The_Disruptive_Future_of_Retail_Mayl_(final)

Tony D‘Onofrio
May 2016
The Disruptive
Future of Retail

© 2016 Tyco. All Rights Reserved.
Agenda
2

3
Tony D‘Onofrio
May 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 2016
same as 2015
Sources: The Economist Intelligence Unit, Planet Retail.
2015
2016 forecast
2017 forecast
Retail sales volumes by regions (% change)
Asia-Pacific
Latin
America
Western
Europe
Middle East
& Africa
North
America World
5
4
3
2
1
0
-1
-2
-3
-4
5
4
3
2
1
0
-1
-2
-3
-4

GRDI
Country
Attractiveness
Tyco Confidential
Source: 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, FY2014
Product 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 retail
Revenue 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 (now
Albertsons Companies Inc.)
US 45.3% 4 Inditex S.A. Spain 5.792
Steinhoff International
Holdings Ltd.
S. Africa 41.6% 5 Amazon.com Inc. US 5.307
Southeastern Grocers LLC
(formerly BI-LO Holding LLC)
US
36.0% 6
Nike 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 Store
Co. 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

11
Make Wise
Technology
Choices
Make Wise
Technology
Choices
Tony D‘Onofrio
May 2016

Retailer Losses
Shrinkage 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 Loss
Supplier 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 & Shopper
Analytics

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%
Predictive
Analytics
Proximity
Marketing
Data
Visualization
RFID Internet of
Things
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 upgrade
Will 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 Group
IHL Group
$1.5 Trillion
Mobile & Digital
Influence on in‐store
sales in 2014, up
from $334B in 2012
$5,409Million
Retail RFID Market
By 2020, up from
$542M in 2013
$5.8 Billion
Global Wearables
Tech market by 2018,
Up from $750M in 2012
$162 Billion
Global Retail Shrink
$4.3 Trillion
Global Online
Retail Sales
By 2025, up from
$0.55T in 2011
$1.1 Trillion
Global Inventory Distortion
$634 Billion From
Out‐Of‐Stocks
63%
Global Retailers
Maintaining / Expanding
Global Source Tagging
Phones
147
minutes
TVs
113
minutes
PCs
108
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 challenges
over 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.

19
The
Disruptive
Future of
Retail
The
Disruptive
Future of
Retail
Tony D‘Onofrio
May 2016

Technology Driving Shifts in Retail Power

EvolvingTechnologySystems
ImpactingRetail

Top Retail Trends
Multichannel 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 Opportunities
Mandates 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%
Retailers
Consumers
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 Retail
Future 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’Onofrio
Email: adonofrio@tycoint.com
Phone: +41 791 508 208
Thank You

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 Intelligence
Inventory Accuracy
Margin 
OpEx 
Planning and
allocation
Reduced markdowns
Reduced inventory
carrying costs
Better omni-channel
execution
OpEx 
Labor
efficiency
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 Longo
Macy’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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