Trends in Retail and E-Commerce - CIM Group · 2018-10-25 · A growing retail trend includes both physical stores and e-commerce to provide a seamless shopping experience for consumers

INAV

This material must be read in conjunction with the prospectus in order to understand fully all of the implications and risks of the offering of securities to which it relates. This is neither an offer to sell nor a solicitation of an offer to buy the securities described herein, and the offering is being made by means of a prospectus. A copy of the prospectus must be made available to you in connection with this offering. Neither the Securities and Exchange Commission, the Attorney General of the State of New York nor any state securities regulator has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.NOT A DEPOSIT | NOT FDIC INSURED | NOT GUARANTEED BY THE BANK | MAY LOSE VALUE | NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY

CCPT V

Trends in Retail and E-Commerce

2 www.cimgroup.com | © 2018 CCO GroupTrends in Retail and E-Commerce

More than 90% of total retail sales are transacted in a physical store.

3www.cimgroup.com | © 2018 CCO GroupTrends in Retail and E-Commerce

© 2018 CCO Group | www.cimgroup.com

NOT A DEPOSIT | NOT FDIC INSURED | NOT GUARANTEED BY THE BANK | MAY LOSE VALUE | NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY

Brick-and-Mortar Retail Remains StrongWhile online shopping has grabbed headlines in recent years, e-commerce still

represents only a small percentage of retail sales. A majority of customers prefer to

shop in physical stores.1 Some retail categories in particular, such as discount and

grocery stores, function best in physical locations.2,3

A growing retail trend includes both physical stores and e-commerce to provide a

seamless shopping experience for consumers. This strategy, known as omnichannel

retailing, integrates online, mobile and physical touchpoints.4 An omnichannel

strategy offers information and convenience as well as the sensory “see, touch, feel”

experience of the physical store that purely online retailers cannot provide.5

With 73% of shoppers using multiple channels during their purchase journeys, many

successful retailers leverage physical stores while integrating corresponding online

platforms.6

1) The State of Retail 2017, TimeTrade Systems, Inc., 2017. 2) Estimated Annual U.S. Retail Trade Sales – Total and

E-commerce: 1998-2015, U.S. Census Bureau. 3) Two-thirds of All Retail Shoppers Shop Off-Price, NPD Group, July 2016.

4) A Study of 46,000 Shoppers Shows That Omnichannel Retailing Works, Harvard Business Review, January 2017.

5) Why Amazon is Betting Big on Brick and Mortar, Retail Dive, December 2016. 6) A Study of 46,000 Shoppers Shows That

Omnichannel Retailing Works, Harvard Business Review, January 2017.


7) Retail Indicators Branch, U.S. Census Bureau, Last Revised 03/21/18. Estimates are adjusted for seasonal variation, but not

for price changes. Total sales estimates are also adjusted for trading-day differences and moving holidays. 8) Data represents

trailing twelve months as of 12/31/17.

As of December 31, 2017, e-commerce accounted for only 9.1% of total retail sales.7

Brick-and-Mortar

$4.63Trillion

E-Commerce$452 Billion

E-Commerce$45 Billion

Brick-and-Mortar

$3.13Trillion

2002 Retail SalesOverall Retail Sales (Past 12 Months)8




E-Commerce Growth Has Slowed

Between 2002 and 2007, e-commerce

sales growth averaged 26%.

Between 2010 and 2017, e-commerce

sales growth averaged 15%.

Source: Retail Indicators Branch, U.S. Census Bureau, 2017.

E-Commerce and Total Retail Sales: Levels and Year-Over-Year Growth

2017


Shoppers Continue to Prefer Physical Stores

79% of multichannel retailers indicate physical stores as their main channel for

generating sales.9

Of U.S. consumers surveyed:

7%

Are online-only shoppers11

78%

Believe it is important to try out a product in-person before purchasing10

64%

Prefer buying from physical

stores over buying online10

57%

Rarely or never make online purchases10

9) Total Retail 2017, PwC, 2017. 10) Online Shopping and E-commerce, Pew Research, December 2016. 11) A Study of 46,000

Shoppers Shows That Omnichannel Retailing Works, Harvard Business Review, 2017.




Percentage of Sales from E-Commerce

12) Estimated Annual U.S. Retail Trade Sales - Total and E-commerce: 1998-2016, U.S. Census Bureau, Last Revised 03/21/18.

Consumers purchase a majority of goods in brick-and-mortar stores.12

2.8%

Automotive Vehicles and Parts Dealers

Sporting Goods, Hobby, Book & Music Stores

Clothing and Accessories

3.0%

General Merchandise Stores

.05%

Electronics and Appliances

% of category retail sales from e-commerce

2.2%

2.6%


Some Retail Categories Function Best with Physical Stores

Necessity retail provides goods consumers need in all economic cycles and that are

less likely to be purchased online.

Grocery Stores Health & Personal Care Gas & Convenience

< 0.9% purchased online.13

13) Estimated Annual U.S. Retail Trade Sales - Total and E-commerce: 1998-2016, U.S. Census Bureau, Last Revised 03/21/18.




Discount retail offers a “treasure-hunt” experience that is difficult to replicate online.

Online retailers face high shipping and return costs, resulting in higher prices not

conducive to the discount model.14

75%of total apparel

purchases occur at

discount retailers15

67%of all consumers are

discount shoppers15

50%of visits to discount

retailers are converted

to purchases15

14) How Free Returns on Online Purchases are Crippling Retailers, MarketWatch, December 2016. 15) Two-thirds of All Retail Shoppers Shop Off-Price, NPD Group, July 2016.


Brick-and-Mortar and E-Commerce Go Hand-in-Hand

Consumers have growing expectations for a seamless shopping experience across

store, web and mobile touch points. The integration of multiple retail platforms is also

known as omnichannel retailing.

38%of all retail sales in

2016 were omnichannel.17

2.2x MoreCustomers spend 2.2 times more when

they visit a brand’s website while in-store.18

400%Average spending increases by nearly

400% when customers are engaged by

both staff and a brand’s website.18

17) Clicks to Bricks: Online Retailers Find the Lure of a Store, New York Times, November 2016. Based on estimates from

Forrester Research. 18) InMoment, Retail Industry Report, 2016.

@Omnichannel




Top Retailers Have Embraced Consumer Demand for Omnichannel Shopping

Walmart, the world's largest brick-

and-mortar retailer, has extended

its omnichannel and e-commerce

capabilities by acquiring online retailers

including Jet, Bonobos and ModCloth.

Additionally, Bonobos, a retailer that

began with a solely online presence,

now also operates in physical stores.

Leading retailers understand the changing consumer market and

the need for multiple channels to promote, distribute and sell goods.

Once a purely online retailer, Amazon

has adopted an omnichannel strategy

that integrates physical stores. Its

acquisition of Whole Foods further

expands its physical footprint and

grants access to the grocery sector

dominated by brick-and-mortar.


Case Study: Dick’s Sporting Goods

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Omnichannel Strategies

19) Dick’s Sporting Goods Could Get a Boost from E-Commerce, TheStreet, September 2015. 20) Dick’s Sporting Goods Reports

Fourth Quarter and Full Year 2017 Results, PRNewswire, March 2018.

Business ImplicationsIn-store and online sales are complementary.

» 80% of e-commerce sales originate from areas near stores.19

» E-commerce sales typically double in a market when a new store is opened.19

As of Q4 2017, e-commerce:

» Accounted for 19.0% of total sales for the quarter20

» Increased 9.0% from the prior quarter20

Buy online, pick-up in-store

In-store returns for online purchases

In-store orders for items not in

stock are shipped to customer

Stores serve as warehouses and

distribution centers for online orders.


Stores are a key omnichannel component.

» 60% of online purchases are picked up in-store and 10% are delivered

from the store.21

» 40% of customers picking up online orders make additional purchases in-store.21

» E-commerce sales accounted for 5.0% of total sales as of Q4 2017.22

Business Implications

Omnichannel Strategies

21) Home Depot and Lowe's Succeed at Omnichannel, Business Insider, May 2017. 22) Lowe’s Revenues and Sales, eMarketer Retail, 2018.

Buy online, pick-up in-store

In-store returns for online purchases

Stores serve as warehouses and

distribution centers for online orders.

Lowe’s Vision is a virtual reality smartphone

application that allows customers to “see” Lowe’s

products within their home.




Case Study: Lowe’s

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Research indicates that shoppers continue

to prefer brick-and-mortar stores.23 The most

successful retailers will synchronize online

and physical storefronts to provide shoppers

with convenient omnichannel options as well

as sensory experiences that a purely online

retailer cannot provide.

23) The State of Retail 2017, TimeTrade Systems, Inc., 2017.




www.cimgroup.com

Contact your financial advisor to see how investing in Cole Net-Lease Assets

may help diversify your portfolio.


Consider These Risk Factors Before Investing

Investments in Cole Credit Property Trust V, Inc. (CCPT V), and Cole Real Estate Income Strategy (Daily NAV), Inc. (INAV) involve a high degree of risk. Prospective shareholders should consider these securities only if they can afford a significant decline in, or a complete loss of, the value of their investment.

Each REIT offering is made by means of a prospectus only to qualified prospective shareholders who meet minimum suitability requirements, as well as suitability standards determined by a financial advisor. Offering materials must be preceded or accompanied by the prospectus for the respective REIT. Please read the prospectus in its entirety before investing and learn more about the risks associated with this offering, including, but not limited to:

» The REITs start as a “blind pool,” as they have not identified all of the properties they intend to purchase, and the REITs have a limited operating history. There can be no guarantee that the REITs will meet their investment objectives.

» These investments have limited liquidity and are not required, through their charters or otherwise, to provide for a liquidity event. There is no public market for each of the non-listed REITs, and one may never exist, for the shares of their common stock. There is also the possibility that even if shareholders were able to sell their shares, they may have to sell them at a substantial discount. Shareholders should have an expected investment time horizon in excess of seven years, if at all.

» There is no guarantee that shareholders will receive a distribution. Distributions have been paid from proceeds of the offering and may be derived from sources other than cash flow from operations, including borrowings, or sales of assets, and there is no limit on the amounts that may be paid from such other sources. Payments of distributions from sources other than cash flow from operations reduce the amount of capital available for real estate investments and may decrease or diminish an shareholder’s interest.

» There are conflicts of interest between the REITs and their advisors, and their affiliates, including payment by the REITs of significant fees to their advisors and affiliates.

» Economic factors may adversely affect the commercial real estate market, including: changes in the economy, tenant turnover, interest rates, availability of mortgage funds, operating expenses, cost of insurance and each tenant’s ability to continue to pay rent.

» If one of these offerings fails to qualify as a REIT, it will be subject to federal income tax. Cash available for distributions could decrease materially and adversely affect the return on your investment.




» Leverage (debt) is borrowed money. It is often used to supplement or enhance the total return on an investment. However, leverage, when used excessively, can have a significant negative impact on the performance of an investment. Leverage risks may include an inability to pay off the interest from the cash flow from the property, rates that can adjust to higher levels, and the potential for default on loans. In an effort to maximize the performance of a REIT portfolio, a number of factors are considered in evaluating financing options. Some of the more common factors include cost of capital, fixed versus variable debt, loan-to-value ratio and debt coverage ratio. The use of leverage during the offering period could limit the amount of cash available to distribute to shareholders and could result in a decline in the value of an investment in the REITs.

In addition to the risks noted above, prospective shareholders should consider the following risk factors associated with INAV:

» The INAV redemption plan will provide stockholders with the opportunity to redeem their shares on a daily basis, but redemptions will be subject to available liquidity, board discretion and other potential restrictions.

» INAV is a perpetual-life investment vehicle of indefinite duration. INAV’s charter does not require it to effect a liquidity event at any point in time in the future.

» The valuation methodologies used by INAV’s independent valuation expert to determine daily net asset value (NAV) involve subjective judgments and estimates, and may not accurately reflect the actual price at which assets could be liquidated on any given day. The NAV of any share class at any given time will not reflect any obligation to pay future dealer manager and distribution fees.

Commercial real estate performs differently than other asset classes, such as stocks or bonds, and lacks liquidity. An investment in a non-listed REIT is not a direct investment in commercial real estate.

The properties pictured in this document have been acquired by Cole REITs, sponsored by CCO Group, LLC (CCO Group), a subsidiary of CIM Group® (CIM®). Corporate tenants may also occupy numerous properties that are not owned by CIM. CCO Group and CIM are not affiliated with, associated with, or a sponsor of any of the tenants pictured or mentioned. The names, logos and all related product and service names, design marks and slogans are the trademarks or service marks of their respective companies.

INAV

INAV INAVINAV

BRO-RTL-ECOM-1 (5/18)

INAV

NOT A DEPOSIT | NOT FDIC INSURED | NOT GUARANTEED BY ANY BANK | MAY LOSE VALUE | NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY

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Trends in Retail and E-Commerce - CIM Group · 2018-10-25 · A growing retail trend includes both physical stores and e-commerce to provide a seamless shopping experience for consumers