© 2017 Celect, Inc. All Rights Reserved.1
Welcome!
Todd HarrisDirector of Marketing
Celect
Deborah WeinswigManaging Director
Fung Global Retail & Tech
José ChanVP of Business Dev
Celect
© 2017 Celect, Inc. All Rights Reserved.
• Introduction to Celect & FGRT • Major Retail Trends• 7 Surprises of 2017• 2018 – The Breakout Year for AI?
© 2017 Celect, Inc. All Rights Reserved.3
WHAT WE WILL COVER TODAY
Celect Background
• Predictive analytics SaaS platform to help retailers optimize inventories through data-driven decisions.
• We leverage a groundbreaking advance in Machine Learning and Optimization.
• An MIT Artificial Intelligence Lab Top 50 Technology Innovation
© 2017 Celect, Inc. All Rights Reserved.4
5DeborahWeinswig [email protected]
AbouttheFungGroup
PRODUCTS SERVICES DISTRIBUTION RETAILING
Li&FungLimitedListedontheSEHK
GlobalBrandsGroupListedontheSEHK
FungRetailingLimitedPrivatelyHeldEntity
ConvenienceRetailAsiaLimited
ListedontheSEHK
TrinityLimitedListedontheSEHK
BrandedLifestyleHoldingsLimitedLiFungKids(Holdings)Limited
Toys“R”Us(Asia)SuhyangNetworks
UCCALFashionGroupPrivatelyHeldEntities
FungHoldings(1937)Ltd.AprivatelyheldentityandmajorshareholderoftheFungGroup
KNOWLEDGE
FGRTFungBusinessIntelligence
FungAcademy
6DeborahWeinswig [email protected]
• TheknowledgebankfortheFungGroup
• Focusesonemergingretailandtechnologytrends
• Establishedin2014
• BasedinNewYork,withresearchteamsinLondon,HongKong, Israel and India
• Publishesthematicresearchandresearchwithaglobalscopeontopicssuchasomnichannelretail,fashionandretailtrends,anddisruptivetechnologies
• CompilestheFGRTRetailIntelligenceIndex
AboutFGRT
8DeborahWeinswig [email protected]
TECH
Experiences&
EntertainmentShortenedCustomer
journeys
ConnectwiththeConsumer
...andconsumerstodayarecallingfordifferentretailexperiences,bothonlineandoffline.
Shoppers’ExpectationsAreConstantlyEvolving…
9DeborahWeinswig [email protected]
Retailersmustrethinkhowtheyengageandretaintheirvisitors.
PersonalizedServices
TheConnectedCustomer
Conversations
Community
ReinventingtheRelationshipwiththeConsumer
10DeborahWeinswig [email protected]
Deliveringarelevant,personalizedexperience
RedefiningConvenience
mobileinteractionandproduct-
browsinghistory
Analyzetargetconsumer
audience
Identify productsand
services
Personalize andcontinuetrend-driveninnovation
Execute
11DeborahWeinswig [email protected]
IntheAll-ChannelUniverse,CustomerIsNowtheChannel
OrderFrom FulfilledBy WhereReceived
Home
Elsewhere
YourStore
DifferentStore
Mobile
DirectDC
StoreDC
YourStore
DifferentStore
Vendor
Home
Elsewhere
YourStore
DifferentStore
Source:Hudson’sBayCompany
12DeborahWeinswig [email protected]
TheRetailerasaHubforOne-StopShoppingRetailersserveasahubforconsumerstoarrangetravel,havetheirclothesdrycleaned,bookappointmentsforhaircuts,andpayforservices.
1.Shopping
2.ClothingStorage 3.DryCleaning
4.Haircut
5.Shave6.Teeth-Whitening
13DeborahWeinswig [email protected]
GlobalTrendsthatCanImpactUSRetailO2OMarketingandDirectSelling:InfluencersandLivestreaming
Line KaokaoFacebook Instagram Snapchat WeChat
2,000
700
255
963
169 49 111
0
500
1000
1500
2000
2500
SuperBowlViewership
MajorSocialMediaPlatforms:MonthlyActiveUsers(Mil.)
Global China Japan Japan Comparison
• Socialmediaplatformsprovideenormousreachformarketingandadvertising• Differentregionshavetheirownuniquesocialplatforms• PlatformssuchasWeChatprovidespaceforbrandstoruntheirownserviceaccountwithintheapp,sotheycanpromoteandsellproducts
14DeborahWeinswig [email protected]
Robotics Augmented Reality
Artificial Intelligence
Virtual Reality
TheNextWaveofDisruptorsinRetail
15DeborahWeinswig [email protected]
• Weforecastthatthecompany’sgrossmerchandisevolumewillreach$50billion in2020(growingataCAGRof16%).
Source:FGRT
Amazonlaunches Acquired
2002Expansionintoapparel
2015Apparel
privatelabellaunched
Amazonapparelgenerates$16.3billioninsales
20167more
Private labelslaunched
Intimatesprivatelabelin1Q
1995 2006Acquired2011 2015 2017
2009
Acquired
AmazonCapturestheMajorityofE-commerceGrowth
17DeborahWeinswig [email protected]
• Thelistkeepsgrowing,mostlyduetodepartmentstoreandspecialtystoreclosures.
1.StoreClosingsContinuetoExceedStoreOpenings
Total: 6,985 announced store closures
229% year over year
18DeborahWeinswig [email protected]
Asidefromtheannounceddeals,therehasbeenmuchotherM&Achatter:
• Nordstrom announceditisexploringa“goingprivate”transaction(June8,companypressrelease)
• AmericanEagleOutfittersisreportedtobebiddingforAbercrombie&FitchwithprivateequityfirmCerberusCapitalManagement(May25,Reuters.com)
• DeckersBrandsannouncedthatitisreviewingstrategicalternatives(April25,companypressrelease)
• BJ'sWholesaleClubputitselfupforsaleinApril(April14,NewYorkPost)
2.SurgeinRetailM&AActivity
19DeborahWeinswig [email protected]
2.SurgeinRetailM&AActivityNotableAnnouncedRetailM&AintheUS,YTD
Date Company Target Value
Dec-13 Target Shipt $550 millionDec-4 CVSHealth Aetna $69billionNov-21 Walmart Parcel UndisclosedNov-17 Williams-Sonoma Outward $112millionOct-4 OfficeDepot CompuCom Approp.$1billionOct-3 AceHardware TheGrommet UndisclosedSep-22 Albertsons Plated UndisclosedJul-17 MichaelKors JimmyChoo $1.2billionJun-17 Sycamore Partners Staples $6.9billionJun-17 Amazon WholeFoods $13.7billionJun-17 Walmart Bonobos $310 millionMay-17 Coach KateSpade $2.4billionApr-17 Petsmart Chewy.com $3.35billionMar-17 Walmart ModCloth Lessthan$75millionFeb-17 Walmart MooseJaw $50millionJan-17 Walmart Shoebuy $70million
Source:Companyreports
20DeborahWeinswig [email protected]
3.WalmartAcquisitionSpree• Afteracquiringanumberofonlineapparelcompanies,WalmartwillhostaLord&TaylorstorefrontonWalmart.comstartinginthespringof2018.
• Theintentistocreateapremiumfashiondestination onWalmart.com.
• Wal-Martisbeginningtobuildout"elementsofdiscoveryandinspiration"withinthefashionportionofitswebsite.
21DeborahWeinswig [email protected]
• Thegrowthofe-commercerevenuehastakenofffollowingtheacquisitionofJet.com.
4.WalmartExplosiveE-commerceGrowth
7.0% 11.8%
20.6% 29.0%
63.0% 60.0%
50.0%
7.5% 13.0% 16.8%
31.0%
69.0% 67.0%
54.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3
GrowthinWalmartE-commerceSalesandGMV
Sales GMV
Source:Companyreports
AcquisitionofJet.com(9/19/16)
22DeborahWeinswig [email protected]
• Alibabaguidedforrobust45%–49%revenuegrowthinitsfiscal2018(endedJune)atits2017InvestorDay.
5.Alibaba’s50%RevenueGuidance
33%
56% 45%–49%
0%
10%
20%
30%
40%
50%
60%
FY16 FY17 FY18E
AlibabaAnnualRevenueGrowth
Source:Companyreports
23DeborahWeinswig [email protected]
• Fore-commerceretailers,physicalstoresaremarketingassetsthatsupporttheironlinebusinessmodels.Examplesinclude:
• Amazon
• Bonobos
• Birchbox
• Everlane
• RenttheRunway
• WarbyParker
6.OnlineGoingOffline
Source:Amazon
24DeborahWeinswig [email protected]
13 + 67 popups
1 + 1popup
48
16 + 1 popup
52
StoresandPop-Ups
StoreCollaborations/Acquisition
s
133
1 5
1 19
61 30 6
PhysicalStores
456
Source: Company Reports, October 2017
24
1
6.OnlineGoingOffline
25DeborahWeinswig [email protected]
• OnJune16,AmazonannounceditsplantoacquireWholeFoodsfor$13.7billionincash.
• AmazonclosedtheacquisitiononAugust28,andAmazonelectronicswereavailablethatsameday.
• Amazonreducedpricesasmuchas43%onthedayofcloseandagainonNov.15.
7.AmazonAcquiresWholeFoods
Source:GeekWire
26DeborahWeinswig [email protected]
Bonus:WalmartLaunchedtheStoreNo.8Incubator• StoreNo.8isatechnology-startupincubatorinSiliconValleyoperatingunderMarcLore.
• StoreNo.8aimstoidentifychangesthatwillreshapetheretailexperience,includingvirtualreality,autonomousvehicleanddronedeliveryandpersonalizedshopping.
• InAugust,StoreNo.8hiredJenniferFleiss,co-founderofRent-the-Runway,tooverseecodeeight,theincubator’sfirstportfoliocompany.
28DeborahWeinswig [email protected]
• Inretail,AIcanhelpwithpersonalization,customization andlocalization.
• AIcanhelpretailersanalyzelargevolumesofdatatocomeupwithproductandservicerecommendations.
WhyDoesAIMattertoRetail?
29DeborahWeinswig [email protected]
AIMeansPersonalizationandHigherConversion
Source:Alizila.com
Alibaba saw a surge in mobile engagement during the first quarter of 2017 due to AI-powered personalization.
Its shopping app reached 529 million users in June, an increase of 22 million in three months.
6.7 billionPersonalized shopping pages were generated by merchants on Taobao
and Tmall during the 2016 11.11 Shopping Festival
20% higher conversion rate
on personalized landing pages during 11.11 in 2016 compared to non-
personalized ones.
31DeborahWeinswig [email protected]
WhyAIisImportantToday• AIisnotnew,butnowwehavetheabilitytocollectandstorelargeamountsofdatatotrainalgorithmsinacost-efficientway.
• Dataisthekey:moredatabeatbetteralgorithms.
Data
Algorithm
Interface
Action
32DeborahWeinswig [email protected]
DisruptiveTechnologiesApproachingaTippingPoint
Source:Gartner
21%
16%
17%
25%
36%
12%
10%
10%
20%
ConversationalInterfaces
SmartRobotics
3DPrinting
AI
IoT
2015 2018
80%
% growth 2015-2018
150%
70%
35%
-
AccordingtoGartner’sCIOsurveys,disruptivetechnologiesareincreasinglygainingadoption. % of Respondents That Have Deployed A Technology
or are in Short-term Planning of Deployment
33DeborahWeinswig [email protected]
NewRetailIsPoweredbyAI
Rolling Out O2O Services on Mobile Devices and Social Networks
Pure Plays Opening Experiential Stores
Offering New Pickup OptionsSuch as Click-and-Collect
Using QR Codes In-Store to Encourage Customers to Buy Online; Driving Online Traffic toPhysical Stores
Enhancing Mobile PaymentServices In-Store
Forming Strategic Alliances with Internet Companies to Drive Synergies
NewRetail,aninitiativeadvocatedbyAlibaba,referstotheintegrationofonline,offline,logisticsanddataacrossasinglevaluechain
34DeborahWeinswig [email protected]
AIandSingles’Day2017Applications:Alibaba
LanguageProcessing
TmallSmartSelection,anAI-poweredrecommendationalgorithm,helpsbuyersmakedecisionswhilescrollingonline.
CustomerservicechatbotDianXiaomicanunderstandmorethan90%ofcustomerinquiriesandservealmost3.5millionusersaday,accordingtoAlibaba.
UsingdeepQ- networks,Alibabacandeterminethebestfitforproductsinapackage,whichhassaved5%ofoverallpackagingcosts,accordingtothecompany.
DataAnalytics
35DeborahWeinswig [email protected]
ThredUpOfferingAI-Powered‘GoodyBoxes’• GoodyBoxes–anon-subscription,nocommitmentboxfilledwithdiscounteditemsforpurchase.
• For$20,thecustomerreceives10–20secondhanditemsandkeepsandreturnsdesireditems.
• StitchFix’smachine-learningalgorithmlearnsthecustomers’tastesandpreferencesovertime.
Source:AdWeek
ThredUP’sGoodyBoxes
KEY TAKEAWAYS:
1. Retail is being disrupted because consumers expectations have evolved: Convenience, Personalization and Speed
2. 2017 produced many eyebrow raising moments including: Store closings, acquisitions, bankruptcies with more to come in 2018
3. AI is at a tipping point, where both new and existing retailers will more readily adopt AI into their business models
© 2017 Celect, Inc. All Rights Reserved.36
THANK YOU!
© 2017 Celect, Inc. All Rights Reserved.38
Deborah [email protected]
José [email protected]
Todd [email protected]
© 2017 Celect, Inc. All Rights Reserved.39