Top 10 Takeaways from the NRF Retail’s Big Show Day 3 ... · Tuesday, January 17, was the third...
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1 January 18, 2017 Deborah Weinswig, Managing Director, Fung Global Retail & Technology [email protected] US: 917.655.6790 HK: 852.6119.1779 CN: 86.186.1420.3016 Copyright © 2017 The Fung Group. All rights reserved. Top 10 Takeaways from the NRF Retail’s Big Show Day 3: Beyond Technology, Changes in Human Behavior are Driving Changes in Retail 1) On Tuesday, January 17, we attended the third and final day of the National Retail Federation (NRF) Retail’s Big Show 2017. As on the previous day of the show, the incoming presidential administration was a major topic of discussion, with presenters and attendees analyzing the potential impact of tax-policy changes. 2) William Dudley, President and CEO of the Federal Reserve Bank of New York, noted the strong correlation between housing market performance and consumer spending: when home equity is rising, homeowners tend to tap into the wealth to fund their consumer spending. Dudley is optimistic about the state of the US economy and said that it is in “quite good shape,” citing strong growth in the labor market, wage growth and a reasonable inflation level. 3) Technology was a hot topic of discussion, but presenters noted that it alone will not solve the challenges retailers are facing. Retailers still need to listen to their customers, as they will be vocal about their needs and wants. 4) A few buzzwords we heard throughout the day were “storytelling,” “content” and “innovation.” Many discussions that included these words focused on the idea that retailers need to change their way of thinking. One of the most insightful things we heard was from designer Rebecca Minkoff, who said that her company pays attention to changes in human behavior and works to understand the impact of those changes on both its own business and retail overall. She cited the selfie culture changing the way people shop as an example. 5) The retail landscape may look different in the future, as a number of larger retailers have seen significant declines in recent years. As consumers embrace specialists and differentiation, there will likely be fewer very large brands and more small and midsize brands.
Transcript of Top 10 Takeaways from the NRF Retail’s Big Show Day 3 ... · Tuesday, January 17, was the third...
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January18,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Top 10 Takeaways from the NRF Retail’s Big Show Day 3: Beyond Technology, Changes in Human Behavior are Driving Changes in Retail
1) OnTuesday,January17,weattendedthethirdandfinaldayoftheNationalRetailFederation(NRF)Retail’sBigShow2017.Asonthepreviousdayoftheshow,theincomingpresidentialadministrationwasamajortopicofdiscussion,withpresentersandattendeesanalyzingthepotentialimpactoftax-policychanges.
2) WilliamDudley,PresidentandCEOoftheFederalReserveBankofNewYork,notedthestrongcorrelationbetweenhousingmarketperformanceandconsumerspending:whenhomeequityisrising,homeownerstendtotapintothewealthtofundtheirconsumerspending.DudleyisoptimisticaboutthestateoftheUSeconomyandsaidthatitisin“quitegoodshape,”citingstronggrowthinthelabormarket,wagegrowthandareasonableinflationlevel.
3) Technologywasahottopicofdiscussion,butpresentersnotedthatitalonewillnotsolvethechallengesretailersarefacing.Retailersstillneedtolistentotheircustomers,astheywillbevocalabouttheirneedsandwants.
4) Afewbuzzwordsweheardthroughoutthedaywere“storytelling,”“content”and“innovation.”Manydiscussionsthatincludedthesewordsfocusedontheideathatretailersneedtochangetheirwayofthinking.OneofthemostinsightfulthingsweheardwasfromdesignerRebeccaMinkoff,whosaidthathercompanypaysattentiontochangesinhumanbehaviorandworkstounderstandtheimpactofthosechangesonbothitsownbusinessandretailoverall.Shecitedtheselfieculturechangingthewaypeopleshopasanexample.
5) Theretaillandscapemaylookdifferentinthefuture,asanumberoflargerretailershaveseensignificantdeclinesinrecentyears.Asconsumersembracespecialistsanddifferentiation,therewilllikelybefewerverylargebrandsandmoresmallandmidsizebrands.
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DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Tuesday,January17,wasthethirdandfinaldayoftheNRFRetail’sBigShow2017,andmembersoftheFungGlobalRetail&Technologyteamattendedconferencesessions,metwithretailersandwalkedtheshowfloor.Below,weprovideourtop10takeawaysfromthefinaldayoftheshow.
1. TheHousingMarketHasaStrongImpactonConsumptionintheUSWilliamDudley,PresidentandCEOoftheFederalReserveBankofNewYork,notedthestrongcorrelationbetweenhousingmarketperformanceandconsumerspending:whenhomeequityisrising,homeownerstendtotapintothewealthtofundtheirconsumerspending.
Dudleynotedthat,inthewakeoftheGreatRecession,USconsumershavenotbeenborrowingagainsttheirrisinghomeequityliketheydidpriorto2008,insteadusingtheirgrowingincometopaydowndebt.Therehasbeenanestimated$300billionlessinhome-equityconsumerfinancing,whichhashinderedgrowthinconsumerspendingdespiteastrongmacroeconomicbackdrop.Dudleynotedthatthesustainedeconomicrecoverycouldboostconsumers’confidence,encouragingthemtotapinto$200billionworthofhome-equity-backedfinancinginordertosupporttheirspending.HepointedouttheneedfortheincomingadministrationtoreformtheUStaxsystem,butsaidtheproposedbordertaxwouldbringadrasticchangefortheretailindustry.DudleysaidthattherisingvalueoftheUSdollarisnotlikelytooffsettheexpectedincreaseinimportedtaxes.HeisoptimisticaboutthestateoftheUSeconomyandsaiditisin“quitegoodshape,”citingstronggrowthinthelabormarket,wagegrowthandareasonableinflationlevel.
2. RebeccaMinkoffonthePulseofChangeinHumanBehaviorDesignerRebeccaMinkoffsayshercompanyviewseverythingitdoesthroughthedigitalandtechnologylens,butthatthecompanystillfeelsstronglyaboutthein-storeretailexperience.Shesaysthebrandhasitsfingeronthepulseofhumanbehaviorandhowchangesinbehavioralpatternswillaffectretail.Thecompanyfocusesonexperientialretail,incorporatingtechnologyintostoresandworkingtomakecustomersfeellikepartofacommunitywithinthestore.Forexample,thecompanyhostseventsandseminarsinwhichaccomplishedwomeninvariousfieldsspeakabouttheirexperiences.Theeventsarefree,andattendeesmayormaynotendupshopping,buttheywillassociatetheexperiencewiththebrand.
Source:FungGlobalRetail&Technology
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DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
3. RebeccaMinkoffandUriMinkoffLaunchFashionTechVentureCapitalFundMinkoffandherbrotherUriMinkoff,whoisthecompany’sCEOandCofounder,feelsostronglyabouttechnology’sroleinretailandfashionthattheyrecentlylaunchedadomesticfashiontechventurecapitalfundinpartnershipwithPedroTorres-Mackie,founderofQuotidianVentures.Thefundwillfocusonsixtoeightearly-stageinvestmentsperyear.Thefund’sfirstinvestmentisin42Technologies,whichturnsrawpoint-of-saledataintoactionableinsightsforbrick-and-mortarbusinesses.UriMinkoffsaidthatothertechnologies,suchasvirtualreality(VR),augmentedreality(AR)andartificialintelligence(AI),willbemeaningfuloverthenextseveralyears,notingthatthecompanyfilmeditslatestfashionshowinvirtualreality.
4. MarxentProvidesBothARandVRToolsforHomeFurnishingsRetailMarxentprovidesAR,VRandsmart-displaytoolsthatenableconsumerstovisualizefurnitureandhomeappliancesinthestore,ratherthanonatabletorsmartphone.StorevisitorscanuseVRgogglesoratablettovisualizeavarietyofappliances,furnitureandhomefurnishingsonlargetouchscreendisplays.Storevisitorscanalsoenterthedimensionsoftheirlivingspaceintothetoolinordertovisualizehowthespacewouldlookwithacompletesetoffurnishings.Theplatformcontainsalargelibraryofstoreditems,allowingshopperstoseeawiderrangeoffurnishingsthanwouldnormallybeavailableinaphysicalstore.ThebenefitforretailersisthatMarxent’stoolsofferabetter,morecontrolledexperiencethatdrawscustomersintothestore,enablinghigherconversionrates.
Source:FungGlobalRetail&Technology
5. WomenAreLeadingtheNextGenerationofWearablesAswearablesmovebeyondthesmartwatch,womenareaddingtheiraestheticsensibilitiesanddesignknow-howtowearabletech.Asfashionandtechnologyarecombinedinwearables,fashionanddesignneedtocomefirst,beforetechnologyisincorporated,RebeccaMinkoffsaid.Womencanofferauniqueperspectiveonthedesignofthesedevices,sincetheyareoftentheconsumersoftheseitemsandknowwhatotherwomenwant.Newwearablesdesignedbywomenrangefromjewelrythatworksinconjunctionwithasmartphonetoalert
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DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
thewearerofimportantmessagesandeventstoawearablebowtiefordogsthattracksapet’smovementsandactivityduringtheday.
6. RetailersNeedtoChangeTheirWayofThinkingAfewbuzzwordsweheardthroughoutthedaywere“storytelling,”“content”and“innovation.”Manydiscussionsthatincludedthesewordsfocusedontheideathatretailersneedtochangetheirwayofthinkingandmasteranewsetofskills.Mostintheindustryseemtoagreethatthebestshoppersshopacrosschannels:thequestionnowishowtocreateagoodexperiencethatgoesbeyondconvenience,whileprovidingmeaning,forthosemultichannelshoppers.Retailersneedtochangenotonlywheretheyreachconsumers,butalsowhichconsumerstheyreachandhowtheyreachthem.Thatwillinvolveinnovationandcollaboration.
Source:FungGlobalRetail&Technology
7. ThereWillBeFewerLargeRetailersandBrandsintheFutureInthepast,consumershavepreferredaone-stopapproachtoshopping.Now,theirneedsaremoresegmentedinallareasoftheirlives:peopleprefertogettheirsportsnewsfromsportsexpertsandtheirfinancialnewsfromfinancialexperts,forexample,ratherthangettingalltheirnewsfromonesource.Inretail,wethinkthatphenomenonispartofwhydepartmentstoreshavestruggledandcontinueto.Theyarenolongerexpertsinanyparticulararea,nordotheyofferastrongpointofview.Wethinkthatinthefuture,therewillbemanymoresmallandmidsizeretailers.Thisalsocoincideswiththecurrentsentimentthatbigistheoppositeofcool.Itisverydifficultformajorretailersandbrandstomaintainahighlevelofcachet.
8. E-CommerceIsthePrimaryOpportunitytoEntertheChineseRetailMarketChinaissettobecometheworld’slargestretailmarket,withoneofthehigheste-commercepenetrationratesintheworld.FrankLavin,FounderandCEOofExportNow,saystheChinesemarketistheprimaryopportunityforglobalretailersduetotheeaseofentryviae-commerceandthecriticalmassofthemarket.DanielArmstrong,BusinessManagerofUKandInternationalGrowthatWaitrose,sharedhowWaitrosesuccessfullyenteredtheChinesemarketviaAlibaba’sTmallGlobalbrandedplatform.IttookWaitroseonlyfourmonthstosetupitsstoreonTmallGlobal,whereasitwouldhavetakenityearstolaunchinChinaviabrick-and-mortar.Armstrongalsonotedthate-commerceplatformsarepreferredoverindependentsitesinChina,andherecommendedthat
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DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
retailersjoinleadingshoppingplatformssuchasTmallGlobalandJD.com.LavinandArmstrongbothremindedtheaudiencethatChineseconsumersputgreatemphasisonproductauthenticity.ProductinformationandimageryonChinesee-commerceplatformsaremuchmoreextensivethantheyareonWesternwebsites.
Source:FungGlobalRetail&Technology
9. GlobalRetailCEOs’ConfidenceHasImprovedfor2017AccordingtoanannualsurveyofglobalCEOsconductedbyJDAandPwC,the350globalretailCEOssurveyedareremarkablybullishabout2017andareconvincedthate-commercewillbetheprimarydriveroftheretailindustry.Chinaisaparticularlybrightspot;itsgrowthtrajectoryforbothonlineandofflinechannelsisexpectedtobesignificant.
JoeJensen,ManageratIntel,sharedhisviewofhowthee-commerceshoppingexperiencecouldevolveandtalkedaboutthebiggestchallengesretailersface.Jensensaidthat40millionUShouseholdswillhaveVRgoggleswithin18monthsandthatVRcommercecouldsignificantlyenhancethee-commerceshoppingexperienceanddrivemoreonlinesales.Healsonotedthatinventorymismanagement,fulfillmentandrisinglaborcostsaresomeofthebiggestchallengescitedbytheretailCEOswhoweresurveyedbyJDA/PwCabouttheirbusinessesin2017.Jensennotedthatthecostofretailers’inventorymismanagementproblemisoutgrowingtheirtechnologyspendingtosolvetheproblem.In2016,inventorymismanagementnegativelyimpactedtheglobalretailindustryby$1.2trillion.
10. RetailTechnologyStartupsSettoChallengetheIndustryStatusQuoFourretailtechnologystartupsfromtheXRCLabsacceleratorprogramsharedtheirlatestinnovationsattheshow.PerseusMirrorsmakesaconnectedmirrorthatenablespeopletomanagetheirday-to-daylife,includingtheirshoppingagenda,throughavoice-commandsystem.Strypesempowersconsumerstodesigntheirownproductusingafoolproofplatform.BanterisanAI-poweredmessagingsystemthatmakescustomerservicemorepersonal.ShopShopsisacross-borderonline-to-offlineapplicationthatconnectsbrick-and-mortarstoresintheUSwithChineseshoppers.
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January18,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
DeborahWeinswig,CPAManagingDirectorFungGlobalRetail&TechnologyNewYork:917.655.6790HongKong:852.6119.1779China:86.186.1420.3016deborahweinswig@fung1937.comJohnHarmonSeniorAnalyst
ShoshanaPollackSeniorResearchAssociate
JingWangResearchAssociate
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