The_Disruptive_Future_of_Retail_Mayl_(final)

Tony D‘OnofrioMay 2016

The DisruptiveFuture of Retail

© 2016 Tyco. All Rights Reserved.

Agenda

2

© 2016 Tyco. All Rights Reserved. 3

Tony D‘OnofrioMay 2016

4© 2016 Tyco. All Rights Reserved.

The Global Retail Market in 2019

Source: Euromonitor


Global Retail Market Data

Store CountRetail Market Growth Sales Volume

Source: Euromonitor


Global Retail Sales – The World is Flat

Best and worst performers: retail sales volume in 2016 (% change)

Russia

Hungary

Ukraine

Azerbaijan

Venezuela

India

China

Algeria

Romania

Vietnam

Worst performers Best performers

-30 -25 -20 -15 -10 -5 0 0 2 4 6 8 10

Up 2.7% in 2016same as 2015

Sources: The Economist Intelligence Unit, Planet Retail.

20152016 forecast2017 forecast

Retail sales volumes by regions (% change)

Asia-PacificLatin

AmericaWestern Europe

Middle East & Africa

North America World

543210

-1-2-3-4

543210

-1-2-3-4


GR

DI

Cou

ntry

A

ttrac

tiven

ess

Tyco ConfidentialSource: AT Kearney 2015 Global Retail Development Index


2015 Global Retail Development Index

Source: AT Kearney 2015 Global Retail Development Index

Level of globalization by product sector, FY2014Product sector profiles, FY2014

The Global Top 250 Retailers

Source: 2016 Deloitte Global Powers of Retailing


Q Ratio LeadersFastest Growing

Source: 2016 Deloitte Global Powers of Retailing

Top 10 Fastest Growing / Q Ratio Retailers

Retailer Country FY2009 - 2014 retailRevenue CAGR¹ RANK Retailer Country Q Ratio

Vipshop Holdings Limited China 320.8% 1 Hermès International SCA France 6.422

JD.com Inc. China 106.3% 2 Tractor Supply Company US 6.113

Axel Johnson AB/ Axfood,Axstores Sweden 49.3% 3

H & M Hennes & Mauritz AB Sweden 5.811

AB Acquisition LLC (nowAlbertsons Companies Inc.) US 45.3% 4 Inditex S.A. Spain 5.792

Steinhoff InternationalHoldings Ltd. S. Africa 41.6% 5 Amazon.com Inc. US 5.307

Southeastern Grocers LLC(formerly BI-LO Holding LLC)

US 36.0% 6Nike Inc./Direct to Consumer US 5.180

Yonghui Superstores Co.Ltd.

China 33.7% 7 Next plc UK 4.952

OJSC Dixy Group Russia 33.3% 8 The TJX Companies Inc. US 4.438

Chongqing Department StoreCo. Ltd.

China 32.5% 9 Vipshop Holdings Limited China 4.400

Jumbo Groep Holding B.V. Netherlands 30.1% 10 Ross Stores Inc. US 4.369


Make WiseTechnology

Choices

Make WiseTechnology

ChoicesTony D‘Onofrio

May 2016


Retailer LossesShrinkage Inventory Distortion Returns

Return$642.6

Overstock$471.9

Out‐of‐Stocks$634.1

Source: Global Theft Retail Barometer, IHL Group


Global Retail Shrink Highest Global Shrink Countries 2014 -2015

Cost of Retail Crime as % of Total Sales

39%

16%7%

38%

Shoplifting Dishonest Employee Theft

Admin/non-crime LossSupplier Fraud

Source: Global Theft Barometer, 2014-2015

MEXICO FINLANDNETHERLANDS

FINLAND HONG KONGMEXICO

1.68%1.48% 1.38%

4.48%2.80% 1.38%

14© 2016 Tyco. All Rights Reserved. 14

The Evolution of Loss Prevention

Item Intelligence

Store Intelligence

Item Security

Data & Video Analytics

EAS Video RFID

Traffic & ShopperAnalytics


Store Systems Priorities

Top Store System Priorities for 2016

15%

16%

16%

19%

21%

29%

32%

35%

42%

52%

Assisted Selling

Ship-from-Store

Workforce Management

Improved Training Tools

Single Transaction Engine

WAN/WiFi Upgrade

Inventory Visibility

BI/Analytics

Mobile for Associates

Advanced CRM/Loyality

3.9% Average increase

in-store technology spending in 2016

Source: 2016 IHL / RIS Store Systems Study

6.5%5.0% 4.7%

2.8% 2.4%

PredictiveAnalytics

ProximityMarketing

DataVisualization

RFID Internet ofThings

Emerging Tech


Status of In-Store Technology Deployments

Source: RIS / Gartner Retail Technology Study 2016

6%

7%

11%

13%

16%

19%

25%

27%

29%

31%

19%

15%

18%

20%

20%

22%

21%

20%

20%

12%

15%

16%

12%

19%

19%

17%

21%

17%

10%

11%

13%

8%

15%

12%

12%

14%

6%

12%

9%

9%

Location-based sensing for MarComm

In-store video analytics

Clienteling/guided selling

Shopper tracking capability

Digital devices (signage, kiosks, magic mirrors, etc.)

Real-time store monitoring / KPIs

Mobile devices for associates / manager

In-store pickup / return of web goods

WiFi for customers

In-store shipping

Up-to-date tech in place Started major upgradeWill start within 12 months Will start within 12-24 months


Omnichannel / Multi-Sensored / Mobile Future

SCREEN TIME(Per Day)

30 Country Millward Brown study of 16-45 year olds

Source: Transparency Research

Deloitte Digital

Frost & Sullivan

Frost & Sullivan

Global Theft Barometer

IHL GroupIHL Group

$1.5 TrillionMobile & Digital

Influence on in‐storesales in 2014, up

from $334B in 2012

$5,409MillionRetail RFID MarketBy 2020, up from$542M in 2013

$5.8 BillionGlobal Wearables

Tech market by 2018,Up from $750M in 2012

$162 BillionGlobal Retail Shrink

$4.3 TrillionGlobal Online Retail Sales

By 2025, up from$0.55T in 2011

$1.1 TrillionGlobal Inventory Distortion

$634 Billion From Out‐Of‐Stocks

63%Global Retailers

Maintaining / ExpandingGlobal Source Tagging

Phones147

minutes

TVs113

minutes

PCs108

minutes


Age of Amazon:Challenges & Opportunities

Source: RIS / Gartner Retail Technology Study 2016

1. Developing personalized marketing capabilities 51%

2. Network and IT systems security 47%

3.Leveraging social media (for sales, CRM, hiring, customer service, etc.)

46%

4.New payment technologies(EMV, contactless, mobile, etc.)

45%

5.Expanding unified commerce (omnichannel) initiatives

44%

Top 5 major strategies over the next 18 months

Top 5 challengesover the next 3 years

1. Customer data security 49%

2. Retiring legacy systems 46%

3.Optimizing digital commerce as growth channels

39%

4. Application integration 35%

5. Optimizing stores as a growing channel 29%

Investments in technologies that improve the retailer’s ability to meet customer

expectations, exploit innate strengths, overcome weakness and disintermediate

others, will move the needle. Make wise choices.


TheDisruptiveFuture of

Retail

TheDisruptiveFuture of

RetailTony D‘Onofrio

May 2016


Technology Driving Shifts in Retail Power


Evol

ving

Tec

hnol

ogy

Syst

ems

Impa

ctin

g R

etai

l


Top Retail TrendsMultichannel consumers

more profitable than single channel*

shoppers to refrain purchasing from store if desired brand not available*

*Sources: RIS 2015 Shopper Experience Study; RSR 2015 Omnichannel Report; RSR 2015 Mobile Study

retailers believe consumers are using mobile as part their shopping experience*

50%

69% 90%


Relevancy of the Store

Educate & empower in-store employees using technology

#1

Brick & mortar stores account retailer revenues*85%

Sources: PSFK and RSR Research; RSR 2015 Store Report

Opportunity for improving in-store experience*

© 2016 Tyco. All Rights Reserved.. 24

The Retailer’s OpportunitiesMandates for Omnichannel Shopper Satisfaction in Digital Retailing

CONSISTENCY - Product, Price and Service

CONVENIENCE - Where / When / How

ACCESSIBILITY – All Channels & Locations

SERVICE - Balancing Operations, Service & Costs The Digital Future Retail Store


The Consumer Power

What Consumers

Want

How are Retailers Addressing it?


The Consumer / Retailer Information Dichotomy

Retailers

Consumers

How do consumers in general feel about disclosing information about themselves?

0% 20% 40% 60% 80% 100%

RetailersConsumers

Store employees welcome the customer by name when he or she enters the store

Source: HUI Research (2015)

27© 2015 Tyco. All Rights Reserved. Company Confidential.© 2015 Tyco. All Rights Reserved. Company Confidential. 27

Global Source Tagging & The Future of RetailFuture Plans of Using Source Tagging Across Regions Future Plans of Using Source Tagging Across Product Categories

The Future of Retail• Less Store Labor / Improved Customer Experience• Interactive Retail Stores with Employees as Brand Ambassadors• Item Level Intelligence Driven by Source Tagging / Out of Stocks FOCUS• A Focus on “Value” Integration• A Sustainable Retail Future


Technology Will Continue to Disrupt the Store


Tony D’OnofrioEmail: [email protected]

Phone: +41 791 508 208

Thank You

© 2016 Tyco. All Rights Reserved.

Store Reinvented - The Future of the Store

“Retailers reported 16.5%YOY improvement in KPI’s related to sales, customer engagement and satisfaction as a result of empowered sales associates”

Source: EKN Modern Labor for Omnichannel Success Report


The Smart Store

Shopper Analytics

Staff Allocation

Loyalty/ Abandonment

Zone Performance

Market Benchmarks

Customer Engagement

Draw Rate

Foot Traffic

Inventory Intelligence

Omni-Channel Fulfillment

Inventory Visibility

Track & Trace Authentication

Stock-out Reduction

Loss Prevention

Loss Pattern Recognition

Employee Theft

Protection

Shrink Reduction

Smart Storefronts

Multi-Sensored Immersive Shopping Experiences


RFID Market in Retail: 2010-2020 Revenue

Note: All figures are rounded. The base year is 2013. Source: Frost & Sullivan

By Products By Region


Benefits from RFID in Retail

Revenue Customer Sat

Product availability and merchandizing

Reduced OOS

Better display execution

Better omni-channel execution

Inventory IntelligenceInventory Accuracy

Margin OpEx

Planning and allocation

Reduced markdowns

Reduced inventory carrying costs

Better omni-channel execution

OpEx

Laborefficiency

Counting

Replenishment

Receiving

Stocking

COGS

Loss prevention

Shrink pattern recognition


Macy’s RFID Journey

• Inventory count 1x / year

• Inventory accuracy deteriorates 2-3% per month

• Inventory accuracy 60-70%

BEFORE RFID

• 1x / year & can cycle count up to 24x / year

• Achieve nearly 99% accuracy w/annual inventory

• Annual inventory accuracy 95%

• RFID categories out performed non-RFID categories with avg. 10% sales lift

WITH RFID

• B2F – Back to Front, Sales Floor Replenishment

• Increased sales and margins, reducing MDs

• 1/3 reduction in basic stock required on-hand

• Improved display compliance from avg. 65-70% to nearly 100%

• P2LU – Pick to the Last Unit

• Leverage 15-20% of store inventory that exits in single units

• Omni-channel readiness enabling $1B reduction in store inventory

• Sales lift on regular & 1st MD merchandise

BEYOND REPLENISHMENT

Peter LongoMacy’s, President, Operations and Logistics -January 2015

RFID is your foundational ‘air supply’

to deliver an omni‐channel promise.

Source: GS1 panel discussion ‐‐ January 13, 2015 at NRF Big Show

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The_Disruptive_Future_of_Retail_Mayl_(final)