NRF Retail's Big Show, January 17-20, 2016.

1. THE FUTURE OF DIGITAL RETAIL
Deborah Weinswig
Executive Director, Head—Global Retail & Technology
Fung Business Intelligence Centre
deborahweinswig@fung1937.com
Cell: 917-655-6790

2. 1
Agenda
• About the Fung Group/Li & Fung
• About Fung Business Intelligence Centre (FBIC)
• Top 16 Emerging Global Technology Trends for 2016

3. 2
The Fung Group

4. 3
Fung Business Intelligence Centre
• Established in 2000 and headquartered in Hong Kong
• FBIC serves as the knowledge bank and think tank for the Fung Group
– Collects and analyzes market data on sourcing, supply chains, distribution and retail
– Provides thought leadership on technology and other key issues
• New York–based Global Retail & Technology team
– Follows broader retail and technology trends
– Provides advice and consultancy services to colleagues and business partners of the Fung Group
– Builds collaborative knowledge communities
• Creating a database of technology-based startups
• Disruptors Breakfasts: introduce startups focusing on disruptive technologies that are changing the ways we think
and act today

5. Futureproofing
• Anticipate future trends and
developments
• Plan for future value and avoid
obsolescence
– What problem are you trying to solve?
– How will solution be used?
– How robust does it need to be?
• Ensure flexibility to manage changing
formats and deployment patterns
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6. 5
Fung Capital/FBIC Commerce Technology Landscape

7. TOP 16 RETAIL TECH TRENDS FOR 2016
1. Additive Technology: Intelligent Clothing
2. 3D Printing
3. Robotics/Artificial Intelligence
4. Drone Delivery
5. Smart Malls
6. IoT-Driven Partnerships
7. Wearables
8. Gamification
9. Voice and Facial Recognition
10. Virtual Reality
11. Augmented Reality
12. IoT
13. Mobile Health
14. Mobile Payments
15. Caring Economy
16. Sharing Economy
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8. 7
1. Additive Technology: Intelligent Clothing
• Application of nanotechnology in smart fabrics offers potential
for development of new textile materials
– Kuraray has developed a way to harness attributes of liquid-crystalline
polymers, resulting in extraordinarily strong fibers that can hold the
weight of four SUVs
– Threadsmiths introduced the Cavalier T-shirt, which uses
“hydrophobic” nanotech woven into the fabric to make it water and
stain resistant
• Visijax embeds LEDs in both the front and rear of jackets
– Machine washable and powered by
a USB-rechargeable battery that
lasts up to 20 hours between charges
– Commuter and City Ace models have
motion-sensing, self-canceling turn signals
embedded into the sleeves of the garment

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2. 3D Printing
Examples in consumer goods:
• Orbitrec: world’s first 3D-printed bike unveiled at CES
• Normal
– Custom-fit 3D-printed earphones
– Partnered with Rebecca Minkoff on limited-edition products
– More sustainable
• Shoes of Prey
– Design your own perfect shoes
– Design studios in 6 Nordstrom stores
• Mink Makeup Printer
– Sub-$200 desktop printer can print makeup

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3. Robotics/Artificial Intelligence
• SoftBank is partnering with IBM’s Watson to
provide new functionality to Pepper, its voice
recognition robot
• In Japan, hundreds of Pepper robots have been
deployed at Nestlé retail stores
• Target is planning to deploy robots in
a concept store in 2016
• Lowe’s OSHbot already being tested

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3. Robotics/Artificial Intelligence
• About 1.2 million additional robots are expected to be
deployed in the US by 2025 (BCG)
• Amazon had 30,000 Kiva robots working at 13 fulfillment
centers by September 2015, double the number from a
year earlier
• Robots created for corporate boardrooms
– Allow users to interact remotely from home
(or wherever they are)
– In the Suitable Technologies showroom, salespeople appear
through telepresence robots
• Advise on how to repair parts and do training sessions

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3. Robotics/Artificial Intelligence
• Stitch Fix
– Subscription service that uses AI and human judgment to
recommend apparel to shoppers
– Subscribers receive a curated box with items personally
chosen by a combination of machine and human stylists
• Used for generating recommendations; key driver
across industries
– 35% of Amazon sales, 50% of LinkedIn connections and
75% of Netflix views are driven by recommendations

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4. Drone Delivery
• Amazon is the leader in drone delivery technology
• Drone company Flytrex forecasts that delivery drones
could be in use in London within five years
• Estimated 1 million drones sold during holiday season (FAA)
• New drones introduced at CES that can follow a moving
object and carry a person
• QuiQui is a drone delivery service based
in San Francisco
• The FAA lost a recent lawsuit, paving
the way for commercial drone use

14. 5. Smart Malls
• Beacons enable location-based advertisements
– Shoppers who are nearby receive mobile notification, such as coupons and directions
– ShopAdvisor & Levi Strauss study: recipients visited stores at a rate that was 2.6 times greater than
those who did not receive notifications
• Malls can track movements, behaviors and preferences
– Data collected from connected kiosks, apps, motion-sensing
technology, beacons, wi-fi networks
– Primarily collected from wi-fi networks
• Data enables personalized and timely promotions
– Build shopper profiles, including visitation frequency
and movement inside malls
– If data shows that shoppers frequent healthy food outlets,
it can drive the opening of health-food restaurants in a mall’s food court
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15. 5. Smart Malls
• Westfield Malls’ IoT offers touchscreen displays, electronic parking assistance, free wi-fi
• HGTV partnered with Macerich shopping malls to launch virtual and hands-on technology-based
experiences
– Augmented reality allows families to create “Elfie Selfie” videos
– Traffic at those 10 malls was up 45%, according to The Washington Post
• RetailNext formed a strategic alliance with StepsAway, an in-mall
mobile retail solution provider offering shoppers smartphone access
to hyperlocal in-store deals
– Offer timely, relevant promotions that measure redemption
and conversion rates
– Interactive data allows platform to improve and become
“smarter” for future promotions
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6. IoT-Driven Partnerships
• Unprecedented cross-industry partnerships being formed
• Samsung and Microsoft developing IoT devices based on
Windows 10
• Panasonic is partnering with Denver to transform it into the first
smart city
– Create an energy-efficient hub
– Solar technology, tele-medicine tech, traffic management and
security
• Audi and Qualcomm are partnering to integrate Qualcomm’s
Snapdragon 602A to provide cutting-edge connectivity
technology
– Infotainment, advanced smartphone connectivity, navigation, voice
quality and control features

17. • Ford is partnering with Amazon to integrate vehicles with
Echo, Amazon’s smart-home device
• Intel is working with New Balance on an Android Wear
fitness watch that is due out next holiday season
• IBM and Under Armour are integrating the Watson
supercomputer with the Connected Fitness network to
analyze data and provide real-time coaching on health
and fitness
• Volvo pursued a partnership with Microsoft to enhance
connected-car strategies
– The Microsoft Band can be pressed and told to start the car
heater, for example
6. IoT-Driven Partnerships
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7. Wearables
• Fitbit: 22.2% share (#1) of the wearables market as of
3Q 15 (IDC)
• Apple Watch: 18.6% (#2) share of the wearables
market as of 3Q 15 (IDC)
• iFit ecosystem provides a game plan for exercising,
activity, nutrition and sleep
• Under Armour’s $400 HealthBox uses a wristband,
heart rate monitor and scale to track fitness, sleep
and nutrition
• Withings has a smart wristband heart monitor, scale,
sleep monitor and blood pressure monitor

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7. Wearables (Wellness)
• AromaCare (mindfulness)
– Connected oil diffuser for personal aromatherapy sessions
– Aroma capsules have RFID tag to enable launching of specific program
• Emfit QS (sleep)
– Monitors heart rate levels and then matches them to specific moments
and interactions throughout a user’s day
• it Smart Bed (sleep)
– Features biometric sensors that track heart rate, movement and
breathing
– ActiveComfort technology collects a customer’s ideal level
of firmness, comfort and support of mattress
– Support for sleep apnea

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8. Gamification
• Gamification is the use of elements from computer and
video games in real-world or other activities
• Examples include badges, levels and leader boards that
can be used to enhance consumer loyalty
• In a tiered rewards program, customers must perform
certain actions in order to pass milestones; each time a
milestone is passed there are new rewards
• Starbucks Rewards gives loyal customers stars and has
tiered levels of rewards, based on purchases

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8. Gamification
• Under Armour and HTC: first connected-fitness product portfolio, the Under
Armour HealthBox
– Based on your height, weight, age and workout tendencies, the Under Armour Record App
pairs you with other users
– You can “challenge” family, friends or co-workers
• Zipline: gamifies store execution and
customer engagement
– The future of "direct to Associate"
communication which will become
more prevalent as companies begin
to allow Associates to bring their own
devices to work

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9. Facial Recognition
• The global advanced Facial Recognition market expected growth: $2.77 Bil. in 2015 to $6.19 Bil. in 2020 (CAGR 17.4%)
• 30% of retailers are using facial recognition technology to track customers in stores (CSC)
• Applications are increasing: health, wellness, beauty and advertising
– Determine the thickness and application of makeup
– Analyze in-store shopper data
• In 2015, Walmart tested with FaceFirst:
– Cameras check you in at location
– Smartphone receives customized deals based on demographic
• Intel released RealSense facial recognition technology in 2015
– Consumer grade 3D cameras
– Home usage: camera recognizes face to unlock front door
• Challenges: Consumers are not especially comfortable with technology use in retail

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10. Virtual Reality
• Google Cardboard viewer was provided
free to New York Times subscribers
• The CTA expects VR unit sales to increase to 1.2
million, a 500% increase from last year
• VR—Oculus Rift headset ($599) available in
April 2016
• Samsung Gear VR headset ($99)
• Vitrio VR system provides a 360-degree
VR view of properties

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10. Virtual Reality (Retail Applications)
• Widespread adoption of VR in
the retail space is expected in as
little as three years
• Video of VR application
at Tommy Hilfiger store

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11. Augmented Reality
• Augmented reality enables consumers to visualize products in
their homes in 3D while they are in the store
• Cimagine
–Markerless augmented-reality system that can be integrated across
multiple channels

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11. Augmented Reality (Retail Applications)

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12. IoT (Connected Home)
• A multitude of connected-home “smart” products are on the market:
cameras, doors, locks, thermostats and light bulbs
• Samsung Smart Home
– Samsung Family Hub Refrigerator
– Highlights: maintains grocery lists and schedules, and even sends photos of the
refrigerator’s contents to smartphones
• Lowe’s and Staples have launched their own lines of home automation
and connected-home products
• LG’s value has dramatically increased via its openness and inclusion of
partners in other industries, such as software, automobiles, materials
and even real estate
• Nest Learning Thermostat learns what temperatures the user likes most
and turns down the temperature when the user is away to save money

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12. IoT (Connected Pets)
• Consumers will spend $60.6 billion
on their pets in 2015, the American
Pet Products Association says
• Tracking pets’ location and activities
• Video and treats
• Video games

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13. Mobile Health
• The global mobile health market is expected to top $49
billion by 2020. A large aging population and rising
rates of chronic conditions, including cancer, heart
disease and diabetes, will drive the market
• The US senior care service market is
forecast to reach $400 billion by 2018,
advancing by 6.3% annually
• Smartphone ownership among those ages
65 and older increased from 5% in 2012
to 27% in 2015
Revenue Forecast for Telehealth Devices

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13. Mobile Health
• Tele-health technology delivers virtual
medical and health services to the
growing aging population. CVS has over
1,000 walk-in clinics, many of which use
tele-health technology
• The average tele-health service cost is
$45 compared to $136–$176 for
in-person visits

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14. Mobile Payments
• Apple and Android pay require near-filed communications (NFC)
chips for payment
– Negative: Require retailers to install new equipment
• Samsung uses magnetic stripe capability (MST) chips for payment
– MST compatible with new and older credit card terminals –
no additional invest required
– Most-widely accepted mobile wallet in the US
– Consumers can enlist loyalty cards into Samsung Pay
– Receive coupons and discounts directly to Samsung account
– In 2016: Expanding to China, lower-priced handsets and online transactions
• Customer adoption remains hurdle, shoppers need incentive

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14. Mobile Payments
# of Accepted
Locations
700,000 > 30 million > 700,000
+
• Apple Watch is compatible
• Secure – Unique security code
for each transaction
• Compatibility with existing
terminals
• No additional investment for
retailers
• Works any Android device
• Support from major retailers:
Staples, Walgreens, Wholegoods
–
• Only works with NFC-enabled
registers
• NFC terminal cost retailer $500
or more
• Not accepted by major retailers:
Walmart, Target, Best Buy
• Limited device options -
Samsung Galaxy S6
• Magnetic strip reader requires
tricky position for phone
• Uses NFC technology

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15. Caring Economy
• Disruptors: TOMS, Reformation, Warby Parker, NOURI,
SoapBox Soaps, Zady, GoodXChange
• Social activism over self-indulgence
– Consumers, especially Gen Z, are increasingly demanding
integrity from brands and retailers
• Startups for social good apply market-based strategies
to achieve a social goal
– TOMS
– Reformation
• Social innovation hubs—The Good Lab in Hong Kong

34. 16. Sharing Economy
• Next big industry to be disrupted is
healthcare, via startups such as Doctor
on Demand, Pager, Studio Dental and
MedZed
• Sector is maturing and becoming more
sophisticated; Airbnb and Uber have
launched separate apps for business
• Challenges: customer safety and
regulation battles
• 2016 may see the first big sharing
economy IPO
Source: Company Reports/Analyst Estimates
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*Retail company
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35. THANK YOU!
deborahweinswig@fung1937.com
US Cell: 917-655-6790
Hong Kong Cell: 852 6119 1779
Twitter: @debweinswig