Presented by: Tiffany Hogan, Analyst Mary Brett Whitfield, Senior Vice President May 23, 2014...

Presented by:

Tiffany Hogan, AnalystMary Brett Whitfield, Senior Vice President

May 23, 2014

Apparel Retailing Webinar SeriesHot Topics: Amazon and Activewear

© Copyright 2014 Kantar Retail

Copyright © 2014 Kantar Retail. All Rights Reserved.

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Disclaimers

The analyses and conclusions presented in this seminar represent the opinions of Kantar Retail. The views expressed do not necessarily reflect the views of the management of the retailer(s) under discussion.

This seminar is not endorsed or otherwise supported by the management of any of the companies covered during the course of the workshop or within the following slides.


• Activewear Activity

• “Amazon Fashion Is Booming”

3

Agenda


Activewear, What’s the Big Deal?

Source: Kantar Retail ShopperScape®, Feb 2013, NPD, research, analysis 4

USD14 billion+ industry

Among the fastest-growing segments of U.S. apparel industry

Fashion: Gen Y is more likely than other cohorts to cite athletic shoes and activewear as top categories where they are currently trading up

Function: ShopperScape® has consistently shown that women are more likely to be making an effort to live an active lifestyle (i.e., eating healthier and exercising more)


Activewear Is Everyday Wear

Source: Kantar Retail ShopperScape®, March 2014 5

Nearly six in 10 wear it at least once a week

58% of women wear

active wear at least once a

week

58% of women wear

active wear at least once a

week

Frequency of Wearing Activewear(among all female primary household shoppers)

Incidence of Wearing Activewear at Least Once a Week, by Cohort

(among all female primary household shoppers)


Activewear Part of Everyday RoutinesAt home and while out and about

6

Exercise

Out & About

Going Out

Source: Kantar Retail ShopperScape®, March 2014

Seniors

Boomers, Seniors

Gen Y, Gen X

Gen Y

Seniors

Gen Y

Seniors

Where and When Shoppers Wear Activewear(among all female primary household shoppers who wear activewear at least once a week

Shopper cohorts at least 10% more likely to wear activewear for activity

At home


In Aggregate, Function Trumps FashionValue (price) comes in third

7Source: Kantar Retail ShopperScape®, March 2014

What’s Important When Buying Activewear(shoppers rating factor 4 or 5 on 5-point scale among all female primary

household shoppers who wear activewear at least once a week)

Comfort 90% FunctionFit 87% Function

Price 86%

Easy-care fabric 79% FunctionPerformance attributes 54% FunctionAppropriateness for specific activities 51% FunctionStorage (e.g., pockets) 37% FunctionCan buy coordinating clothing 35% FashionBrand name purchased before 34% FashionFamiliar brand name 33% FashionAll natural fabric 31% FunctionStyle/look popular right now 28% FashionColor/pattern popular right now 25% FashionBrand name that has been around a long time 23% FashionCan buy coordinating shoes/accessories 21% FashionBrand name popular right now 15% FashionDesigner or high-end brand name 14% Fashion


Gen Y Places Premium on FashionAll fashion-related aspects of activewear features more important to Gen Y


What’s Important When Buying Activewear: Fashion(shoppers rating factor 4 or 5 on 5-point scale among all female primary

household shoppers who wear activewear at least once a week)


Gen Y also Spends More on Activewear

9

Activewear also takes a bigger chunk of the apparel budget

Self-Reported Past 6-Month Spending on Activewear

(among all female primary household shoppers who wear activewear at least once a week)

Activewear Spending as Percent of Total Apparel Spending

(among all female primary household shoppers who wear activewear at least once a week)



Mass Retailers Have Largest Share of Preference

All Female Shoppers

Gen Y Gen X Boomers Seniors

Mass Retailers (net) 32% 35% 28% 34% 32%

Apparel Specialty Retailers (net) 19% 27% 21% 13% 11%

Department Stores (net) 18% 10% 18% 24% 14%

Sporting Goods Retailers (net) 8% 10% 10% 6% 5%

Amazon.com 3% 6% 3% 2% 2%

Apparel specialists challenge mass among younger cohorts


Where: Most Recent Activewear Purchase(among all female primary household shoppers who wear activewear at least once a week)

Mass: This skews toward Walmart … but

close to evenly split between Walmart and

Target for Gen Y

Mass: This skews toward Walmart … but

close to evenly split between Walmart and

Target for Gen Y

Apparel Specialty: Just 3–4% of this is the activewear specialists; largest portion of share held by

off-price specialists

Apparel Specialty: Just 3–4% of this is the activewear specialists; largest portion of share held by

off-price specialists

Department Stores: Large Boomer share

driven by Kohl’s

Department Stores: Large Boomer share

driven by Kohl’s


• Lululemon Effect

• Lifestyle Brands Creating the Activewear “Experience”

11

Activewear Retailing Trends


The “Lululemon” Effect …

Source: Kantar Retail Analysis 12


… Is Having a “Trickle Up” Effect“Low” Fashion Influences “High” Fashion

Source: Kantar Retail Analysis 13

Marc by Marc Jacobs DKNY Tommy Hilfiger

Ralph Lauren J Crew

© Copyright 2014 Kantar RetailSource: Kantar Retail Analysis 14

… And a “Trickle Over” into Specialty Retailing


Activewear in Lifestyle BrandsProduct Differentiation and Customer Experience


Activewear in Lifestyle BrandsProduct Differentiation


Activewear in Lifestyle BrandsCustomer Experience

Extend the experience beyond the

product.

© Copyright 2014 Kantar RetailSources: Kantar Retail Analysis & VF Corp. Q1 Earnings Call 18

Activewear in Lifestyle BrandsProduct Differentiation


Activewear in Lifestyle BrandsCustomer Experience

• Engaging customers through online training program

• Using athlete partnerships to create a motivating environment

• Mobile app available in June

- Like the macro trends in retail, activewear is becoming more about the experience for lifestyle retailers

- Successful retailers will need to create an environment for the consumer as well as tailored products


Key TakeawaysPlaying in activewear requires positioning with the customer in mind

Source: Kantar Retail research, analysis 20

Strategic Positioning

Value

• Create differentiation and cohesive brand platform• How does this category complement or supplement?• Position to drive performance among core/target

audience and lift KPIs

• Align with shopper requirements• Find appropriate mix of product, price, in-store experience $




21

Agenda


Apparel as Growth Category at Amazon

Source: Amazon.com 22

Amazon Fashion is booming. Premium brands are recognizing that they can use Amazon to reach fashion conscious, high-demo customers, and customers are enjoying the selection, free returns, detailed photos, and video clips that let them see how clothes move and drape as the models walk and turn.

Jeff BezosFounder and CEO,

Amazon.comApril 2014


Amazon Has Second-Largest Apparel Shopper Base

Source: Kantar Retail ShopperScape®, March 2014 23

Monthly Shopping Incidence for Apparel at Key Retailers*, Among All Female Primary Household Shoppers

*Inclusive of shopping at stores and website as applicable.


Shoppers in the “Amazon Ecosystem” Even More Likely to Be Regular Apparel Shoppers

24

Gen Y Gen X Boomers Seniors AmazonPrime

Members

MonthlyAmazon

Shoppers

All Shoppers:

24%

All Shoppers:

24%

Monthly Amazon Shopping Incidence for Apparel, (among all female primary household shoppers)



Amazon Apparel Shoppers Are Younger, More Affluent


*Female apparel shoppers


Amazon Draws Apparel Shoppers from Top Apparel Destinations


Cross-Shopping:Monthly Amazon Shopping Incidence for Apparel, Among Monthly Apparel Shoppers at Key Retailers

(among all female primary household shoppers)

*Read as: 44% of all female shoppers who shop at Walmart at least once a month also shop for apparel at Amazon at least once a month


The Future of Amazon.com/Fashion

• Adopting improved visual merchandising

Source: Amazon.com, Kantar Retail analysis 27




• Bringing a portfolio of concepts into the “ecosystem”






• Testing and learning with platinum partners






• Testing and learning with platinum partners

• Leveraging social media



Amazon Exceeds 244M Customer Base

31

Third party growth remains strong

Source: Kantar Retail analysis; Company reports

+17% vs. Q1 2013

Active Customer Accounts have exceeded 244M for Q1 2014. Expanding digital content and services, and continued focus on selection, price, and convenience will accelerate this growth into 2014. Third-party units as a percentage of total units was 40%, consistent with Q1 2013.

Active Customer Accounts have exceeded 244M for Q1 2014. Expanding digital content and services, and continued focus on selection, price, and convenience will accelerate this growth into 2014. Third-party units as a percentage of total units was 40%, consistent with Q1 2013.

Active Customer Accounts = customers who have purchased products on Amazon at least once in the last 12 months

Y-o-Y growth >60%


Amazon Continuing to Innovate Supply Chain/ Fulfillment

32

• Austin, TX• Cincinnati, OH• College Station, TX• Columbus, OH• Dallas, TX• Houston, TX• Indianapolis, IN• Lexington, KY• Los Angeles, CA• Louisville, KY• New Orleans, LA• New York, NY• Oklahoma City, OK• Philadelphia, PA• San Antonio, TX• Shreveport, LA• Waco, TX

In the U.K.: London, Birmingham, Milton Keynes, Oxford, Nottingham, Manchester and Leeds

Making the revolutionary, routine—New Sunday

Delivery Markets


Amazon Rolling Out Same-Day Delivery

Kantar Retail Analysis, Amazon.com 33

Spreading across United States, Germany and UK

Prime members pay $5.99 and non-Prime members pay a minimum of $8.99 + $0.99 per extra item.

Cutoff times vary by distance from Fulfillment Centre and only include ≈ top 10,000 SKU’s.

• Baltimore 11:00 a.m. local time

• Boston 11:00 a.m. local time

• Chicago 7 a.m. local time

• Dallas 12:15 p.m. local time

• Indianapolis 11:30 a.m. local time

• Los Angeles 12:15 p.m. local time

• New York City (and parts of New Jersey) 8:00 a.m. local time

• Philadelphia 8:30 a.m. local time

• Phoenix 12:15 p.m. local time

• San Francisco 12:15 p.m. local time

• Seattle12:15 p.m. local time

• Washington, D.C.11:00 a.m. local time

Orders are generally delivered in the evening from 6-9pm, although more flexible choices may come online soon


The Future of Online-Only Apparel RetailingWhich model will prevail?

34Source: Amazon.com, Kantar Retail analysis

ContentCuration

Experience

AssortmentExecutionFulfilment


Multi-Channel Retailers Not Standing Still

• Nordstrom adds “Search & Send” functionality for full Nordstrom Rack inventory, and Rack Alerts app lets shoppers make merchandise requests

• Neiman Marcus organizes for more efficient cross-channel operations

• Gap expands Reserve in Store

Introducing new tools, new functionality and organizing to better compete

Source: Company websites, Kantar Retail analysis 35




36

Questions?


Contact:

Tiffany [email protected]

T:+ 1 614 355 4045www.kantarretailiQ.com

Mary Brett WhitfieldSenior Vice [email protected]

T:+ 1 614 355 4010www.kantarretailiQ.com

Presented by: Tiffany Hogan, Analyst Mary Brett Whitfield, Senior Vice President May 23, 2014...

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