robert grossman, repositioning and restructuring retail
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Robert grossman, Repositioning and Restructuring RetailTRANSCRIPT
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Repositioning andRestructuring Retail
The Evolution of the Store and its Impact on Real Estate Strategies
May 9, 2012Rob Grossman, PrincipalDeloitte Consulting LLP
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“If everyone does their shopping online, the malls will closeand we won’t have anywhere to hang out.”
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The Retail Industry is Feeling Pressure from Every Direction
StagnantMacroeconomicEnvironment
Heightened Competition & Lowered Barriers
to Entry
Consumer Behaviors& Lifestyle
Consumer Technology, Price Transparency,
& Secure24/7 Access
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Online Sales Growth Continues toOutpace Traditional Growth
YoY Quarterly Growth: Ecommerce vs. Traditional Retail
‐15%‐10%‐5%0%5%
10%15%20%25%30%
Q1 20
05Q3 20
05Q1 20
06Q3 20
06Q1 20
07Q3 20
07Q1 20
08Q3 20
08Q1 20
09Q3 20
09Q1 20
10Q3 20
10Q1 20
11Q3 20
11
EcommerceBrick and Mortar
Source: U.S. Census (Quarterly Ecommerce reports, Monthly Retail Trade reports)
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Bizrate Insights/Forrester Holiday Shopping Flash Surveys, Q4 2011 (Forrester Research, Inc.)
I shopped online instead of in stores because there were better deals online
I shopped in stores less because I shopped online
instead
72%
59%
During Cyber Week, 2011:
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Ecommerce Sales are ReshapingBrick‐and‐Mortar Economics
$2,400
$2,600
$2,800
$3,000
$3,200
$3,400
$3,600
$3,800
Sales, M
illions
Traditional Retail Sales
Ecommerce – IncrementalEcommerce – Shifted out of Stores
By 2015, it is estimated that $175 billionwill shiftout of storesto online
Source: Multichannel Forecast for the US and the UK. Gartner Oct. 2011 (US sales numbers only), Deloitte Analysis
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Translating Sales Into Square Footage
Consider revenue numbers and growth rates for traditional and ecommerce
Determine physical footprint and Sales/Square Foot metrics Forecast growth of all channels based on projected trends
and current performance Estimate the sales ‘shift’ from the store to online, and
translate into square footage
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Some Retailers Have Already Begun Reacting to the Shift
Source: Company 10k reports (U.S. Stores only)
% Change in Average Physical Store Square Footage 2002 ‐ 2011
‐20%
‐15%
‐10%
‐5%
0%
5%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
% Cha
nge (Year‐over‐Year)
Kohl’s
Home Depot
Best Buy
J.CrewNieman Marcus
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Lower In‐Store Sales Warrant a Reduction in Square Footage
Excess square footage by 2015,Department Stores
Excess square footage by 2015,Specialty Retail
Source: Company 10k reports, InternetRetailer.com, Deloitte analysis
5‐25%10‐45%
Variation in range depends on retailer’smultichannel maturity
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Smaller Stores, Fewer Stores, or Both?The considerations are complex
The Customer
Each retailer must weigh its own situation and objectives
The Competition
Advertising
Logistics Economics
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Implications for Retailers
Existing Stores:
Future Stores:
Reimagine and Repurpose‐ “Show‐rooming” & showcasing‐ New services & customized experience‐ Stores‐within‐a‐store
Reduce and Reinvent‐ Understand implications of ecommerce sales on square footage
‐ Consider smaller stores, fewer stores‐ Focus on the customer experience
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“Show‐rooming” & Showcasing
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New Services & Customized Experience
(Irfan Khan/Los Angeles Times/MCT)
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Store within a Store
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As retail sales continue to shift out of stores, retailers will increasingly need to re‐evaluate their real estate strategy:
• Recognize and repurpose surplus square footage
• Evolve the physical store to deliver a superior customer experience
• Reimagine new stores in terms of size and density
Summary
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For Additional Informationor to Discuss Further:
Deloitte Consulting LLP1633 Broadway
New York, NY 10019
Tel: +1 212 492 [email protected]
Rob Grossman
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Q&A