New Mega Trends Shaping the Future of Great Britain

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Today’s PresenterArchana VidyasekarTeam Lead and Senior Research Analyst, Visionary Innovation Research Group, Frost & Sullivan• Over 6 years of consulting experience • Managing and overseeing research on Global Mega Trends at Frost & Sullivan• Domain expertise in healthcare, logistics, and ICT• Published articles and quoted in reputed journals and mainstream media

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Agenda

Presentation of Top Mega Trends of the Future Influencing the UK EconomySpot new business models and white space opportunitiesMacro to Micro : How To Apply Mega Trends Within Your Organisation to Develop Growth Strategies

Introduction and Definition of Mega Trends

What is a Mega Trend?What is a Mega Trend?Mega trends are transformative, global forces that define the future world with their far reaching impact on business, societies, economies, cultures and personal lives.

Urbanization – City as a Customer

Smart is the New GreenSocial Trends

Connectivity and Convergence

Bricks and Clicks

Innovating to Zero

New Business Models: Value for ManyBeyond BRIC: The Next Game Changers

Future Infrastructure DevelopmentHealth, Wellness and Well BeingFuture of Mobility

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Top Mega Trends Covered By The Visionary Innovation Research Division

Mega Trend 1:Bricks and Clicks

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Future of Clicks in Retail IndustryGlobal Online Retail Sales To Reach $4.3 Trillion By 2025 Accounting for 19% of Total Retail

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United States China United Kingdom

Japan Germany0.000

0.200

0.400

0.600

0.800

1.000

1.200

1.400

1.320 1.300

0.2100.170

0.090

On

line

Ret

ail S

ales

($

trill

ion

)

$11.800 trillion

$23.000 trillion

$0.550 trillion

$11.250 trillion$4.300 trillion

$18.700 trillion

24% 18%

27% 10% 15%

5%

19%Online Sales Non-Online Sales % share of online in total retail

1 2 3 4 52011 2025

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UK Retail – Online Vs. Non OnlineOnline Retail Sales to Account for nearly 1/3rd of Total Retail Sales by 2025 Online Retail Market: Online Vs. Offline Retail Sales, United Kingdom, 2011-2025

2011 2015 2020 20250.00100.00200.00300.00400.00500.00600.00700.00800.00900.00

77.00 116.00 152.00 210.00473.00 479.34 492.41 570.00

Online Sales Offline Sales

Retail Re

venue ($

Billions)

$550.00

$595.00

$644.00

$780.00

Total Retail Sales($ Billion)

Source: Office for National Statistics, IMRG, and Frost & Sullivan Analysis

14.0%

86.0%

19.0%

81.0%

24.0%

76.0%

27.0%

74.0%

% of total

UK’s Retail Model Will Evolve From a Single/Multiple Channel Model to an Integrated Cross Channel Model

Source: Frost & Sullivan Analysis

Department Stores

Supermarkets Hypermarkets Online Mobile Payments Mobile Apps

Bricks (pre-2000) +Advent of Clicks (post-2000)

Interactive StoresVirtual Stores Hyper Online Markets

The Future - Bricks and Clicks (2015 and Beyond)

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Macro to Micro Example Increase in On-line Retailing is ushering new urban logistics business models

Source: Frost & Sullivan Analysis.

New Strategies for Urban Logistics(Special Delivery Options Such as Same-Day Outsourced)

Same-Day Night Time Robotic Warehouses Stores as DCs Locker Boxes

Urban Consolidation Centres High-speed Logistics E-Commerce Hubs

Opportunities for UKClick and Collect

Image Source: iStockphoto and Dreamstime

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Mega Trend 2:Urbanisation - “City as a Customer”

Mega CitiesMega Regions

Mega Corridor11

Smart and Sustainable Cities

Future Mega Cities, Mega Regions, and Mega Corridors of UKBy 2025, UK could see 1 Mega City, 1 Mega Region and 1 Smart City; Around 81.0% (55.2 million) of the Total Population in UK will Live in Urban Regions

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Source: United Nations, Department of Economic and Social Affairs, Population Division (2012). World Urbanization Prospects: The 2011 Revision and Frost & Sullivan analysis, 2012

ManchesterPopulation 2025:

2.5 million

LeedsPopulation 2025:

2.6 million

LondonPopulation 2025:

10.3 millionGDP 2025:

$986.60 billion

Emerging Corridor in 2025

Mega Cities in 2025

Emerging Mega Cities (More than 1.0 million population in 2025)

Smart City in 2025

HSR Phase-I : London to Birmingham (2016-2026)HSR Phase-II: Manchester and Leeds (2032-2033)

London-Leeds-Manchester-Liverpool-Birmingham

Corridor18.5 million

Edinburgh – Glasgow Corridor7.1 million

EdinburghGlasgow

LiverpoolPopulation 2025:

1.9 million

BirminghamPopulation 2025:

1.2 million

London-Sevenoaks-Woking-Slough-Basilton-

Brentwood-Harlow13.2 million

Emerging Mega Region in 2025

Cities, and Not Countries, Will Drive Wealth Creation In the FutureCities like Seoul account for 50% of the country’s GDP; Budapest (Hungary) and Brussels (Belgium) each for roughly 45%. London to account for 30% of UK’s GDP by 2030Cities get a push from UK government…• Ministry of Cities• Super Broadband Access• Smart City Consortium

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Mega Trend 3: Smart is the New Green

Smart Cities Smart Technology Smart InfrastructureSmart Energy

Smart WindowsSmart CloudsSmart Mobility Smart Buildings

Smart Factory Smart MetersSmart BandagesSmart Materials 15

Smart cities To Create Huge Business Opportunities With A Market Value Of $1.5 Trillion By 2020Europe Accounts for 1/4th of Key Market Segments such as Smart Energy and Buildings.

36.8%

23.4%11.4%

10.5%

10.4%

7.4%

1

2

3

4

5 Smart Governance (e-governance, smart education, and smart security)CAGR: 11.9% (2012-2020)

Smart EnergyCAGR: 19.6% (2012-2020)

Smart Infrastructure*CAGR: 8.9% (2012-2020)

Smart TransportationCAGR: 14.8% (2012-2020)

Smart HealthcareCAGR: 6.9% (2012-2020)

Smart BuildingCAGR: 8.8% (2012-2020) 6 Smart City Market by Segments,1 Global, 2020

Source: Frost & Sullivan analysis.

Note: The graph represent the market share of each segment in the smart city market.For more information on smart city market sectors please refer to appendix

Smart City Market

*Other Smart Infrastructure such as sensor networks, digital management of water utilities not included in other segments1These numbers represent the entire smart solutions eco-system in each segment for both urban and non-urban panoramas with the exception of smart security, smart transportation, and smart healthcare.

Mega Trend 4:Social Trends

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Gen YGeo Socialization

“She-conomy”Ageing Population Reverse Brain Drain

Middle Bulge Generational Political Shift

Surge in Asian Work Pool

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Halal Economy

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Aging Population (aged over 65), UK, 2010 and 2020

2010 2020

16.6%19.4%

• By 2020, 1 out of every 5 people will be age 65 or older.• In 2011, those age 65 and older contributed $66 billion in consumer spending to the UK economy; in 2030, this will rise to $121 billion.• Their purchasing power will increase from $122 billion in 2011 to $204 billion in 2030.• In terms of asset holdings, those age 65 and older will hold nearly 50% of the UK’s total liquid assets (cash) by 2020.Source: ONS.gov.uk; HM Revenue; AgeUK.com; igd.com; Frost & Sullivan

Aging Population In the United Kingdom

Robots Priced Between £1.5k to £5k Could Enter our Personal Lives by 2020

Robotic for Elderly Care: Assisted LivingRobots as Teaching Assistants

Nanobots Used for Targeted Drug DeliveryRobotic in Healthcare eg. Non Invasive Surgeries Done by Robotic ArmsRobot Window Cleaner

Robots at Home

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Mega Trend 5:Connectivity & Convergence

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10 Connected Devices for Every Household by 2020

5 billion internet users by 2020

5 connected devices for every user by 2020

500 devices with unique digital IDs (Internet of things) per square kilometre by 2020

80 Billion Connected Devices Globally By 2020

Source: Frost & Sullivan, 2012

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Connected UK – A Digital Economy6 Connected Devices for Every

Household by 2020Average of 4-5 Connected per individual above the age of 16

by 2020

62.0 million internet users in the UK by 2020

93.0 million smart phone users and 75.0 million 3G users by

2020

30.0 million tablet users by 2020 17.0 million smart TV owners by 2020

Source: Ofcom, Pyramid Research, SNL Kagan research

Connected Devices Creating New Opportunities…

Mobile Banking Mobile Commerce Social Media

Over 35.0% of smartphone owners will

use mobile banking services in the UK 2020

Over 30.0% of online sales will be made

through mobile phones by 2020

100.0% of UK’s internet users will actively rely

on social media for communication

Image Source:: Dreamstime.

559

225

107

102

220

365

129

73

71

327

Series6 R&D Reconnaissance Navigation Earth Observaion

136

59

218

354

161 164

31

89

Heavy5,400kg+

Large4,200-

5,400 kg

Medium2,500-4,200

kg

Small500-

2,500 kg

Micro100-

500 kg

Mini10-100 kg

Pico0.1-1 kg

Nano1-10 kg

Space Jam : There will be 1,213 Satellites Launched, Cumulatively, Globally by 2021. UK positioning itself to lead in Small satellite manufacturing1,213

965

2011* 2021*

Source: Frost & Sullivan Analysis

*Note: The numbers refer to accumulated number of satellites to be launched in the period 2012 to 2021 cumulatively

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Business case for faster speed – 4G/5G

£2 in every £5 spent online in UK will be through a mobile device in 2020

Unlocking Mobile Commerce Potential High Digital Revenue per Citizen$

ICT Business Incubators - Hubs / TechnopolisesNew revenue streams for treasury through EGovernance.

Digital City Infrastructure Revenue

$$

$ $$

Mobile data increased by 16.8% to reach £2.4bn in 2012 $2 of every $5 spent online to be through a mobile device by 2020.Highest digital revenues per capita in Europe at £3.1 per UK citizen

12% of UK GDP from ICT businesses Over 20% increase in tax collected through eTax filling platformsSmart City Market to be Worth £970 billion by 2020

Macro-to-micro Implications of Connectivity Trends

Source: Ofcom, Frost & Sullivan, 2012

Mega Trend 7:New Business Models: Value for Many

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New Business Models

Personalization and Customization

Personalization & CustomizationNike

Quirky .comCo-Creation

One-off Experience

Service as a Business ModelLocation Based Services(red letter Days)Source: Frost & Sullivan, 2012 27

Sharing- What is Yours is Mine

Free Premium

Freemium

+

= Group Buying

Source: Frost & Sullivan, 2012 28

Potential for over 15 million car sharing members in Europe alone by 2020Pinterest attracts over 70 million users – Tesco, ASOS among leading UK retailers merchandising through the site

Social Merchandising

BEYONDMega Trend 8:Economic Trends

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Internal Economic Growth Hubs: Top Economic Regions in UK in 2025South East Region could grow to become the second largest region of UK accounting for 15.3% of the country’s total GDP ($ 562.66 billion)

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Scotland$194.50 billion (2011)

$286.85 billion (2025)

Yorkshire and The Humber$170.19 billion (2011)$239.04billion (2025)

Greater London$507.40 billion (2011)$986.60 billion (2025)

East of England$218.81billion (2011)$316.27 billion (2025)

South East$364.69 billion (2011)$562.66 billion (2025)

North East $72.93 billion (2011)$77.20 billion (2025)

East Midlands$145.87 billion (2011)$202.26 billion (2025)

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2

4

6

8

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South West$194.50 billion (2011)$279.49 billion (2025)

Wales$85.09 billion (2011)

$102.97 billion (2025)

West Midland$170.19 billion (2011)$224.33 billion (2025)

North West$243.13billion (2011)$342.01 billion (2025)

Northern Ireland$ 63.21 billion (2011)$77.22 billion (2025)

3

5

7

Source: Eurostat, and Frost & Sullivan analysis, 2012

Mega Trend 9: Health, Wellness and Wellbeing

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MoodStress levelsMental healthSense of optimismAttitudeSecuritySafety

Personal valuesPersonal fulfilment

Self image / self actualisation

Sight / visionTouch & feelSmell / breathingSoundTemperatureWellness

The 3 Cornerstones - The Body, Mind and Soul - Contribute To Humans Definition of Health, Wellness and Well Being

Source: Frost & Sullivan, 2012 32

Future of Health, Wellness and WellbeingUnited Kingdom expected to be the three top markets when it comes to technology adoption in Telehealth and EMR

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E-Health/M-HealthHealth Kiosks

Robotics in Healthcare

Regenerative Medicine

Tissue Engineering

Wonder Drugs and Personalized Medicine

Cybernetics

NutraceuticalsNon-Invasive Surgery

Source: Frost & Sullivan analysis.

Mega Trend 10: Future Of Mobility

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Future Innovation in Mobility to Focus on The “Wild” Side

KnownSolutions

Met Needs Unmet Needs

UnknownSolutionsTechnology InnovationTraffic Prediction systemParking Search assistanceCashless Payment

ImprovementMicro carsElectric CarsElectric BikesApplication InnovationCar SharingCar PoolingBike Sharing

Wild InnovationMobility IntegrationNew Mobility ProductsMotorized MoverTwo seated Electric Car

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The Future of Mobility Is Multi-Modal Commuting, Combining Door to Door Solutions Using Dedicated Mobility Platforms

City

SuburbsIntercity

TRAVEL

DISTANC

E

TRAVEL DISTANCEDestination

PublicTransportation

Private CarsShared Mobility

Micro-mobility

Intercity Bus

Intercity Train

Shared Mobility

Door to door integrated, multi-mobility a reality in futureVehicle manufacturers to offer smart mobility solutions ensuring first and last mile connectivity.Government to club public transport with bike / two wheeler/car rental schemesMarket will see new players in market termed as “Mobility Integrators”36

Source: Frost & Sullivan

Is the Future of Mobility James Bond.................

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...............................or Jason Bourne!

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So what will the future look like in 2025 to a UK citizen

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1. We will start witnessing robots in our homes2. Digital Assistants will guide our everyday lives (even in our cars)3. Cars to have many autonomous functions which will provide advanced driver assistance functions4. You will most likely live in a British city which wants to be Smart or Sustainable5. We will have multiple devices monitoring our well being and wonder and designer drugs will be common place (but not paid by NHS)6. UK’s Centre of Economic Gravity could shift from Financial Services to Technology as UK’s Digital Economy Grows to account for a fifth of its GDP by 2025

Macro MicroFrom Macro to Micro: Taking Mega Trends from Information to Strategy ImplementationMega TrendSelected trends that impact your business and markets

Sub TrendA sub-layer of trends that has a wide ranging impact Impact to Your IndustryVisualising the roadmap of these critical forces through scenario-building and macro economic forecasts

Impact on Future Product/ Technology

Analysis of Opportunities and Unmet Needs

To

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Learn More About “New Mega Trends”Upcoming Book:New Mega Trends Implications for our Future Lives By Sarwant Singh     Publisher: Palgrave Macmillanhttp://www.palgrave.com/products/title.aspx?pid=577423

Join Our Mega Trend Group OnMega Trends: Strategic Planning and Innovation Based on Frost & Sullivan Research

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Contact InformationSarwant SinghPartner & Practice Director, Visionary Innovation Research Group and Automotive & Transportation

(+44) 2079157843

sarwant.singh@frost.com

Archana AmarnathProgram Manager, Visionary Innovation Research Group

(+44) 2079157893

aamarnath@frost.com

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Archana Devi VidyasekarSenior Research Analyst, Visionary Innovation Research Group

(+91) 4466814216

ArchanaV@frost.com