Introduction to VIRTUAL RETAIL and E.L.S.E., by ELSE Corp

Exclusive Luxury Shopping Experience
Introduction to “Virtual Retail”
© 2016 ELSE Corp S.r.l. 1

© 2016 ELSE Corp S.r.l.
Index
2
• Market Scenario
• Customer Scenario
• Luxury 3.0: Tailoring + Technology + Speed
• An Opportunity for a New Retail Model

Virtual retail will fade
the barrier between
the digital and
physical world, using
Technology as an
experience enhancer
for products and
services.
The Impact of Virtual Retail
3

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GENERAL SCENARIO: MARKET

Now
25% are
willing to pay
a premium
price (+20%)
(Deloitte, 2015)
45% spend
money on
personalization
(Forrester, 2015)
45% are
comfortable
waiting longer to
get a personalized
product
(Deloitte, 2015)
“By 2020, 15% of the clothing Americans buy will be
customised. That is $35 Bn worth in sales in apparel alone.”
Merjin Helle
VP SAP America
The Future
“Hyper-personalisation has started to grow in 2015 and
will become a more important part of the customer
experience over the next couple of years”
Craig Cannon
IBM Business
Development Manager
Luxury Products Customisation: Now and the Future
5

“For the next 5 years, I do not see many things happening. In 30/50 years you will be measured by a body scanner,
the measurements will be sent to a production facility completely run by computers, the suit will be assembled
without any human touch and then it will be sent back for trial. The client will try it on and the suit will be loosen or
tighten where the client feels it. The suit will be made using nanotechnology that when connected with the client
brain will alter itself without any human intervention. Probably the person that will assist you in store will be just a
facilitator totally unaware of fashion trends because, for them, you will look at styles and ideas just from famous
bloggers on the social media platforms.”
Giovanni Luigi Bordone - SCABAL Brand Ambassador
E.L.S.E. is working to reach this scenario many
years before this prediction:
Made to Measure in 5 to 50 Years
6

RETAIL
Luxury brands preferred to steer
away from technology, fearing it
synonymous with mass media, and
t h e r e f o r e m a s s - m a r k e t
communication and perception.
Luxury brands are acknowledging
the role that social media and
a d v a n c e d , s e n s o r y - l e d
technologies play in consumers’
everyday lives, and adapting them
to their own purposes with a smart,
upscale twist.
PAST PRESENT
Retail is Changing
7

Brands were sticking to traditional
ways of manufacturing, based on
old technologies and seasonal
collections.
B r a n d s a r e a p p l y i n g n e w
technologies into a traditional
scheme, trying to insert Limited
Edition Collections.
PAST PRESENT
MANUFACTURING
Manufacturing is Changing
8

C u s t o m e r s w e r e a b l e t o
experience shopping in a physical
store, and they could only buy
existing products from the stock.
The shopping experience is
extended in both, off-line and on-
line channels. Brands recognize
the importance of using digital
technology in-store to make the
shopping experience more
appealing.
PAST PRESENT
SHOPPING
EXPERIENCE
The Shopping Experience is Changing
9

Personalisation was largely the
preserve of luxury brands,
involving monogram products or
observing an item being ﬁnished
in-store.
Brands cater to consumers’
growing desire for individualism
and personal creative expression
with customization zones and
participatory concepts.
PAST PRESENT
PERSONALISATION
EXPERIENCE
The Personalisation Experience is Changing
10

The customer’s measurements are
taken by a tailor, then a pattern is
selected and altered to match the
customer’s measures.
The customer’s measurements are
taken by a MTM retailer (on-line or
physically), then a pattern is
altered to match customer’s
measures and style specs.
PAST PRESENT
MTM & MTO
MTM & MTO is Changing
11

Manufacturing: Technology will play an essential
role, becoming fundamental in the Industrial Made to
Measure processes to provide hyper - personalized
products.
Customers: Consumer - creators become an integral
part of the design process and are able to co - author
personalized products; stores and on - line platforms
function as studios and labs.
Shopping Experience: Brands will deliver tailored
products and services, taking the approach of
Technology as an experience enhancer.
Retail: Virtual retail will play an essential role in omni
& consumer relevancy channels, fading the barrier
between the digital and physical world.
Luxury 3.0 + Virtual Retail Business Model
12

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GENERAL SCENARIO: CUSTOMER

The new
definition of luxury
doesn’t eliminate
class and style, but
does require absolute
uniqueness & deeper
experiences.
The New Luxury Consumer
14

Types of Millennial Shoppers (RCE, 2016)
15
Social
Shopper
The Bargain
Hunter
Elite
Shopper
Impulse
Buyer
Frugal
Fannie
Around 50% fo consumers are influenced by friends and
family when making a purchasing decision.
7.4% of consumers are more likely to buy from retailer’s
site when they get a discount code.
47.6% feel more valued when the retailer rewards them
with loyalty points.
Almost 50% of consumers have made a purchase based
on “Suggested Items”.
37.2% are motivated to shop when they need something.

25% are willing
to pay a
premium price
(+20%)
(Deloitte, 2015)
45% spend
money on
personalization
(Forrester, 2015)
45% are
comfortable
waiting longer to
get a
personalized
product
(Deloitte, 2015)
216% more
likely to be
influenced by in -
store deeper
experiences
(Honigman, 2013)
Trends: Millennials / HENRYs
16

Tailored
Products &
Services
Deeper
Experiences
Products
Delivered on
the Right Time
TAILORING TECHNOLOGY SPEED
What do They Want?
17

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LUXURY 3.0: TAILORING + TECHNOLOGY + SPEED

Target
Positioning
Purpose
Value
Shopping
Form
Shopping
Influence
Added
Value
Approach
HNWI
Exclusive
Acquiring
Brand
Spontaneous
In - Store
Tailored Product
Product Based
Omni - Channel + Commerce Relevancy
Tech as an experience enhancer
Tailored Product + Tech + Time Efficiency
Considered
Back - Story
Experience
Unique
HENRY
Luxury 3.0Luxury
Luxury & Luxury 3.0
19

VirtualDigital
Digital Platform
Browsing
Unidirectional
Multi - Channel
Best Price
Seasonal Collections
Product from Stock in 1 Size
Virtual Platform
Interacting
Multidirectional
Omni - Channel + Commerce Relevancy
Best Products
Capsule Collections
MTO + MTM Product
E.L.S.E provides brands with a new solution, taking them from a traditional e-
Commerce model to a cross-platform, virtual commerce solution that they
can integrate into any environment to sell personalised capsule collections
From Digital to Virtual
20

Famous Luxury Brands
Fashion Companies &
Emerging Designers
Fast, Affordable & Trendy
Allows experimentation
Best product at a competitive price
Production comes after payment
M
T
O
Prevent retail costs
Increases brand awareness
Boosts brand’s dynamism
Attracts new customers without
compromising brand’s exclusivity
Increments online competitiveness
with price - oriented customers
M
T
O
M
T
M
+
MTO & MTM + Luxury 3.0: The Advantages
21

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BEYOND THE 1ST PURCHASE

Loyalty Impact
Beyond the First Purchase (1)
23
Loyalty programs are used out of an
average of 11.3.7.3
Modify spending habits to maximize
points.63%
Are more likely to recommend brands
with good loyalty programs.66%
RCE, 2016.

24
Demographic Differences
Times, millennials are more likely to pay a
premium price if they earn loyalty points.1.5
Of millennials don’t mind product
recommendations based on purchase
history, compared with 30% of boomers.
44%
Millennials value special services
compared with boomers.
+
RCE, 2016.

25
RCE, 2016.
Rewards &
Redemption
Times as likely to defect
loyalty programs, the
“non - redeemers”.
2
Credit card programs can
benefit from retail and
online points redemption.+
Of members have never
redeemed anything.+25%
Program
Satisfaction
Program satisfaction is
steady from last year.
2015/16
Thinks their program fits
their brand expectations.23%

26
Mobile as a Big Advantage
Want to interact with the brand via
mobile device.
Don’t know if a brand mobile app
exists.+50%
Consumers are interested in mobile to
check point balances, read emails, find
a store and redeem rewards.
RCE, 2016.
44%
+

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COUNTERFEIT PRODUCTS: A HARM TO ECONOMY

3.3% 1.9% 1.6% 1.2%
0.6% 0.5% 0.4% 0.4%
China
Turkey Singapore Thailand India
Morocco U. A. E. Pakistan Egypt
Top Origin Economies of Fakes
28
Hong Kong
63.2%
21.3% 5.6%
Rest of the
World
Data: Trade in Counterfeit and Pirated Goods

€17
Billion
363 000 518 281
€8.1
Billion
Lost Sales Revenue
Lost in the
Sector
Revenue
Lost in
Related
Sectors
Direct Jobs
Lost
Direct &
Indirect
Jobs Lost
Government
Revenue
Lost
(contributions & taxes)
€26.3
Billion
9.7%
Data: Office for Harmonization in the Internal Market
Counterfeiting Effects in Europe
29

The Damage in Economy
30
ITALY IS THE
MOST AFFECTED
EUROPEAN
COUNTRY

70% OF TEXTILES
USED IN ITALIAN
FASHION IS MADE
INTERNALLY,
AFFECTING 81,000
JOBS
Effects in Related Industries
31

5 Billion
4.5 Billion
4 Billion
3.9 Billion
3.8 Billion
Italy
Spain
United Kingdom
Germany
France
Lost Sales in Numbers
32

96% OF
CHINESE SHOPPERS
ARE CONCERNED
THAT PRODUCTS THEY
BUY ONLINE MAY BE
COUNTERFEIT.
Effects in Online Sales
33
Data: J. Walter Thompson Intelligence

An Opportunity for a New Retail Model

INDUSTRIAL “MADE TO MEASURE” MADE SIMPLE
E.L.S.E. as a Concept
35

Initial Payment
Virtual Fitting & Cross Sale
Final Payment Product Finalisation
for initial
manufacturing
%
for tailored
manufacturing
%
€
Measures & Information of 3D Avatar
Model: #98457
Customer: A. G.
Size: 38 Regular
Adjust: Points X, Y, T, Z for MTM
Virtual Tailoring & Manufacturing
MTM & Customisation1
3
5
2
4
6
Virtual Retail Service Delivery Model
36

Fashion Brand’s
Capsule Collection
Brand’s
Customers
SaaS platform as a
bespoke services
automation for fashion &
luxury brands
E.L.S.E. Direct to Consumer Service Delivery Model
37

3D Design Strategic Marketing
Technical Support Smart Prototyping
Value Added Service
38

B2BB2C
Traditional Response
- Store closing
- Geo presence revision
- New processes
Sales Tools & Technology
- Window displays
- On - line store
- 3D Body Scanners
- 3D Printers
- Interactive tailoring mirror
- Holograms
- Virtual Consoles
- In - Store E - Commerce
- CRM Systems
Current Scenario
- Slowdown in openings
- Physical stores are not rentable
- Decline in sales
- Less sales in mature markets
- Slow stock rotation (in some products)
Current Trends
- 45% of shoppers spend money on
personalization
- 25% of consumers are willing to pay a
premium price (+20%)
- 45% are comfortable waiting longer to get a
personalized product
- Millennials are 216% more likely to be
inﬂuenced by in-store touch screen
displays
Tech Integration
Luxury 3.0 & E.L.S.E.
39

Each Virtual Capsule collection is comprised of a selection of items that follow
the theme or mood of the collection. Each product within the v.c.c. is made up
of elements, and each element has it’s own set of possible configurations.
Basic Product Customization Logic
40

Brand Input for V-Retail: Shoe (example)
41

Everyday Luxury
Affordable Luxury
Accessible Core
Premium Core
Superpremium
Ultra
High
End
Democratic Fashion Brands
Bespoke
Industrial
INDUSTRIAL
MADE TO
ORDER
Margin
Volume
SmartBrands
Ideal Fashion Brand Types for Virtual Retail
42

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KNOW MORE ABOUT

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Thank You!
Andrey Golub, Co - Founder & C.E.O.
a.golub@else-corp.it

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Disclaimer
Brands’ logos inserted in this presentation belong to their respective owners and ELSE Corp
Srl does not claim rights over them.
Data and information provided in this presentation belong to public sources of digital
access. ELSE Corp Srl has no responsibility for the accuracy of these sources.
The pictures that are on this document are copyrighted to their personal owners. The credit
is to the owner and in no way we are claiming the right to these photos.
The pictures are taken from URL’s on the web and believed to be public.

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Introduction to VIRTUAL RETAIL and E.L.S.E., by ELSE Corp