hk retail expo 2016—identifying whitespaces in a difficult retail environment
TRANSCRIPT
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Identifying Whitespaces
in a Difficult Retail Environment
Kiril Popov
Analyst
June 15, 2016
FUNG GLOBAL RETAIL & TECHNOLOGY
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Agenda
ABOUT US
GLOBAL RETAIL OVERVIEW
CONSUMER TRENDS
TAKING ACTION
3
About Fung Group
TRADING LOGISTIC
S
DISTRIBUTIO
N
RETAILING
Li & Fung LimitedListed on SEHK
Global Brands GroupListed on SEHK
Fung Retailing LimitedPrivately Held Entity
Convenience Retail
Asia Limited
Listed on SEHK
Trinity Limited
Listed on SEHK
Branded Lifestyle Holdings Limited
LiFung Kids (Holdings) Limited
Toyrs “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
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About Fung Global
• Fung Global Retail & Technology advises retailers, real estate developers and tech companies on projects situated at
the intersection of retail, tech and/or fashion.
• Our team offers a robust knowledge bank and significant experience in the retail, fashion and tech fields. We are
involved in many areas of the business and believe this allows us to offer a unique perspective by focusing on the
future and where the sector is heading.
A Unique Combination of Retail, Fashion & Tech
RETAIL FASHIO
N
TECH
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Our Accelerator Partnerships
ENTREPRENEURSROUNDTABLE
ACCELERATOR
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Agenda
ABOUT US
GLOBAL RETAIL OVERVIEW
CONSUMER TRENDS
TAKING ACTION
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E-commerce Growth
8,677
9,210
14,281
14,586
14,732
21,423
33,252
36,006
137,412
279,973
0 50,000 100,000 150,000 200,000 250,000 300,000
Australia
South Korea
France
Japan
US
Top 10 Internet Retailing Markets By Growth
2010-2015 ($ mn)
Source: Euromonitor International
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
2011 2012 2013 2014
Reta
il v
alu
e (
US
$ m
n)
Mobile Internet Retailing in Key Markets
2011-2014
USA
China
Germany
Japan
United
Kingdom
Russia
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Brick-and-mortar underperformance in the US
Source: Company Reports
-70% -60% -50% -40% -30% -20% -10% 0%
Sears
Christopher and Banks
Pacific Sunwear
Restoration Hardware
Aéropostale
Bebe Stores
Lands' End
Barnes & Noble
Williams-Sonoma
Dillard's
Gap
Change in Store Base: 2010-2015There was a 7% year-over-year increase
in store closures announcements in
2015
There was 29% less square footage
associated with announced store
closures in 2015 than
in 2014
16 retailers closed at least 10% of their
stores between 2010
and 2015
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US Retail Space Closure by Segment in 2015
Source: ICSC and PNC Real Estate Research
270
378
396
460
1,961
3,123
3,404
3,984
5,024
7,629
9,674
14,646
0 10,000 20,000
Retail, Not Elsewhere Classified
Toy Stores
Bookstores
Sporting Goods
Restaurants
Discount Department Stores
Drug Stores
Home Furnishings
Home Entertainment
Grocery Stores
Apparel
Department Stores
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AMAZON ATHLETA
CASPER
AYR
YOGIBO
HARRY’S
1 400 120 1 1 2
3 21 1 1 7 150
4 27 25 12 2
Source: Company Reports
Evolving Pure Plays (Number of Actual/Planned Physical Stores)
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Rebalancing in China – moving to O2O
Source: Fung Business Intelligence Center, Fung Business Intelligence and China Commerce Association for General Merchandise Survey
Wanda Group closed 56 Wanda
Department Stores in 2015
Marks and Spencer closed 5 of its 15
stores in China in 2015
Rainbow Department Store closed 5 stores in 2015
Traditional retailers form partnerships with Internet players to facilitate O2O deployment:
• Alibaba invested 28.3 billion yuan for 19.99% stake in Sunning
• JD.com invested 4.3 billion yuan fo4 10% in Yonghui
55% of department stores have gone online:
• 69% have launched their own transactional website
• 55% have opened an online store on a third party platform
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Agenda
ABOUT US
GLOBAL RETAIL OVERVIEW
CONSUMER TRENDS
TAKING ACTION
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1. The Experience Economy
• 78% of millennials prefer to spend money on an experience rather than buying something desirable
• 69% believe attending live experiences helps them connect better with their friends and community and people around the world
Source: Harris Poll Survey
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Experiential Retail: A Way to Bring Shoppers Back to Stores
• Urban Outfitters acquired the Vetri Family group of restaurants in 2015
• Club Monaco collaborated Café Myriade to open an in-store coffee shop in Montreal
In-StoreTechnology
• Rebecca Minkoff offers interactive mirrors as well as virtual reality headsets in stores
• Tommy Hilfiger stores have virtual reality headsets that allow visitors to experience runway shows
Customization
• In March of 2016, Nike revealed its app, Nike+, that gives shoppers the ultimate customized experience
Food &
Beverage
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Experiential Retail: Making the Experience Engaging
• Urban Outfitters acquired the Vetri Family group of restaurants in 2015
• Club Monaco collaborated Café Myriade to open an in-store coffee shop in Montreal
Food & Beverage
• Rebecca Minkoff offers interactive mirrors as well as virtual reality headsets in stores
• Tommy Hilfiger stores have virtual reality headsets that allow visitors to experience runway shows
Customization
• In March of 2016, Nike revealed its app, Nike+, that gives shoppers the ultimate customized experience
In-Store
Technology
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Experiential Retail: Customization and Personalization
• Urban Outfitters acquired the Vetri Family group of restaurants in 2015
• Club Monaco collaborated Café Myriade to open an in-store coffee shop in Montreal
Food & Beverage
In-StoreTechnology
• Rebecca Minkoff offers interactive mirrors as well as virtual reality headsets in stores
• Tommy Hilfiger stores have virtual reality headsets that allow visitors to experience runway shows
Customization
• In March of 2016, Nike revealed its new app, Nike+, that gives shoppers the ultimate customized experience
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2. Social Networks as Retail Platforms
Source: Activate, Company Reports, TechninAsia, Quartz
App2016/2015
Active Users (Mil.)Approx. YoY
Change
WhatsApp 1,000 37%
QQ Mobile 860 5%
Facebook Messenger
800 53%
WeChat 760 39%
Skype 300 27%
Viber 249 29%
LINE 212 57%
Snapchat 100 45%
2.5 billion people are registered to
use at least one messaging app
Adults spent an average of 109 mins.
per day in 2015 on social media sites
such as Facebook, Twitter and
Consumers spend 84% of their time
in only five apps each month: One or
two are likely social media, instant
messaging, etc.
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2. Social Networks as Retail Platforms
27/7 Customer Service
Marketing through influencers and
promotions
In-platform payments
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3. Healthy Living & Tracking
Source: Euromonitor International
-2%
0%
2%
4%
6%
8%
10%
0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000
CA
GR
20
15
-20
20
Total sports clubs and gyms 2015
Sports Club Numbers and Growth 2015-2020
Russia
China
US
12
16
17
33
40
44
0 10 20 30 40 50
Team Sports
Yoga
Group Fitness
Cycle
Walk/Hike
Run/Jog
% Chinese Respondents Active in Selected Exercise at Least Once a Week 2015
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Dec. 2013 Feb. 2015 Jan. 2016
MapMyFitness
• $150 million (cash)
• Provides users with the ability to map, record and share workouts
• Previous user base: 30 million
MyFitnessPal
• $475 million (cash)
• Allows users to track stats on their food habits
• Previous user base: 80 million
Endomondo
• $85 million (cash)
• Previous user base: 20 million
• Track workouts
• Strong presence in Europe
Gritness
• Undisclosed
• Search engine to find and join workouts
• 1.5 million workouts available to users
Launched UA HealthBox after announcing at CES 2016
• Combines fitness tracker with a heart-rate strap and smart scale
• Connects with UA’s Record smartphone app
• Price: $400
Announced UA and IBM partnership at CES 2016
• New UA Record app powered by IBM Watson
• Cognitive-computing technology
Under Armour: Healthy Living & Tracking
Jan. 2015 Jul. 2015 Apr. 2016
Source: Company Reports
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Keep & Codoon
• Mobile fitness trainer
• Launched in February 2015
• May 2016: Raised $32 million in Series C
• Total raised: $47 million
• 30 million registered users
• 11 million active users • Sports and wellness service
provider
• Launched in 2011
• May 2016: Raised $50 million in Series C
• Total raised: $91 million
• 50+ million registered users
Source: Company Reports, Crunchbase
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Agenda
ABOUT US
GLOBAL RETAIL OVERVIEW
CONSUMER TRENDS
TAKING ACTION
23
Growing Startup Ecosystem as Source of Innovation
Source: StartmeupHK
Working with
startups offers a way
to experiment and
learn quickly
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NAME UR PRICE
SELF-CHECKOUT
Retail Technology Disruptors Framework
New Retail
Models
HOW WILL THE CONSUMER
SHOP IN THE FUTUREAll Channel
THE CONSUMER CAN SHOP
WHEREVER + WHENEVER
Experiential
Retail
MAKE THE STORE AN
AWESOME PLACECustomer
Engagement
HOW DO YOU CONVERT
THE CUSTOMER
