Global Retail Innovation Ecosystem TOP 15 In-store Innovation Trends

1. IN-STORE
TECHNOLOGY:
Jing Wang
Research Associate
FUNG GLOBAL RETAIL & TECHNOLOGY
BRIGHT SHINY OBJECT
OR THE NEW
NORMAL?

2. 2
About US
Global Retail Innovation Ecosystem
TOP 15 In-store Innovation Trends
Agenda

3. 3
FUNG GROUP
TRADING LOGISTICS DISTRIBUTIO
N
Li & Fung Limited
Listed on SEHK
Global Brands Group
Listed on SEHK
Fung Retailing Limited
Privately Held Entity
Convenience Retail
Asia Limited
Listed on SEHK
Trinity Limited
Listed on SEHK
Branded Lifestyle Holdings Limited
LiFung Kids (Holdings) Limited
Toys “R” Us (Asia)
Suhyang Networks
UCCAL Fashion Group
Privately Held Entities
Fung Holdings (1937) Ltd.
A privately held entity and major shareholder of the Fung Group
RETAILIN
G

4. 4
HONG KONG NEW YORK LONDON
RETAIL
TECH
MICRO
MACRO
RETAIL
REAL
ESTATE
THEMATIC
RESEARCHVR
AI
IOT
DIGITAL
DIGITAL
DIGITAL
DIGITAL
• The knowledge bank for the Fung Group
• Consultancy for clients within and outside Fung Group
• Focuses on emerging retail and technology trends
• Based in New York with research teams in London and
Hong Kong
• 20+ analysts specializing in retail and technology
• Publishes thematic and global market research on topics
such as the Internet of Things (IoT), digital payments,
omnichannel retail, fashion retail trends and disruptive
technologies
FUNG GLOBAL RETAIL & TECHNOLOGY

5. 5
• Fung Global Retail & Technology publishes research, freely available on www.fgrt.com
• We advise retailers, real estate developers and tech companies on projects situated at
the intersection of retail, tech and/or fashion
• Our team posesses a robust knowledge bank and significant experience in the retail,
fashion and tech fields
A UNIQUE COMBINATION OF RETAIL, FASHION AND
TECH
RETAIL FASHION TECH

6. 6
FUNG GLOBAL & FUNG CAPITAL RETAIL TECHNOLOGY
LANDSCAPE

7. Global Retail Innovation Ecosystem
1. Retail-Accelerator
Partnerships
2. Retail-Tech Company
Partnerships
3. Innovation Outposts
4. Stores of the Future
5. The Explorium

8. 8
JLab is the dedicated accelerator
for British department store
John Lewis based in London.
Macy’s and Kate Spade are
founding mentor companies to
New York Fashion Tech Lab.
Target announced hosting
Techstars’ startups in Minneapolis
in June 2016.
1Retailer-Accelerator Partnerships
Retailers are seeking out innovation by partners with accelerators

9. 9
2Retail-Tech Company Partnerships
Partnerships between retail and technology companies becoming a necessity
Levi’s partnering with Google to create
smart fabric with Project Jacquard
Intel and new balance partnering to create
customized 3D insoles

10. 10
3Innovation Outposts
Major retailers have set up Silicon Valley-style innovation labs to incubate
businesses and tap into tech talent
Westfield Labs
San Francisco, CA
Lowe’s Innovation Lab
Los Angeles, CA
Walmart’s Tech Innovation Center
San Bruno, CA

11. 11
4Store of the Future
Retailers Incorporate Technology in Future Store Concepts
Target’s Open House
tests out smart home concepts
Lowe’s Holoroom creates
a 3D virtual reality shopping
experience
American Girl’s Manhattan location
experiments with experiential
retail with media studios

12. 12
An experimental
learning laboratory
for business model
innovation in Shanghai
5Store of the Future Experiments: the Explorium

13. 13
A playground for the future of retail
and a platform for accelerated
experimental learning.
上海
Interactive Exhibition Space
We offer consumers a dynamic mall for
them to discover new shopping
experiences both online and offline.
Data & Analytics Hub
Underneath the surface we capture
interactions between consumers and the
physical and digital space.
Research and
Learning Lab
Experiments are
designed, prototyped,
and tested with the
public with learning
supported by data.
Explorium is strategically
located in Shanghai, and
explores the leading edge
of tomorrow’s shopping
behaviors.
5Store of the Future Experiments: the Explorium
Explorium is

14. 14
An interactive exhibition space and dynamic physical platform.
Explorium is
5Store of the Future Experiments: the Explorium

15. 15
A data and analytics hub with an all-encompassing digital platform and an analytics
dashboard in partnership with .
iBeacon Bracelet App
Explorium is
5Store of the Future Experiments: the Explorium

16. TOP 15 IN-STORE INNOVATION TRENDS
1. Experiential Retail
2. Smart Malls
3. Augmented Reality + Virtual Reality
4. Facial Recognition
5. Interactive Displays
6. Smart Mirrors
7. Robotics
8. 3D printing
9. Evolving Pure Play
10. Click & Collect
11. Reverse Logistics
12. Self Checkout
13. Mobile Payments
14. Mall-based Loyalty Programs
15. Gamification

17. 17
Why People are Leaving the Stores?
Getting Hungry Need to Go to BathroomLong Checkout Lines Lousy Dressing Rooms

18. 18
1Experiential Retail
BEAUTY
Sephora: Play, learn and shop at its 400th store’s BEAUTY TIP (Teach, Inspire, Play)
WORKSHOP in Chicago.

19. 19
1Experiential Retail
BEAUTY
Origins: free, walk-in mini facials available at
Origins stores.
Lush: in-store Hair Lab to try products
before purchase.

20. 20
1Experiential Retail
BEAUTY
Bloomingdales: Drybar opened its first Soho store
on the 1st floor within Bloomingdales in 2015.
ULTA: offer hair and skin care consultations
in the in-store Style Bar.

21. 21
1Experiential Retail
WELLNESS
Nike, Lululemon, Athleta, Rebecca Minkoff: free in-store fitness classes like yoga and
HIIT available for sign-up.

22. 22
1Experiential Retail
WELLNESS
Singapore: health promoting malls like the Star Vista partner with professional instructors to
organize weekly workout session.

23. 23
1Experiential Retail
FOOD
Old Navy: tee & ice-cream giveaway
truck popped up in NYC.
Urban Outfitters: launched UO café
in Herald Square, NYC.

24. 24
1Experiential Retail
ENTERTAINMENT
The Dubai Mall: has one of the
largest indoor aquariums
in the world.
American Dream Meadowlands:
first indoor skiing facility
in the US, projected to
launch in spring 2017.
Mall of America: indoor
entertainment facilities
include roller coasters.

25. 25
2Smart Mall
Reshaping The Physical Shopping Experience
Data-enabled personalized and
timely promotions.
Track movement, behavior and
preferences.
Beacon-enabled, location-based
advertising.

26. 26
2Smart Mall
Reshaping The Physical Shopping Experience
An in-mall mobile retail solutions
provider to offer shoppers
smartphone access to
hyperlocal in-store deals.
Silicon Valley based unit that
designs and develops
innovations to improve the
retail experience.
Partnered with HGTV
to launch virtual and
hands-on technology-based
experiences.

27. 27
3Augmented Reality + Virtual Reality
Combined AR and VR markets will reach $151 bn by 2022
Lowe’s Holoroom allows
customers to see different
merchandise and color
combinations as they would
appear in a home.
Tommy Hilfiger, Top Shop
and many other retailer stores
have virtual reality headsets that
allow visitors to experience
runway shows.
Pokemon Go: augmented reality, the
game is driving traffic
to stores.

28. 28
3Augmented Reality + Virtual Reality
VR Shopping: the Future of Virtual Shopping
Will your store be featured in VR shopping?

29. 29
4Facial Recognition
The global Facial Recognition market is forecasted to grow from $2.77 bn in 2015
to $6.19 bn by 2020, at a CAGR of 17.4% Source: MARKETSANDMARKETS
Walmart tested with
FaceFirst to spot
shop lifters.
actiMirror is an in-store,
mirror-like display that identify
the customer’s demographics
and make instant
personalized product.
Applications are expanding from
health, wellness, beauty
and advertising into
theft prevention.

30. 30
5Interactive Display
Interactive display uses online or offline interactive media to present and
promote products, brands and services to consumers
PERCH is a digital platform that
responds with dynamic digital
media as customers touch
and pick up products.
FrankMayer specializes in
designing and producing interactive
point-of-purchase displays
and kiosks. GE light displayfor
customer testing of bulb hues in
different lighting settings.
TUKU is a tap-to-learn in-store
information tool that presents
information in an easily
digestible manner.

31. Perch & Sunglass Hut :

32. 32
• Attracting customers with visual
suggestions and options
• Expediting the fitting-room process
6Smart Mirrors
• Attracting customers with visual
suggestions and options
• Expediting the fitting-room process

33. Rebecca Minkoff

34. 34
7Robotics
The global robot market is growing rapidly at a CGAR of 17%, expected to
reach $135 billion by 2019.
SoftBank: Pepper acts as
a sales assistant to engage
with customers in-store.
Henn-na Hotel: robots are
replacing the human servers
in the Henn-na Hotel Nagasaki
from front desk to kitchen.
Amazon Robotics: Founded in
2003, Amazon robotics has
automated the entire fulfilment
center operations with
autonomous mobile robots.

35. 35
83D Printing: All about Customization
The 3D printing industry was valued at $11 billion in 2015, and is expected to
grow to $26.7 billion by 2019, a CAGR of 27%.

36. 36
9Evolving Pure Plays
Number of Actual/Planned Physical Stores
AYR
HARRY’S
1 400 120 1 3 2
3 27 1 1 7
4 37 25 12 2

37. 37
9Evolving Pure Plays
Number of Actual/Planned Physical Stores

38. 38
Source: “U.S. Seamless Retail Survey Results 2015” Accenture, November 2014
95%
43%
89%
78%
42%
33%
Department Stores: Online Purchase, In-Store Follow-up
Percentage of Brands Utilizing Omnichannel by Region - July 2015
North America, n=21 Europe, n=18 APAC, n=12
10Click & Collect
EUROPE LEADS THE WAY…
In-Store Return In-Store Pick Up
2x as many shoppers are ordering online and picking up at store this year compared to last.

39. 39
11Reverse Logistics
In-store returns from e-commerce companies can increase traffic to malls
and decrease fraudulent returns
Gilt customers can now
make returns at any Saks Fifth
Avenue/OFF 5th locations .
Happy Returns offers return kiosks in
high-traffic areas
(e.g., shopping malls) that takes
returns for retailers and
repackages them, reducing return
costs for retailers.
Retail Industry has $260.5 billion
worth of merchandise returned
or 8% of total sales.

40. 40
12Self-Checkout
• Non-food industry loses $14 billion from
abandoned purchases due to long checkout
• 73% of customers say the checkout process is the
largest pain point at grocery stores
• Traditional self-checkout experiences are not
satisfactory for shoppers; New technologies include
“Scan-Bag-Go” by Kroger
• Most self-checkout solutions are focused on grocery
stores. Yet studies suggest that many other retail
environments may be conducive to innovative
self-checkouts *Motorola Research

41. 41
Focuses on small basket item sizes
at drug stores, convenience
stores and toy stores
Can be integrated into
retailers’ own app
Notifies users about special
deals or discounts
41
12Self-Checkout - Shopic
is a QR-code empowered express self-checkout app

42. 42
13Mobile Payments Are Changing The Landscapes
# of
Accepted
Locations
>2,000,000 > 30 million > 2,000,000 > 300,000 >200,000
+
Apple Watch is compatible
Secure – Unique security
code for each transaction
Compatibility with existing
terminals
No additional investment for
retailers
Works on any Android device
Support from major retailers:
Staples, Walgreens,
Wholegoods
Works on both iOS and
Android
Connect to a platform to
invest in financial product
Widely supported within
China, eg. repay credit card,
utility bills, online purchases,
or QR-codes for offline
payment
Part of the Alibaba’s
ecosystem
Provides users with
additional wealth
management tools and
services
Only works with NFC-
enabled registers
NFC terminal cost retailer
$500 or more
Not accepted by major
retailers: Walmart, Target,
Best Buy
Limited device options −
Samsung Galaxy S6
Magnetic strip reader
requires tricky position for
phone
Support NFC technology-
enabled Android
smartphones only.
Few stores outside of Asia
support WeChat Pay but
catching up.
Lack of third-party
regulations

43. 43
13Mobile Payments Are Changing The Landscapes
P2P Payments Explode on WeChat
32.1 billion
red envelopes
516million
Users *
903%
Chinese New Year Celebration
Feb. 7 – 12, 2016 ~74% of all
WeChat users
YoY growth since introduction
of red envelopes
* Over 92% of those senders were reportedly between the ages of 20 & 29

44. 44
Last-generation
Loyalty
Tomorrow’s
Loyalty
Today’s
Loyalty
14Mall-based Loyalty Programs
• Smartphone-based
• Integration of tracking status,
payment, gift cards, etc.
• Cards with bar codes,
reward programs
• Use of gamification
(membership levels, points,
leaderboards)
• Coupons, membership cards

45. 45
Capitastar a mall-based loyalty
program that covers 15 malls and
over 2000 stores in Singapore.
Spring is a personalized
in-store shopping awards
program in the US
Mall-Connect is a app based loyalty
program that awards shoppers for
visitingmalls,makinga purchase and
sharing content on social media
based in the Netherlands
14Mall-based Loyalty Programs

46. 46
15Gamification
The global gamification market will worth $10.02 billion by 2020 with a CAGR of 42.4%
Source: Mind Commerce
CocaCola: customers in Japan
can get free drinks with 15
digital stamps from
the CocaCola app
Sears in-store scavenger game.Starbucks let customers
accumulate points to win game
pieces to win different
levels of prizes.

47. 47
15Gamification
A gamified solution to increase store traffic via promotion rewards
Helps retailers increase store
foot traffic and sales.
Geo-location engages
customers at venues.
Injects relevant retailer content and
promotions and engage
the customer with games.

48. Q & A
Jing Wang
Research Associate
FUNG GLOBAL RETAIL & TECHNOLOGY
jingwang@fung1937.com
https://fungglobalretailtech.com