Retail sales are growing healthily driven by strong consumer fundamentals like record high consumer sentiment and improved household finances. However, consumers are spending differently by demanding convenience through omnichannel retail and prioritizing experiences over products. This is putting pressure on mid-range retailers as consumers spend more on value and luxury brands. Retailers are investing in technology to meet consumer demands for seamless omnichannel experiences, personalization, and convenience through automation and integration of digital and physical channels.
2. 2 CLIENT NAME | PRESENTATION TITLECBRE
KEY TRENDS
1) Retail Sales are Healthy
2) Consumers are spending, but spending differently
3) Omnichannel Retail Takes the Forefront
4) Convenience is Key
5) Consumers Demand Experience
6) Consumers Demand Personalization
7) The Barbell Effect Puts Pressure on the Mid-range
8) Continued Investment in Technology to Encourage Growth
4. 4 CLIENT NAME | PRESENTATION TITLECBRE
6.4%
2.9%
2.4%
4.4%
6.1%6.5%
5.3%
3.3%
-1.3%
-7.2%
5.4%
7.3%
4.8%
3.8%4.2%
2.5%
3.0%
4.6%
RETAIL SALES GROWTH IS HEALTHY
RETAIL SALES GROWTH (YOY)
KEY DRIVERS OF
HEALTHY SALES:
Strong Consumer Sentiment
Unemployment at Lowest
Rate in Seven Years
Source: University of Michigan
5. 5 CLIENT NAME | PRESENTATION TITLECBRE
E-COMMERCE IS POSTING HIGHER GROWTH,
BUT IN-STORE SALES ARE STILL RISING
SALES GROWTH BY RETAIL CATEGORY (2010-2022)
0.00%
5.00%
10.00%
15.00%
20.00%
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Ecommerce Sales Growth Total Retail Sales Growth
Source: Euromonitor
6. 6 CLIENT NAME | PRESENTATION TITLECBRE
RETAIL SALES DRIVEN BY STRONG
CONSUMER FUNDAMENTALS
CONSUMER SENTIMENT INDEX
KEY FINDINGS:
Record-high consumer sentiment
Improved household financial health
Record-low unemployment
Consumer confidence in the economy
and in future spending ability
0
20
40
60
80
100
120
INDEX
Source: University of Michigan
8. 8 CLIENT NAME | PRESENTATION TITLECBRE
-14.3%
-12.5%
-4.7%
2.9%
6.5%
7.7%
13.7%
14.6%
15.7%
16.0%
19.2%
20.7%
26.4%
29.5%
Department stores (excl. L.D)
Book stores
Electronics and appliance…
Sporting goods stores
Clothing stores
General merchandise stores
Grocery stores
Shoe stores
Hobby, toy, and game stores
Jewelry stores
Total retail and food services…
Health and personal care stores
Furniture and home…
Food services and drinking…
RETAIL SALES GROWTH BY CATEGORY
2012-2017
Source: U.S Census Bureau, Q1 2018
9. 9 CLIENT NAME | PRESENTATION TITLECBRE
HIGH GROWTH CATEGORIES
KEY DRIVERS:
Consumers favor
experiences and
personalization when
shopping
Products in these categories
are partially shielded from
online shopping
30%
Restaurants &
Bars
26%
Furniture &
Furnishings
21%
Health &
Beauty
16%
Jewelry
15%
Shoes
14%
Grocery
10. 10 CLIENT NAME | PRESENTATION TITLECBRE
LOW GROWTH CATEGORIES
KEY DRIVERS:
Changing consumer
spending habits + a shift
toward off-price
Products in these
categories are affected the
most by e-commerce
7%
Clothing
-5%
Electronics &
Appliances
-14%
Department
Stores
8%
General
Merchandise
3%
Sporting
Goods
-13%
Bookstores
13. 13 CLIENT NAME | PRESENTATION TITLECBRE
KEY RETAIL & CONSUMER TRENDS
1. Omnichannel is not an option
2. Convenience Is key
3. Focus on Experience
4. Personalization
5. Barbell effect
6. Technology
14. 14 CLIENT NAME | PRESENTATION TITLECBRE
OMNICHANNEL IS NOT AN OPTION
CONSUMER DEMANDS
• Instant gratification
• Channel surfing and channel
agnostic
• But consumers still demand the
store…
IMPLICATIONS FOR RETAILERS
• Provide seamless and effortless
customer experience
• Be present both physically and digitally
• Be consistent across channels
• Be ready to adapt to changing
consumer behaviors
15. 15 CLIENT NAME | PRESENTATION TITLECBRE
RESTAURANTS, APPLEBEE’S
• Order ahead, pay online
• Allows casual dining
concept to offer a fast-food
option
GROCERY, AMAZON GO
• ”Just Walk Out” Technology
allows shoppers to scan in
upon entrance, grab desired
items and get charged upon
exit without checking out
CONVENIENCE IS KEY
Source: Amazon, Applebee’s
16. 16 CLIENT NAME | PRESENTATION TITLECBRE
CONVENIENCE IS KEY
Source: Lowe’s, Shutterstock
HOME IMPROVEMENT, LOWE’S
• LoweBot: Tango AR
Technology
• Navigate the store with help
from robot or through phone
using the Tango App
• LoweBot speaks multiple
language and can answer
questions for you
SHOES, ALDO
• Partnered with Celect to
optimize fulfilment of online
orders
• Ensures online orders don’t
take from stores that are low
on inventory
• Reduces delivery time
17. 17 CLIENT NAME | PRESENTATION TITLECBRE
78%of millennials would chose to spend
money on a desirable experience over
buying something desirable
18. 18 CLIENT NAME | PRESENTATION TITLECBRE
FOCUS ON EXPERIENCE
Source: Bruno Magli, Sephora
HEALTH & BEAUTY – SEPHORA
• Beauty Workshop
• Virtual Artist Tool
• Customers can virtually
try on different looks
• Share looks through
store-integrated iPads
LUXURY – BRUNO MAGLI
• New Manhattan store is
part retail, part museum
and includes a social café
19. 19 CLIENT NAME | PRESENTATION TITLECBRE
of shoppers who have experienced
personalization believe it has had a
noticeable influence in purchasing
59%
20. 20 CLIENT NAME | PRESENTATION TITLECBRE
PERSONALIZATION
Source: Adidas, Gucci,
SHOE - ADIDAS
• Consumers can print their
own design on shoes
• “Knit for You”
• Customers undergo a
laser body scan to
determine your fit and
then design a custom
sweater
LUXURY – GUCCI
• In New York Store, “Gucci
Connectors” connect shoppers
to the brand
• DIY Setup: Personalize Luggage
• AR Technology: See how
products look on you
21. 21 CLIENT NAME | PRESENTATION TITLECBRE
PERSONALIZATION
Source: L’Oreal
HEALTH & BEAUTY, L’OREAL
• Kerastase Hair Coach
Hairbrush
• Analyses a users hair
• Connected with mobile
app to provide the user
with hair tips and
personalized product
suggestions
22. 22 CLIENT NAME | PRESENTATION TITLECBRE
BARBELL EFFECT
CONSUMERS ARE FLEEING THE MID-RANGE BRANDS
11,000.00
15,000.00
19,000.00
23,000.00
27,000.00
2012 2013 2014 2015 2016 2017
Sales
Discounters Value Sales (2012 – 2017)
Amount($USD)
Source: Euromonitor Country Report 2018
Big Box Brands that Announced Expansion in
2017
23. 23 CLIENT NAME | PRESENTATION TITLECBRE
RETAIL BANKRUPTCY TIMELINE, 2015 – 2017
CLOSURES CONCENTRATED IN THE MID-RANGE
Source: CB Insights
24. 24 CLIENT NAME | PRESENTATION TITLECBRE
TECHNOLOGY CONTINUES TO CHANGE THE RETAIL LANDSCAPE
1) Focus on Automation that saves
money and Drives convenience
2) Enables Digital and Physical Integration
3) Facilitates Omnichannel / Cross
Channel Shopping
25. 25 CLIENT NAME | PRESENTATION TITLECBRE
AUTOMATION & TECHNOLOGY
SAVE MONEY, DRIVE CONVENIENCE
Source: Café X, Eater Boston
COFFEE X – SAN FRANCISCO
• Robotic arm replaces barista
• Increases margins for
company
• Reduces wait time for
customers
SPYCE – BOSTON
• ”Culinary excellence, elevvated
by technology”
• Replaced all chefs with robots
• Can prepare meals in 3
minutes or less
• Place food order on touch
screens
• Focus on healthy and affordable
food
26. 26 CLIENT NAME | PRESENTATION TITLECBRE
AUTOMATION & TECHNOLOGY
DIGITAL + PHYSICAL INTEGRATION
Source: H&M, IKEA
SMART MIRRORS – H&M
• Through voice and facial
recognition, customers can use
voice commands to take selfies
• Virtually integrated with the H&M
catalogue
• Gives shopping tips to users
AUGMENTED REALITY SMART
PHONE APP – IKEA
• Allows customers to see
exactly how furniture items
would look and fit into their
homes
• Consumers can experience,
experience and share how
specific designs can transform
a space
27. 27 CLIENT NAME | PRESENTATION TITLECBRE
AUTOMATION TECHNOLOGY
FACILITATE CROSS-CHANNEL SHOPPING
Source: Walmart, Alibaba
ALIBABA + GUESS
• Outfitted store with Alibaba’s
fashion AI technology
• Each item equipped with
RFID tags
• Allows smart mirrors
and fitting rooms to
identify and respond
to customer
interactions
• Self checkout with app scanning
WALMART – PICKUP TOWERS
• Receive online orders faster
while saving money on shipping
• Available to nearly 40% of
population
• Online Grocery Pickup: order
online, pickup in store
• Discounts on online items that
you can order online and ship to
store
Retail sales continue to grow, and we expect that to continue through 2022.
Today’s consumers are spending differently than ever before, leading to a shift in category spending. This charge is being led by e-commerce, which has changed consumer spending habits.
Headlines may argue that retail is dead with ecommerce gaining a larger percentage of retail sales however, this is not true. Consumer sentiment is at a 17 year high and retail sales growth is strong. While we can not deny that ecommerce is playing a stronger role in category retail than ever before, we expect that the retail categories that continue to change as consumer behaviors change will experience growth into the future.
It is clear that retail is not dead, and consumers are still spending—they’re just spending differently
One key differences in how consumers are spending:
They’re shifting spending away from traditional retail growth categories and toward different sectors. This has important implications for landlords of certain asset types, like power centers and shopping malls, where the tenant base is predominantly focused on the traditional growth categories
Economic bifurcation: since the recession, consumers have trended toward either end of the pricing spectrum; they’re either choosing discount/off-price OR high-end/luxury. We see this in the health of brick and mortar off-price retail and in luxury brands.
More specifically we can look at the categories that have high growth versus the categories that have low growth
Barbell effect – variations WITHIN each category
When looking at different retail categories there are FOUR major trends that are important to millennials and affecting growth within retail categories
(what do they have to do to be successful in omnichannel)?
Technology was supposed to make our lives easier, when in reality, it just made things faster. Convenience for the time-pressed consumer will continue to play more and more of an important role in retail category growth
Convenience is an important consideration for millennials on account of their hectic lifestyle. Time is of essence for the working younger generation and is one of the key reasons for the growth in online shopping and online ordering from restaurants. With the rise of online shopping, retailers need to make sure that the consumer is able to shop effortlessly
Importance of creating an experience:
- Draw consumer to the physical store
- Incorporate technology
Digital touchpoints
Connect consumers through social media
Millennial consumers want products that are unique to them and aim to differentiate themselves from the rest of the crowd
Importance of creating an experience:
- Draw consumer to the physical store
- Incorporate technology
Digital touchpoints
Connect consumers through social media
Millennial consumers want products that are unique to them and aim to differentiate themselves from the rest of the crowd
Personalization is a trend that continues to be a driver of growth in across many categories.
59% of shoppers who have experienced personalization believe it has had a noticeable influence in purchasing
https://www.infosys.com/newsroom/press-releases/Documents/genome-research-report.pdf
Millennial consumers want products that are unique to them and aim to differentiate themselves from the rest of the crowd
Key Shift in spending habits since the recession
Consumers are choosing to spend at the low and high end of the pricing spectrum, putting pressure on the mid-range brands
This trend is reflected in real estate absorption; significant expansion among off- price, discount, and value players
TJX Companies to open 260 stores – chainstoreage
Dollar General plans to open 900 new stores in 2018 – CNN
Ulta Beauty opening 100 new stores in 2018
Ross to open 100 new locations in 2018
