Retail Environment: US Retail Revolution
1. Retail Revolution Is Happening: Store Openings and Closures
2. All-Channel Universe Will Require Adaptation
Top 8 Global Retail Trends
1. Corporate Innovation Is the New R&D
2. Store as a Platform
3. Wellness as the New Luxury
4. Consumers Want to Be Part of a Community
5. Personalization and Customization
6. Resale Is Thriving While Retail Is Struggling
7. Demographics Suggest Opportunity in Plus-Size Apparel
8. Silver Economy: Aging Population Will Impact Retail
5. #TheDisruptors 5
The Judges
Kathryn Cavanaugh
Partner, Grace Beauty Capital
Jason Rabin
President, North America & Global
Chief Merchandising Officer
Global Brands Group
Julie Vargas
Director, Product Management,
Digital Solutions
Avery Dennison
6. #TheDisruptors 6
About The Startup Pitch Competition
Each company will have
4 minutes to present, followed by a
2-minutes Q&A session.
The startup with the best pitch
will receive a $2,500 cash prize from
Avery Dennison.
7. #TheDisruptors 7
Judging Criteria
Does it address a big problem or area of opportunity?
(5 = Yes, 1 = No)
Feasibility of the business model
(5 = High Chance Of Success, 1 = Low Chance Of Success)
Ability to scale across multiple categories or segments
(5 = high ability, 1 = limited ability)
Would you invest?
Confidence in the founder/team to execute
(5 = High Confidence, 1= Limited Confidence)
1.
2.
3.
4.
5.
(5 = Yes, 1 = No)
9. #TheDisruptors 9
Agenda
Retail Environment: US Retail Revolution
1. Retail Revolution Is Happening: Store Openings
and Closures
2. All-Channel Universe Will Require Adaptation
Top 8 Global Retail Trends
1. Corporate Innovation Is the New R&D
2. Store as a Platform
3. Wellness as the New Luxury
4. Consumers Want to Be Part of a Community
5. Personalization and Customization
6. Resale Is Thriving While Retail Is Struggling
7. Demographics Suggest Opportunity in Plus-Size Apparel
8. Silver Economy: Aging Population Will Impact Retail
11. #TheDisruptors 11
1. Retail Revolution Is Happening: Store Openings and Closures
The majority of retailers closing stores
are within the department store and
specialty retail sectors.
• Declining mall traffic
• Sales shifting online
• Cutting losses from unprofitable stores
Store closures continue to exceed store openings.
Major US Store Closing Announcements
Year to Date 2017
*Reported by Bloomberg; **Part of the 100-store closure announcement made in 2016
Source: Bloomberg/company reports/Fung Global Retail & Technology
Total: 3,310 announced
store closings
Up 98% year over year
23
32
44
48
50
60
68
68
70
70
101
110
120
138
160
160
170
171
187
190
220
250
400
400
0 50 100 150 200 250 300 350 400 450 500
Ralph Lauren
Gander Mountain
Lucy Activewear
Eastern Outfitters
Chico's
Guess
MC Sports
Macy's**
CVS
Staples
Gordmans Stores
American Apparel
BCBG
JC Penney
Sears and Kmart
Crocs Inc.
Bebe Stores*
Wet Seal
RadioShack
GameStop
hhgregg
The Limited
Payless Inc.
Rue 21
12. #TheDisruptors 12
1. Retail Revolution Is Happening, but Opportunities Still Exist
• Retailers offering value-driven concepts
such as discount and fast fashion have
been aggressive in expanding their store
footprints
• Categories such as beauty and athleisure
are outperforming the market
US major store openings favor dollars stores and off-price retailers.
Year-to-Date 2017 Major US Store Opening
Announcements
*Fung Global Retail & Technology estimates; **Net store openings; ***Includes new, expanded and relocated stores
Source: Company reports/Fung Global Retail & Technology
Total: 2,483 announced
store openings
Up 16% year over year
17
24
30
52
59
60
90
100
100
111
130
650
1,000
0 200 400 600 800 1,000 1,200
Nordstrom
Costco
Target
Dick's Sporting Goods
Walmart***
H&M
Ross Stores
Lidl
Ulta
TJX**
Aldi*
Dollar Tree
Dollar General
13. #TheDisruptors 13
2. All-Channel Universe Will Require Adaptation
Order From Fulfilled By Where Received
Home
Elsewhere
Your Store
Different Store
Mobile
Direct DC
Store DC
Your Store
Different Store
Vendor
Home
Elsewhere
Your Store
Different Store
Source: Hudson’s Bay Company
Retailers should view the shopping experience as their customers do; as one all-
encompassing experience, not separate channels and devices.
15. #TheDisruptors 15
1. Corporate Innovation Is the New R&D
How is corporate innovation changing?
• Greater willingness to expand R&D efforts beyond
traditional in-house teams
• Desire for an open and collaborative environment in a
major tech hubs
• Partnering with startups and ecosystem players rather
than simply gaining access to technology
• New innovation formats: corporate accelerator
programs, in-house innovation labs, university
residences, innovation outputs and investments arms
Retailers and Brands are showing growing interest in investing in formal innovation
teams or dedicated innovation centers.
Number of Corporate Innovation Hubs Opened
Jul 2015–Oct 2016
301
368
456
July 2015 February 2016 October 2016
+22.3%
+23.9%
Source: Fahrenheit 212/Altimeter
16. #TheDisruptors 16
1. Corporate Innovation Is the New R&D and Is Spreading Across the Globe
The Israel tech startup scene is booming:
• More than $4.8 billion was invested in Israeli high-
tech startups in 2016—more than in Silicon Valley
• Due to disruption from Amazon, retail technology is
one of the greatest areas of focus for the country
• The growing Israeli startup ecosystem is driven by
investments from Alibaba, Walmart and others, and
by tax breaks from the government
Asia is emerging as a top innovation hub:
• Singapore, Bangalore, Shanghai, Tokyo
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
0
10
50
20
30
40
Israeli VCs Foreign Investors
Source: OurCrowd Global Investor Summit Presentation
Retail Tech Investment Up 120% vs. 2013
(USD Hundred Mil.)
17. #TheDisruptors 17
2. Store as a Platform
• Retailers serve as a potential hub for customers to one-stop shop for products and services.
• Similar to WeChat, retailers’ mobile apps can provide customers with one-stop shopping for all of their needs. A
platform or app can redirect shopper traffic back to the retailer’s store and attract different shoppers with
loyalty rewards, games and personalized services.
1. Shopping
2. Clothing Storage 3. Dry Cleaning
4. Haircut
5. Shave6. Teeth-Whitening
18. #TheDisruptors 18
2. Store as a Platform
Implement buy online, pick up in-store:
• Walmart’s Pickup Discount Program encourages shoppers to
pick up items at a local stores to receive discounts
• Shoppers can save 3%–5%, while Walmart lowers its last-mile
logistics costs and drives traffic to stores
Add services to the store:
• PetSmart offers grooming salons, training classes, dog day
care, petMD and more
Incentivize in-store check-ins and engagement:
• Target’s Cartwheel app sends users information about deals
at local Targets and in-store coupons, and lets them search
for current discounts
Retailers and brands can leverage online and in-store services to drive traffic to stores.
Source: PetSmart.com
Source: Target.com
Source: Fierceretail.com
19. #TheDisruptors 19
3. Wellness as the New Luxury
• Consumers are increasingly spending on products and services related to healthy living , including
exercise, sleeping, devices and apparel
• Healthy living and self-improvement are increasingly becoming status symbols
Consumers are placing more value on health and wellness than on “things.”
Rebecca Minkoff ‘s smart bracelet HelloFresh’s healthy food delivery
service
Under Armour’s Athlete Recovery
Sleepwear
Source: HelloFresh.com Source: UnderArmour.comSource: RebeccaMinkoff.com
20. #TheDisruptors 20
3. Wellness as the New Luxury
A number of brands and luxury department stores are turning parts of their stores into gyms:
Selfridges launched a six-week pop-up workout studio along with a clean-eating wellness destination
Lane Crawford launched The Fit Room, where it hosts yoga and fitness classes
Mexican department store El Palacio de Hierro is offering workout experiences and healthy food options
Cycle Pop-up Studio Selfridges, LondonYoga Classes at The Fit Room at Lane
Crawford, Hong Kong
Nike’s 45 Grand Workout Space, NYC
Global retailers are launching dedicated athleisure and wellness spaces.
21. #TheDisruptors 21
4. Consumers Want to Be Part of a Community
Consumers want to be connected to others with whom they have something in common.
CrossFit has created a rigorous fitness
training program. It has gyms in 142
countries across seven continents. It is a
lifestyle that includes certifications, diet
guidelines, training workouts of the day
and competitions.
Peloton is a live-streaming, interactive
fitness platform that uses commercial-
grade cycles. It is found in hotels,
universities, offices, gyms and healthcare
facilities.
Under Armour has established a fitness
community of more than 165 million
members, who can share workouts and
goals and receive curated workouts.
Source: Peloton.comSource: Underarmour.comSource: crossfit.com
Brands such as CrossFit, Under Armour and Peloton have created a very high level of brand loyalty by establishing
communities in which members jokingly agree they have a “cultlike” interest
22. #TheDisruptors 22
4. Consumers Want to Be Part of a Community
Retailers are aiming to create a store with a bigger purpose.
Apple announced plans to launch dozens of
new educational sessions in all 495 of its
stores; topics range from photo and video
to music, coding, art and design, and more.
The sessions are called “Today at Apple.”
Vitamin Shoppe is revamping existing
stores as “wellness locations” with in-store
beverage bars, open spaces to gather,
sampling counters and health enthusiasts
on-site.
Source: Vitaminshoppe.comSource: Apple.com
Retailers and brands such as Apple, Vitamin Shoppe and Starbucks are establishing communities by offering unique
in-store experiences and services where customers can connect with one another and experience the product.
The Starbucks loyalty program, Starbucks
Rewards, continues to drive loyalty with
incentives and to build relationships with the
Starbucks community.
Source: Starbucks.com
23. #TheDisruptors 23
4. Consumers Want to Be Part of a Community
Festivals are a way for brands to connect with consumers and build a community of followers.
Sweetgreen, a “destination for simple,
seasonal, healthy food,” launched its
Sweetlife Festival in 2009 as an annual
celebration of music, food and community.
Hunter is participating at music festivals to
boost millennials’ engagement with its
brand.
Burning Man has grown from a small group
of people gathering spontaneously to a
community of over a million people. The
yearly event creates a temporary
metropolis dedicated to community, art
and self-expression.
Source: sweetgreen.com Source: hunter.com Source: BurningMan.com
Some brands, such as Sweetgreen, sponsor their own festivals. Others, such as Hunter, find music festivals to
collaborate with and be a part of in order to reach their target audiences.
24. #TheDisruptors 24
5. Personalization and Customization
Nutella pop-up stores in Hong Kong
allow customers to create and buy
Nutella jars with their names
printed on the label.
Uniqlo stores in Japan allow customers
to purchase shirts with their own design
printed on them.
Match pop-up coffee shops 3D-print
the face of the consumer on the
foam of the latte.
• The global personalized gift market is forecast to grow at a 9%+ CAGR between 2016 and 2021, according to
Technavio analysts.
• Brands reach high levels of engagement when consumers are able to create one-of-a-kind pieces
showcasing their creativity.
Source: Nutella.com Source: Uniqlo.com Source: Match.com
25. #TheDisruptors 25
6. Resale Is Thriving While Retail Is Struggling
• US apparel resale (online and offline) is an $18 billion industry, and is estimated to reach $33 billion by 2021,
according to ThredUP. We expect the apparel resale sector to grow at a 13% CAGR from 2016 through 2021, versus a
2% CAGR for US apparel retail.
• Subscription fashion rental sites allow consumers to experiment with rapidly changing fashion trends by renting
items for onetime wear.
ThredUp is a fashion resale website for
consumers to buy and sell secondhand
clothing online.
Tencent announced a $200 million
investment in secondhand trading platform
Zhuan Zhuan, which is run by 58.com.
Chic by Choice is a London-based
company offering a monthly Fashion Pass
that includes four-day dress rental and a
backup size for £65.
Source: ThredUp.com Source: Chic-by-Choice.com Source: Tencent.com
26. #TheDisruptors 26
6. Resale Is Thriving While Retail Is Struggling: Consumers Are Choosing
Access over Ownership
Why did the online resale marketplaces take off?
• Resale encourages sustainable consumption
• Millennials are 2.4 times more likely to be motivated by eco-
conscious factors when second-hand shopping (ThredUp)
• Consumers are buying less stuff: 65% of secondhand savings
are spent on experiences (ThredUp)
• Societal shift toward less ownership—the art of decluttering
We expect this trend to accelerate and that resale
vendors will capture wallet share from off-price retailers.
Source: ThredUp
Resale Market Annual Growth Rate
2015–2021
27. #TheDisruptors 27
7. Demographics Suggest Opportunity in Plus-Size Apparel
Source: AshleyStewart.com
According to The NPD Group, ~65% of women, wear size
14+ in the US:
• Plus-size US women’s apparel sales have outpaced total
women’s apparel sales for the past three years
• The percentage of teens buying plus-size clothing will reach
34% in 2017, up from 19% in 2012 (The NPD Group)
What is different about consumers who wear plus-size
apparel?
• Underserved segment; limited in-store options
• Women who wear size 16 or larger buy more than 50%
of their clothing online versus 33% who wear a smaller
size (ModCloth)
The plus-size apparel market is underserved.
28. #TheDisruptors 28
8. Silver Economy: Aging Population Will Impact Retail
Silvers aged 65+ will grow from 8% of the world’s
population in 2015 to 17% in 2030, and will account
for more than one-third of total population growth
through 2035.
In 2015, 15% of the US population was 65+, and it is
projected to reach 26% by 2030 (World Bank).
Opportunities to engage with silvers:
• Leisure services such as travel and exercise
• Healthcare tech industry
• Smart home: healthcare and assisted living
• Convenience and local grocery stores
The senior population is growing across the globe.
Source: UN Department of Economic and Social Affairs, Population Division, World Population Prospects: The 2015 Revision/International Labour Organization, World Social
Protection Report 2014–15/Euromonitor International/Fung Global Retail & Technology
7 10 15
12.3%
13.5%
16.5%17.0%
19.0%
23.5%
0%
5%
10%
15%
20%
25%
0
5
10
15
20
2015 2020 2030
Consumer spending by senior population(USD trillion)
Senior population as a % of total population
% of total worldwide spending
Estimated Senior Population and Spending
2015, 2020 and 2030
29. #TheDisruptors 29
8. Silver Economy: Aging Population Will Impact Retail
In retail, silvers’ needs and desires differ from those of
other generations:
• Prefer smaller-format stores
• Prefer simplicity in packaging and labels
• Greater demand for home delivery via e-commerce
In Japan, retailers are accommodating silvers by making
shopping more convenient and appealing:
• Silvers aged 65+ accounted for 26% of Japan’s population in 2015
(World Bank)
• Widening aisles and lowering shelves
• Tailored products for the silver market
• Offering medical and meal, delivery and concierge services to
silvers
Retailers serve as a hub for consumers to arrange travel; have their clothes dry cleaned; book appointments for haircuts, manicures and pedicures; and pay for services.
Similar to WeChat, retailers’ mobile apps can provide customers with one-stop shopping for for all of their needs. A platform or app can redirect shopper traffic back to the retailer’s store and attract different shoppers with loyalty rewards, games and personalized services.
Successful brands are creating emotional connections with consumers. When consumers feel connected to a brand, they spend more.
Consumers can shop anywhere. Retailers have to give them a reason to feel something. Connecting with consumers emotionally is what keeps them coming back for more.
Add Uniqlo + 3D print at store
https://www.bloomberg.com/news/articles/2016-08-23/why-nutella-and-nike-have-hong-kong-shoppers-lining-up-for-hours
https://techcrunch.com/2017/01/13/matchs-pop-up-coffee-shop-will-3d-print-your-dates-face-on-a-drink/
In a 2016 survey conducted by ThredUP, 87% of respondents who bought secondhand clothing online indicated that they had shifted their spending away from off-price retailers.
http://adage.com/article/digitalnext/consumers-experiences-things/299994/
http://www.mintel.com/press-centre/social-and-lifestyle/america-is-back-to-pre-recession-spending-habits-of-save-less-and-spend-more
Women in America that are defined as plus-size still comprise <2% of images in top media consumed by female audiences
The number of overweight women in the UK increased from 49% to 58% between 1993 and 2011.
Women’s plus size apparel represents a US$18 billion industry in the US (JCP).
The number of overweight women in the UK increased from 49% to 58% between 1993 and 2011.
Greater use of e-commerce for home delivery
Prefer smaller format stores
Simplicity in packaging and labels
They seek quality and are brand loyal
Feel they have limited choices, especially in fashion
Greater use of e-commerce for home delivery
Prefer smaller format stores
Simplicity in packaging and labels
They seek quality and are brand loyal
Feel they have limited choices, especially in fashion