Retail Revolution: Disrupt or be Disrupted The Connected Mall

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Deborah Weinswig

Managing Director

FGRT

August 30, 2017

Retail Revolution: Disrupt or be Disrupted The Connected Mall

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• Managing Director of FGRT

• Award-winning global retail analyst and a specialist in retail innovation and technology

• Spent 12 years at Citi Research, where she served as Head of the Global Staples and Consumer Discretionary team

• Ranked as #1 analyst by Institutional Investor for 10 years

• Serves on the advisory board of several accelerators, including Alchemist Accelerator, The Cage (Lane Crawford Joyce Group), Entrepreneurs Roundtable Accelerator, Grand Central Tech, Plug and Play, and TrueStart

• Certified Public Accountant, with an MBA from the University of Chicago

About Deborah Weinswig

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FUNG GROUP

PRODUCTS SERVICES DISTRIBUTION RETAILING

Li & Fung Limited Listed on the SEHK

Global Brands Group Listed on the SEHK

Fung Retailing Limited Privately Held Entity

Convenience Retail Asia Limited

Listed on the SEHK

Trinity Limited Listed on the 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

KNOWLEDGE

FGRT

Fung Business Intelligence

Fung Academy

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• The knowledge bank for the Fung Group

• Focuses on emerging retail and technology trends

• Established in 2014

• Based in New York, with research teams in London, Hong Kong, Israel and India

• Publishes thematic research and research with a global scope on topics such as omnichannel retail, fashion and retail trends and disruptive technologies

• Compiles the FGRT Retail Intelligence Index

FUNG GLOBAL RETAIL & TECHNOLOGY

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The Retail Revolution and the Future Outlook For Shopping Centers

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1. Urbanization

There will be 100 million more people living in Chinese

cities by 2019.

New infrastructure projects such as metro lines create more

local communities.

More people living in cities means smaller livings spaces and

necessitates more places where people can spend time

together outside the home.

Three Global Trends Impacting the Future of Shopping Centers

Sources: Xinhuanet/The State Council of the People’s Republic of China

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2. Demographic Shifts: Millennials and Silvers Drive Experiential Spending


415

353

300

350

400

450

ChineseMillennials

Total workingpopulation

Po

pu

lati

on

(M

illio

n)

Western

Europe &

the US

65+ Population as a % of the Total Population, by Region,

2015 vs. 2030E

* Germany and France are included in W. Europe. The UK is included in N. Europe. Source: UN Department of Economic and Social Affairs, Population Division: World Population Prospects: The 2015 Revision

26%

20%

15%

10%

6%

6%

8%

30%

26%

21%

17%

10%

9%

12%

Japan

W. Europe

N. America

China

S.E. Asia

India

World

2015 2030

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2. Demographic Shifts: Underserved Markets


• Plus-size US women’s apparel sales have outpaced total women’s apparel sales for the past three years.

• According to The NPD Group, ~65% of women in the US wear a size 14+.

• The percentage of teens buying plus-size clothing will reach 34% in 2017, up from 19% in 2012, The NPD Group estimates.

• Women who wear size 16 or larger buy more than 50% of their clothing online versus 33% of those who wear a smaller size, according to ModCloth.

• 75% of women wear a size 10 and above, but the only account for 17% of apparel spending

For example, the plus-size apparel market is underserved and there are limited in-store options.

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3. The Hyper-Connected Consumer is Always On: More Informed and With Greater Access


Physically Digitally

Mobile Broadband Connections as a % of Total

Source: GSMA

Smartphones

Data Traffic CAGR (2015–2020E)

2015 2020E

47%

2.6 Bil.

49%

71%

5.8 Bil.

3.1%

3.7%

4.8%

6.0%

North America

Europe

World

Asia

Estimated Annual Growth Rates for Passenger Air Traffic for 2016–2035, by Region

Source: Boeing

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The expectations of shoppers today

are constantly evolving, calling for

different retail experiences and for the

shopping center to reinvent itself.

TECH

EXPERIENCES &

ENTERTAINMENT

NEW TYPES

OF TENANTS

CONNECT WITH

THE CONSUMER

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Reinventing the Mall Experience

Mall operators are rethinking how they deliver experiences to consumers and how to keep occupancy rates high.

Curation and Novelty Pop-ups are a curated mix of smaller stores that add a sense of novelty and urgency to the mall offering. Crowds were lined up to get into Kylie Jenner’s pop-up shop in the Westfield Topanga Mall in Los Angeles.

Content and Events Art exhibitions, performances and exclusive events have proven effective in driving traffic to shopping locations. K11 Shanghai featured a Vivienne Westwood exhibition.

Convenience E-commerce companies are partnering with mall operators on more compelling omnichannel offerings, including a “drive up, pick up” service at malls.

Locally Grown and Made Consumers are seeking goods that are locally grown, made and produced, and that incorporate more regional, artisan flavors and designs. Kimco Realty has expanded a program that offers small businesses one year of free rent and reduced property charges.

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Reinventing the Relationship with the Consumer

Mall operators must rethink how they engage and retain their visitors.

Conversations

Community Personalized

Services

The Connected

Mall

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Reevaluating How they Think about their Tenants

Mall operators must revaluate who their potential tenants might be.

Online Going Offline For e-commerce retailers, physical stores are marketing assets that support their online business models. They require more innovative leasing models.

Office and Wellness Service Businesses Co-working spaces and gyms (Pure, SoulCycle) require flexible access schedules to offer more convenience to users.

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Rethinking How they Approach Technology

Accelerators, Venture Capital Arms and Universities as Resources

Internal External

Venture Academia

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Rethinking How they Approach Technology

Startup investments made by US shopping center developers and REITS between 1Q2010 and 1Q2017, by category.

Brands and Digital Commerce Platforms

Crowdsourced Delivery

Digital Loyalty

Marketing Platforms

Parking Data

Analysis

Pop-ups and Retail

Experiences

Simon / Simon Venture Group

Macerich Westfield


Westfield GGP

Westfield




* Size is representative of the number of investments in each category. Source: CB Insights/Crunchbase/Pitchbook/FGRT

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What if Storefronts Were Shoppable?

Ted Baker piloted interactive store windows for its Keeping Up with the Bakers campaign in London. The screens were produced by Nexus Interactive Arts.

Glass Media offers projector-based storefront displays.

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Rethinking How they Leverage Technology

Can shopping centers provide value-added technology solutions to tenants?

Shopping center Wi-Fi is a start, but what’s beyond?

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Partnering With Technology Companies to

Bridge the Gap: A Global Overview of Solutions

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Entertainment: Location-Based, Fully-Immersive Virtual Reality (VR)

Dreamscape Immersive: A new Los Angeles-based startup for location-based VR that is planning to open a VR Multiplex in Los Angeles.

Nomadic VR: A California-based developer of VR games that can be touched and felt. The company received an investment from Horizon Ventures and demoed its technology at the Wonderful Worlds of the Whampoa mall in Hong Kong in July 2017.

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Security: Robots in Shopping Centers

• The Prudential Center in Boston and the Westfield Valley Fair in San Jose have piloted security robots.

• The K-5 robot by Knightscope takes pictures and video, and can detect heat and CO2. It leases for a monthly fee of about $8,000.

• Westfield has also used SoftBank’s Pepper robot to greet and offer assistance to shoppers at its US properties.

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Security: Using Crowdsourcing to Catch Shoplifters

• SpotCrowd is an online platform that streams existing, real-time footage from retail stores’ surveillance cameras.

• Registered users access those images to spot suspicious activities inside the stores and alert shop owners.

• For stores to be informed, a spot needs to be confirmed by several other users. After that, an alarm is sent to the shop owner, who can then decide whether or not to act upon it.

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Loyalty and Rewards

• When consumers use their credit or debit card, Spring tracks their spending in real time and offers personalized marketing and rewards.

• It also creates a direct communication channel and customer relationship management (CRM) tool for shopping centers.

• Spring is used at 75 live mall locations in the US to date. Clients include Simon, Taubman, Macerich, PREIT and GGP.

• There are plans to add 50 more locations by the end of 2018.

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Flexible Spaces: WithMe

• Pop-up stores are designed to be assembled quickly from the ground up.

• Locations: shopping centers, office parks, airports, campuses and festivals.

• All products and fixtures are RFID-embedded, and the store includes beacons so that customers with the ShopWithMe app can receive product suggestions and personalized messages.

• Eight locations in the US.

• Investment by Macerich.

Source: WithMe

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Short-Term Leases: Storefront, an Airbnb for retail, is a rental platform operating in eight markets, including Hong Kong

Source: Storefront

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Omnichannel Solutions: Solving the Issue of Same-Day Delivery and Easy Returns

Happy Returns accepts in-person returns from participating online retailers at six malls. ShopRunBack is an on-demand returns service for e-commerce businesses, which operates returns drop-off points as well as a network of delivery professionals. The company currently works with Mango in Europe. ShopTurn, a Techstars-backed company, is an on-demand return service enabling consumers to return purchases directly from home. OLAM is a technology-enabled logistics platform solution for mall-based retailers, providing convenient, same-day purchase options for shopping mall purchases. The cost per pickup is $5.

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Hassle-Free Checkouts

Shopic is a QR code-based, express self-checkout app. The company collaborated with Tyco on an application that enables consumers to remove the security sensor on items at the point of sale—without requiring any assistance.

QueueHop lets customers check out on their phones without having to wait in line. It uses QR-code scanning and RFID-powered security tags that automatically unlock after payment is made.

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Personalized and Data-Driven Marketing

ActiMirror helps stores become omnichannel hubs by creating a personalized consumer communication channel and enhancing the overall guest experience.

Neoma helps shopping malls create, launch and promote beacon-powered and augmented reality (AR) applications, and helps retailers within the mall inspire and attract customers as soon as they enter the building.

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Personalized and Data-Driven Marketing

Using computer vision to analyze shopping mall visitors’ shopping bags and provide personalized marketing messages.

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Thank you DEBORAH WEINSWIG

MANAGING DIRECTOR

FGRT

[email protected]

mailto:[email protected]