology

BIG BREAKFAST: customer

#retailoasis

long live millennials

mobile #1 AI #2

experience is

everything

tell don’t sell

this year, millennials (gen Y) will surpass Baby Boomers as the largest living generation

source: Pew Centre

by 2020 Gen Y + Gen Z will be the dominant retail segments in dollars spent

Management Team* average age

the gap between management and consumer is growing

Source: Fortune * based on age of CEO taking office; ABS 2014

50 yo 34 yo customers

average age

16 years

added to this are two very important shifts their generation will bring:

blended society female leadership

2050: US will be a majority non-

Caucasian (Australia will

be similar)

2030: there will be

more female millionaires than male

’75% of millennials consider the store the centrepiece of their experience….they may

not come in as much as they use to, but they will be more knowledgeable when

they come in’

Myron Ullman, ex-Chairman +CEO J.C Penney

the physical store needs a new definition:

what this means:

business must shift it’s mindset

to meet the millennial

embrace diversity -

cultural and gender

businesses need to act like their digitally native

mobile #1. AI #2

‘channels are a language retailers speak to justify what they’re spending on IT.

it’s not understood by the customer’

Sir Charlie Mayfield, Chairman, John Lewis Partnership

millennials check their phones three times more than any other generation

shift in customer behaviour:

Source: Sam’s Club

under armour: largest mobile fitness community

160m users

150K downloads

a day

my fitness pal

endomondo

map my fitness

health box

it starts with mobile and now it’s AI

nearly $2B in sales will happen this year through a mobile digital assistant (like Siri, or Watson).

TITLE insert text here

what this means:

mobile first, play with AI

don’t be afraid to ‘buy’ talent

the real cost is in delaying (not doing)

experience is everything

‘if people are going to go to the store, you need to make it worth it’

Sir Charlie Mayfield, Chairman,John Lewis Partnership

the store is not just about procuring product – you can do that online.

it’s about experience, and people will pay for

experience.

TITLE 3x 1 jeans

3x1 - soho

TITLE the laundress

the laundress - soho

abc home - flatiron

TITLE lululemon flagship

lululemon - flatiron

kit & ace - nolita

what this means:

experience is your obligation

at store

it’s brand building if done

well

a product isn’t enough to get

traffic

tell don’t sell

we are marketing machines. we now when we’re being sold to and we don’t like it.

plus, millennials are more informed, more connected and way more skeptical - all thanks to tech.

they don’t care about your shareholders - they see themselves as the most important part of

the equation

the facts

your authenticity commands their

respect. tell them your story, make it human -

not corporate.

they want to buy into what you’re

doing for the world - make it better (not

generate a sale)

story spiritual stakeholders

‘we dreamt of making high quality Italian food available around the world – eat, shop and learn about the Dolce Vita’

Oscar Farinetti, Founder, Eataly


soul cycle

"it is the place people come, regardless of their age, athletic ability, size, shape,

profession or personality, to connect with their best selves."

shinola - tribeca

TITLE insert text here ‘our purpose was to create jobs for people

- not product’

“the purpose of business is to improve the community - it’s not a monolithic opportunity

where there’s a transaction and you made money -

understand the importance in the long-term of being an important part of the world. “

Myron Ullman, ex-Chairman +CEO J.C Penney

what this means:

work with stakeholders as important as shareholders

lead with purpose - why do you exist?

treat your customer like a human - with

heart


mobile #1 AI #2

experience is

everything

tell don’t sell

“we’re dealing with business models that aren’t as efficient as they use to be..

it’s not what the change is; but how do you change continuously”

Sir Charlie Mayfield, Chairman, John Lewis Partnership

BIG BREAKFAST: investor

#retailoasis

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THE FUTURE OF RETAIL Through the eyes of an investor


BESEN – Who are we?

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DANIEL BESEN ANDREW POST

ANNA ELLIS JOE TACK

THIS IS WHAT WE LOOK FOR IN A RETAIL BUSINESSES NOW

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•  Profitable

•  A passionate entrepreneur or founder with a vision to grow

•  A unique or differentiated product, service or business model that consumers love and / or a sustainable competitive advantage

•  Growth potential

PAST EXAMPLES:

WHERE DOES BESEN THINK THE PITCH WILL BE IN 3 YEARS?

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Retail businesses in the future will need:

1.  To answer the question WHY not just WHAT

2.  To respond to “the age of the consumer”

3.  To have one strategy which covers physical and digital

1. BUSINESSES IN THE FUTURE WILL NEED TO ANSWER THE QUESTION WHY NOT JUST WHAT It is no longer enough to have a great product or service… Why should the consumer buy it? We will be looking for businesses that:

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1.  Stand for something

2.  Enhance value to the consumer

3.  Have provenance or an authentic story

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BUSINESSES THAT STAND FOR SOMETHING

SHINOLA TOMS

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BUSINESSES THAT ENHANCE VALUE TO THE CONSUMER

With an innovative or disruptive business model…

WARBY PARKER

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BUSINESSES THAT HAVE PROVENANCE OR AN AUTHENTIC STORY Mast Brothers Chocolate “bean to bar” concept

MAST BROTHERS CHOCOLATE


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1. To answer the question why not just what

2. To respond to “the age of the consumer”

3. To have one strategy which covers physical and digital


2. BUSINESSES IN THE FUTURE WILL NEED TO RESPOND TO THE AGE OF THE CONSUMER Consumers today:

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•  Are more connected than ever before

•  Care more about experiences than things

•  Want to be part of a community in-store and online

Let’s have a closer look at each of these and what they mean for what BESEN will be looking for from businesses in the future…

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CONSUMERS ARE MORE CONNECTED THAN EVER BEFORE

•  Online has long been a cost of entry but mobile enabled is next

•  Businesses need to be social – no longer an add-on but a necessity, part of the DNA of a business


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CONSUMERS CARE MORE ABOUT EXPERIENCES THAN THINGS

•  We have known for some times that affluent Australians rate enjoying experiences above acquiring material goods – this is translating to retail

•  We like retailers that provide in-store experiences that give consumers a reason to get off the couch and shop

MAST BROTHERS Chocolate factory and taste testing


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CONSUMERS WANT TO BE PART OF A COMMUNITY IN-STORE AND ONLINE

•  Being part of a community makes consumers happy – why do we think this is important for retail businesses?

1.  It costs 5x as much to acquire than keep a customer

2.  The #1 influencer of purchases is recommendations

3.  Community engagement can increase revenue by up to 25%

•  In New York in-store communal spaces such as lounges, coffee shops and free wi-fi are the norm rather than the exception

LULULEMON NYC CONCEPT STORE NIKE + RUN CLUB AUSTRALIA



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1.  To answer the question why not just what

2.  To respond to “the age of the consumer”

3.  To have one strategy which covers physical and digital


3. BUSINESSES IN THE FUTURE WILL NEED ONE STRATEGY WHICH COVERS PHYSICAL AND DIGITAL

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1.  When it comes to bricks or clicks, the choice is both

2.  Physical stores are no longer one size fits all

3.  A seamless consumer experience across all channels


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WHEN IT COMES TO BRICKS OR CLICKS – THE CHOICE IS BOTH

The death of retail was overstated…

• We are not saying that online only retailers will not be successful, there are many businesses where a purely online strategy is the best one

• What we are saying is that we don’t believe it is bricks OR clicks – the physical and digital are complimentary

• Online retailers are opening physical stores because retail flagships are driving online sales

MICROSOFT


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PHYSICAL STORES ARE NO LONGER ONE SIZE FITS ALL •  Different store concepts and formats are required for different consumer markets – we like businesses that

are innovative in adapting their footprint, offer and location

•  Lowe’s – a traditional big box home improvement retailer adapting their model to the city market “Lowe’s urban stores”

•  Murray’s Cheese Shop – a NYC institution that has rolled out 350 store-in-store concepts in supermarkets across the US

LOWE’S MURRAY’S CHEESE SHOP


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A SEAMLESS CONSUMER EXPERIENCE ACROSS ALL CHANNELS

•  The physical and digital need to connect and the consumer needs to be able to move seamlessly between all channels

•  We think UK retailer John Lewis is a great example of how a seamless customer experience should look over the few years

–  80% of customers shop across both channels –  75% of all John Lewis transactions comprise some component of online and in-store (i.e. browsing

on mobile then purchasing in-store) –  40% of John Lewis sales are online –  Delivery options include next day, click and collect and commute and collect

JOHN LEWIS

AS AN INVESTOR I LOOK FORWARD TO SEEING HOW AUSTRALIAN RETAIL BUSINESSES RESPOND…

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BIG BREAKFAST: retailer

#retailoasis

TITLE insert text here Digital Trends: Transforming Retail

MarkTepersonDirector Mul5channel

RCG Corp Ltd


A"tude towards change Two truths, one mantra

‘Without passion, we are just unfulfilled poten9al’

‘The relentless pursuit of excellence’

5 Key Themes Today

1.  Technology@Retail2.  Challengingthestorenetwork3.  Organisa:onalchange4.  Intersec:onofcontent&commerce5.  Customerloyalty(community)

TITLE insert text here THE FUTURE IS HERE.

It’s just not evenly distributed yet


Three Key Ques+ons That should drive technology @ retail

1.  Whatistheunmetneedoftheconsumer?

2.  Howcantechnologymeaningfullysolvethisunmetneedorenhancetheexperienceforaconsumer?

3.  Istheexperiencecontextuallyrelevant?


Large mirrored panel at the front of the store, where customers can; §  Browse the latest looks §  Shows ‘what to wear it with’ §  Select items to be brought to

change room

Does this meaningfully enhance the consumers experience? Is it contextually relevant?


Beacons automa,cally iden,fy product placed in change room §  Shows ‘what to wear it with’ §  Select alternate size to be

brought to change room §  Change ligh,ng to reflect

different se@ngs (night, day, club)

§  Order beverages §  Complete checkout; or §  Add items to your app

automa,cally so you can purchase later

TITLE insert text here Follow the customer

& you will never have to look for growth


DepartmentStore:Inves0ngheavilyinstoreexperienceanddigitalcommercetofuelgrowth. Origina(ng with first store in mid 1800’s in Oxford Street, London. Today it has 45 stores in the UK. In 2015, 40% of John Lewis total revenue (£1.5bn) was generated through online channels.


PurePlay:Inves.nginretail‘Guideshops’Holdsnophysicalinventoryin-store.OnlyTRYONsizes. Try it on before you buy at one of their Guideshops. No crowds. One-on-One service. Exactly what you want, delivered right to your door.

\

SpecialtyRetail:Reducingthetradi3onalstorefootprint.Leveragingdistribu3onnetworksandcentralisedinventory. Holds no physical inventory in-store. Only TRYON pairs. Shop in store: FREE overnight shipping Shop Online: Free ground shipping

Why is this important for retailers?

Improveinventoryefficiency(Centralizeinventory)ReducemarkdownsReduceretailfootprint(size&numberofstores)IncreaseinvestmentinstoreexperienceLeveragedigitalchannelstoextendreachofyourmarket

Strategy ImpactReducemarkdowns

ImprovemarginsReducepremiumrentals&eliminateunprofitablestoresGrowconsumerengagement&salesGrowsales&profits


Does your organisa-on have the capability to change?


Capability Pla+orm Talent§  Specialistexper/se§  Transforma/onalexper/se§  Vision&Ownership

Culture§  Execu/veleadership&commitment§  Collabora/on&partnership§  SharedKPIs,Incen/ves&Goals§  Customerleaddecisions(datadriven)

Structure§  Dedicatedinternalresources§  Sharedresponsibili/esandorchestratedhandoff’s§  Crossdisciplineteams,doHedlines&hybridroles


The new, non-linear purchase journey !

The journey is now !

DynamicThe journey is more!

InfluencedThe journey is!

Continuous


Content

Commerce

Contextually relevant content is driving commerce

BREAKIT

DOWN

MobileApps

Tablet/DesktopRetailSocialEmailBlog

ChannelsBrowseResearchInspira0onConsidera0onPurchasePostPurchaseReturnsRewardsAdvocacy

Behaviours


Customer Loyalty Trends

Content

Commerce

Community

•Inaclu)eredmarketvalueexchangeismoreimportantthaneverbefore

•Personalisa9onisaHygieneFactor

•Shi/fromproductcyclestoconsumerlifecycleengagement

•Nothowloyalyouaretous.Itishowloyalwearetoyou

•MembershipSpectrum(SAPS:StatusAccessPowerStuff)

•Kudoseconomy


Follow the customer withtherelentlesspursuitofexcellence

& you will never have to look for growth

BIG BREAKFAST: technology

#retailoasis

DATE CLIENTPRESENTATION HEADINGD-J Aquilina insert insert

THE BEST OF CES

BIGGEST SHOW EVER 250,000 sqft

170,000 vistors

AUTOMOTIVE ANNOUNCEMENTS : ‘RETURN OF THE BUS’

4k Content

Smart Tv IOT1

2

TVs

VR GETS REAL

NATIVE TECH

AUGMENTED LIFE

VIRTUAL TRAINER

IMPLICATIONS

• The first new medium of the 21st Century is here - virtual reality. Develop content with VR in mind

• New tech and scale need not be estranged. Use native thinking to bring IoT to the masses

• Text→Image→Audio→Video→3D→AR→VR (content’s inevitable march from static to fully immersive continues)

• Gamification of activities brings passion points to life - reward consumers for engagement.

BIG BREAKFAST BRIEFING

#retailoasis

TITLE CONSUMER FIRST

IS THE KEY MESSAGE

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FOOD FOR THOUGHT, AND THEN ACTION.

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JOIN US IN NYC 2017 JAN 11-18TH

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Q&A

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THANK YOU

#retailoasis www.retailoasis.com

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