Three new retail trends combine to create low-cost, high-impact shopping. Download the paper: http://cs.co/ibsg-digitalmalls

1. Digital Malls:
The Next Generation of
Self-Service Shopping
Joanne Bethlahmy, Howard Lock, Matt Maddox, Sharon Finke
November 2012
@CiscoIBSG
For more information: http://cs.co/ibsg-digitalmalls
Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Public Internet Business Solutions Group 1

2. Retail Challenges: Urbanization,
Growth, Customer Experience
ChangingDemographics, Challenges for Developers,
Economics, and Retailers, Vending Operators,
Technology and CPG Manufacturers
 Continuing urbanization  Reverseslowing returns from U.S.
 Unemployment, economic mall, store, and vending assets
uncertainty  Create enhanced customer
 Growth of e-commerce and experiences
mobile showrooming  Reduce labor and construction
 Millennials’ digital shopping costs
expectations  Deepen brand differentiation
 Optimize small urban formats
 Justify investment in equipment
innovation
Sources: U.S. Census Bureau; Reuters, 2012; comScore, 2012; Vending Times Census of the Industry, 2011
Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Public Internet Business Solutions Group 2

3. Beginning of an Opportunity:
Three Trends in Self-Service Retailing
Three trends are reinvigorating unattended
retailing, creating a new retail opportunity:
1. Innovative vending: networked vending
machines offering an array of consumer
experiences and/or back-end efficiencies
2. Micro-markets:unattended small stores with
open shelves of products, plus vending
machines, coolers, and freezers.
3. Virtual stores: physical e-commerce sites
where consumers can order via mobile for later
delivery
Digital Malls
Source: Cisco IBSG, 2012
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4. Trend #1: Innovative Vending Creating
More Engaging Consumer Experiences
Innovative Vending Examples
Pepsi Be Kraft Temptations Art-o-Mat U*tique
Social Product Sampling Small Artworks Fashion
Vending is now at a technology and sales tipping point, as machines
become smart, networked devices.
Source: Cisco IBSG interviews, 2012
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5. Trend #2: Unattended Micro-Markets
Driving Growth in Workplaces
 Micro-markets are unattended, small convenience
stores in workplace locations
—Open shelves
—Self-service payment kiosks
 Typically in workplaces with 250+ employees
Need to get permission?
http://www.skytopvending.com/
Source: Cisco IBSG, 2012
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6. Trend #3: Completely Virtual Stores
With No Inventory
 Enabled by e-commerce, high-resolution and interactive screens or
e-paper, mobile QR codes, and gesture technology
 Consumers click and purchase goods for later delivery
 Virtual stores can be stationary or mobile, permanent or pop-up
Tesco @PG Mobile with Pão de Açúcar
Gatwick Airport Walmart.com São Paulo, Brazil
New York, Chicago
Source: Cisco IBSG, 2012
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7. However, These Trends Alone Are Not
Enough To Combat Retail Challenges
Challenges Why Trends Insufficient Alone
Slowing  Still need retail destinations to create return traffic,
Returns, sustainable excitement
Urbanization
Costs  Stand-alone components donot build the scale
necessary to lower costs
Enhanced  None of these trends provides both immediate
Experiences, purchase gratification and the
Branding assortment/convenience of endless aisle
Differentiation  Today, none provides leading-edge, immersive
technologies
Source: Cisco IBSG, 2012
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8. Cisco Vision: Combine Trends into
Sophisticated Self-Service Digital Malls
 Highly interactive, graphically exciting, self-service shopping
environments
 Combine innovative vending, next-generation virtual stores, and/or
next-generation micro-markets to create digital retail
destinations, with dramatic improvements in labor, real
estate, construction, and technology costs
Example: Digital Mall in Luxury Hotel
Source: Cisco IBSG, 2012
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9. Example: Public Transit Digital Mall with
Innovative Vending, Virtual Stores
Source: Cisco IBSG, 2012
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10. Next-Gen Virtual Stores: Immersive
Shopping and Entertainment
Source: Facecake.com; Cisco IBSG, 2012
Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Public Internet Business Solutions Group 10

11. Next-Gen Micro-Markets Bring Retail to
Offices, Apartments, Small Hotels
 Enable retailers to expand without large-store
investments
 Go beyond food and beverage to offer immediate-need
general merchandise, innovative vending and remote
services using digital technology
Source: Cisco IBSG, 2012
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12. Digital Malls: Many Solution
Combinations Depending on Location
High
Traffic/
Prestige
Innovative Vending
Virtual Stores
Large Large
airports, transit, universities, stadiums, malls, amuse hotels, resorts, frequen
ment parks, festivals/events t-flyer clubs
Medium
Traffic/
Prestige Large workplaces, apartments/condos, smaller hotels
Non- Secure
Micro-Markets Open Shelving
Secure
Source: Cisco IBSG, 2012
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13. U.S. Market Could Total $7 Billion in
Annual Revenue
Thousands of Possible Locations Across Three Scenarios
Secure Prestige Luxury
 Large workplaces and  Large airports, transit,  Large luxuryhotels and
residential complexes, shopping malls, resorts, top frequent-
smaller hotels universities, stadiums, flyer clubs
 94K locations, $5B amusement parks,  260 locations, $130M
annually festivals/events
 $504K per location
 $54K per location  3K locations, $1.9B
 Payout 15-28 months
 Payout only 12-15  $602K per location
months  Payout 16-34 months
Source: Cisco IBSG, 2012
Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Public Internet Business Solutions Group 13

14. How Cisco Can Help
Business Strategy and
Co-Innovation
 Develop Digital Mall vision and
strategy
 Conduct “big idea” brainstorming
 Identify Digital Mall opportunities in a
particular sector or geography
 Create pilot business plan
Architecture and Technology
 Create technology architecture
 Identify right components and
partners
 Lead proof-of-concept pilots
Source: Cisco IBSG, 2012
Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Public Internet Business Solutions Group 14

15. http://cs.co/ibsg-digitalmalls
Big Idea Session at NRF: Digital Malls