Shoptalk- May 15-18, 2016.

1. SHARE YOUR FEEDBACK ON OUR MOBILE APPSTARTUP PITCH
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The Shoptalk Startup Pitch
Deborah Weinswig
Managing Director
Fung Global Retail & Technology
May 18, 2016
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• Fung Global Retail & Technology advises retailers, real estate developers, tech companies, and others on
projects situated at the intersection of retail, tech and/or fashion
• Our team offers a robust knowledge bank and deep-rooted experience across the retail, fashion. and tech
industries. We are involved in many areas of the business, which allows us to offer a unique perspective on
the future and where the sector is heading.
Retail, Tech, and Fashion
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“They (consumers) are not buying apparel.”
---Wesley McDonald, CFO of Kohl’s, Q2 2016 earnings call
“We are seeing continued weakness in consumer spending levels
for apparel and related categories.”
---Terry J. Lundgren, Chairman and CEO of Macy’s, Q2 earnings call
“While apparel will always be important to JCPenney, we've
conducted a detailed review of our customers’ current and
future shopping patterns, and we'll start to strategically shift
our merchandising mix to sell more products and services that
correlate to where customers are spending the greater percent
of their dollars.”
---Marvin R. Ellison, CEO and Director of JCPenney
“There's no doubt that the luxury market is the most
challenging market we participate in right now. And you've seen
that in the results of companies across the luxury spectrum.”
---Gerald L. Storch, CEO of Hudson’s Bay
Retail Destruction
Company Actual Estimate
Kohl’s (3.9%) 0.2%
Nordstrom (1.7%) 0.1%
Macy’s (6.1%) (3.4%)
JCPenney (0.4%) 3.2%
H&M 5.0% 9.0%
Select Retailers’ Comps/Sales Results
Actual Versus Estimates
Source: Factset
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All-Channel Universe
Order
From
Fulfilled
By
Where
Received
Home
Elsewhere
Your Store
Different Store
Mobile
Direct DC
Store DC
Your Store
Different
Store
Vendor
Home
Elsewhere
Your Store
Different Store
82% involve stores!
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Courtesy of Hudson’s Bay

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• Accounted for $0.51 of every $1.00 of
growth in US e-commerce in 2015
• Generated 24% of total retail growth in
the United States
• New Amazon services are changing
consumer preferences
Is It Amazon or a Change in Customer Preferences?
Amazon Annual Sales Growth
Source: Bloomberg and US Census Bureau
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• Over the next 5 years US consumer
spending is forecasted to grow by 22%;
non-essential categories, including vacations
and dining out, will see the fastest growth,
about 27% (Mintel)
• More than 3 in 4 millennials would choose
to spend money on a desirable experience
• Experiences are what people use to define
themselves across social channels
Experiences Trump “Things”
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The Instagram Effect:
Never Be Photographed in the Same Dress Twice
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“Selfie culture, if you take a photo 10 times today...
the result is people are using more makeup and more
instant skin care.”
---Fabrizio Freda, CEO of Estée Lauder, commenting on 11%
growth in makeup sales in 1Q16
The Beauty Category Outperforms Apparel
Industry
Global Revenue
2015
Annual Growth
10-15
Cosmetics $276bn 3.2%
Apparel $618bn 0.6%
Source: IBISWorld
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• The top half and bottom half are doing better,
with outperformance at the bottom
• The “consumer hourglass” phenomenon
generates opportunities in the value-for-
money segment
The Consumer Hourglass
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Squeeze in the Middle Segment
Neiman Marcus
Saks
Nordstrom
Bloomingdale’s
Dillard’s
Macy’s
Kohl’s
Sears
JCPenney
Target
Walmart
Costco
TJ Maxx/Off-Price
Primark
Aldi / Trader Joe’s
Dollar Stores

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• Retailers are raising capital-spending budgets
for technology projects
• There has been a capital reallocation between
new stores and technology
• The software as a service (SaaS) model
demands continuous spending on technology
services by retailers
“You have to spend money to make money.”
Increasing Tech Spend by Retailers
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Creates Opportunity for Startups
Source: Company Reports

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FOUR-QUANDRANT
DISRUPTORS
FRAMEWORK
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NAME UR PRICE
SELF-CHECKOUT GAMIFICATION
EVANGELIZE THRIVE
NEW RETAIL MODELS:
HOW WILL THE CONSUMER SHOP IN THE
FUTURE
EXPERIENTIAL RETAIL:
MAKE THE STORE AN AWESOME PLACE
CUSTOMER ENGAGEMENT:
HOW DO YOU CONVERT THE CONSUMER
ALL CHANNEL:
The CONSUMER CAN SHOP WHEREVER +
WHENEVER
REACTION
COMMERCE

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Why Online Secondary Marketplaces Took Off:
• Online resale industry is worth $34 billion in the US
• Rise of retail brands’ resale programs
• Consumers are convinced by the great quality of the
secondhand apparel bought via online platforms
• Societal shift toward less ownership — the art of
decluttering
• Creating communities where the customers can share
experiences about shopping + more…
New Retail Models
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Online Fashion Barter Community

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New Retail Models
Online Fashion Barter Community – reKindness
is a unique “swap to shop” online fashion barter community
Barter spare clothes in
reKindness’s community closet
online and at local events
Reduce personal
environmental footprint by
recycling clothes
De-clutter mass-market items
to make life less stressful
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• Name-your-own-price model: allows customers
to state the price they are willing to pay
• Dynamic pricing and data-driven repricing:
prices change in response to real-time supply and
demand
• 40% of retailers plan to use cloud/Saas solutions
for dynamic pricing
• Implementing dynamic pricing can improve
revenues and profits by 8% and 25%, respectively
New Retail Models
Name Ur Price
Source: WisePricer
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Best Buy and Walmart
implement price changes over
50,000 items
per month.
Amazon changes
prices every 10
minutes or more!

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New Retail Models
Name Ur Price – ideally
is a smart wishlist generator for customers
Follow friends’ and families’
wishlists on social media
Slide price bar to indicate
the price you want to pay
Set an expiration date for
auto-buying service when
the app discovers a sale
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New Retail Models
Name Ur Price – MeanBuy
is an app that empowers customers through PAY WHAT YOU WANNA PAY
Discretionary Nice-to-Have
product categories
Slide the price bar to indicate
customer willingness: a lower
price corresponds to a longer
waiting time
Inventory turnover
maximization for retailers
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• Nearly 80% of customers start the path to
purchase online (desktop or mobile)
• US mall traffic has declined for 41 consecutive
months and continues to be challenging
• April 2016 store traffic dropped by 6.6% YoY
• Malls have seen an average drop in traffic of
9.3% YoY
All Channel
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C It Buy It
Source: RetailNext

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All Channel
C It Buy It – Radius 8
offers online broadcasting that facilitates communication between local
stores and customers
Engage customers where
they are
Shoppers see inventory at
local store levels
Successfully launched a
partnership by Guess
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All Channel
C It Buy It – Brickwork
is an online-to-store conversion funnel to activate store traffic
Enables appointment book
and event RSVP
Drives customers to stores Dashboard allows retailers
to better coordinate
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All Channel
C It Buy It – TUKU
is a Tap-to-Learn in-store information tool
Presents information in a
quick, simple, and easily
digestible manner
Facilitates more informed
purchase decisions
Keeps customers engaged
and loyal
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All Channel
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Click & Arrive
PROS
• 110 Amazon Dash Buttons available
• Two-day shipping on all items
• Set up with existing Amazon account
• Dash Buttons are available to Prime members for $4.99
each, with a $4.99 credit after the first order
• Interfaces with existing system of participating brand
• Third-party providers (if needed) for payment, delivery, and
fulfillment
• Data analytics provided to brands
• Brands have a direct relationship with customers
• Available globally and to all brands
CONS
• Does not provide data to brands
• Selective regarding which brands can participate
• Controls the channel while promoting private label
brand
• Items must be Prime-eligible
• Scale and distribution
• Kwik must make sure that deliveries are profitable
Source: Fung Global Retail & Technology

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All Channel
Click & Arrive – kwik
An open IoT cloud
platform connects to any
fulfillment
Available to all brands
across the globe
Provides a dashboard that
gathers customer data
offers one-click physical “Buy” buttons that allow users to seamlessly
restock household essentials
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• Global retail e-commerce software and service
market:
– Expected to grow at a CAGR of 16% over
2015-2019
• Global e-commerce logistics market:
– Expected to grow at CAGR of 10% over 2016-
2020
All Channel
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E-Commerce in a Box
WooCommerce
26%
Magento
Community
Enterprise
25%PrestaShop
9%
Shopify
9%
Magento
Enterprise
5%
VirtueMart
3%
Demandware
2%
Others
21%
Market Share of Top Ecommerce Platforms 2015
Source: Magento

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Market
Segment Focus
Number of
Customers
Selected Clients Best Fit For
Starting
Price
Small Business 95,000+
Toyota, Schwinn
Payless, Camelbak
• Simple storefronts with custom look &feel
• Small businesses looking to scale
$29.95/
month
Small Business
10,000+
online
merchants
BTOSports, Clive
Coffee, Fireball
HAAN, Taylor Swift
• Online stores with custom look & functionality
• Use add-ons & work with professional services
$79.95/
month
Small Business 275,000+
Budwesier, Tesla
GE, World Vision
• Easy-to-use platform to sell products right away (but are
not planning to scale rapidly)
$9/
month
Small Business
40,000+
stores
Etech parts, Redfox,
BookPC, Radiantz,
Sawhouse
• Businesses that need an out-of-box solution for inventory
management and order processing
$15/
month
Small Business 295+
Adidas, Crocs, Godiva,
Godiva, Party City
• Large scale e-commerce operations (multiple brands or
stores; high purchase volume)
NA
Mid-size
Companies,
Enterprises
260,000+
Rosetta Stone, Alex
and Ani, Ghiradelli
Zumiez, Olympus
• Businesses looking to run multiple storefronts or multiple
brands with a backend system
• Open source and mobile friendly
NA
Small to
medium-sized
businesses
8,500+
Stores
N/A
• Businesses looking for an open-sourced platform which
allows flexibility in templates and customized designs
$45/
month
Source: Magento
All Channel
E-Commerce in a Box – Reaction Commerce
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Reaction Commerce

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All Channel
E-Commerce in a Box – Reaction Commerce
is a completely open source JavaScript platform that provides a premier customer
experience
Powerful, customizable
solutions
Instant updates with real
time reactions
Open source, easily extendable
templates and themes
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• Non-food industry loses $14 billion from abandoned
purchases due to long checkout
• 73% of customers say the checkout process is the largest pain
point at grocery stores
• Traditional self-checkout experiences are not satisfactory for
shoppers; New technologies include “Scan-Bag-Go” by Kroger
• Most self-checkout solutions are focused on grocery stores. Yet
studies suggest that many other retail environments may be
conducive to innovative self-checkouts
*Motorola Research
Experiential Retail
Self-Checkout
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Experiential Retail
Self-Checkout - Shopic
is a QR-code empowered express self-checkout app
Focuses on small basket item sizes at
drug stores, convenience stores and
toy stores
Can be integrated into
retailers’ own app
Notifies users about
special deals or discounts
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• Augmented reality enables consumers to
visualize products in 3D
• The market size is estimated to reach $1
billion with a 200% growth rate in 2016
• Augmented reality has great applications in the
home, fashion, and beauty categories, and
furniture
Experiential Retail
Augmented Reality
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Experiential Retail
AR - Cimagine
uses augmented reality and configurable 3D models of products to drive
sales and conversion
Augmented Commerce
Click and see the products in
3D at home
Augmented Stores:
“Endless aisle” or virtual
showroom
Augmented Sales
A B2B sales tool for sales associates
to use with customers
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• Fashion and apparel is the fastest growing e-commerce
category, hitting $73 billion in 2016.
• Poor fit is the no.1 reason for online returns.
• Conversion rates can increase 300% when fitting technology
is adopted
• Online return rates for apparel can range between:
 15%–20% at multichannel retailers
 35%-40% at online pureplays
 35%–40% at multi-brand
 15%–25% at monobrand retailers
• Fashion retailers can reduce fit-related returns by up to 50%
using virtual fitting technology
Experiential Retail
Fit Tech
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Experiential Retail
Fit Tech
Year Founded Fitting Category Retail Partners Key Technology
2011 Men’s Fashion 3D body scanning
2011
Women’s and men’s
apparel and footwear
Custom input measurements, 3D
body scanning
2013 Apparel
3-D visualization and color
discrimination
2010 Footwear
3-D scanning system, shoe
database
Clothes Horse
2011 Apparel
Customer input measurements and
product database
True Fit
2010
Footwear and Apparel
Customer input measurements and
product database
Fitted Solutions
2016 Footwear and Apparel Online retailers and brands Cloud-based 3D measurement
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Experiential Retail
Fit Tech – Fitted Solutions
offers a next-generation virtual fitting technology
Highly accurate fitted
solutions for apparel and
footwear
Cloud-based system 3D model measurement
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• There are 120m US mobile gamers today, 65%
are between the ages of 21-50, and 48% are
women, which constitutes perfect shopping
demographics
• The market is expected to reach $2.8 billion
• Objective: engage, interact and promote brand
Consumer Engagement
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Gamification US M-Commerce Sales, 2010-2015
billions and % change
Source: eMarketer

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Experiential Retail
Gamification – Skrownge
is a gamified solution to increase store traffic via promotion rewards
Geo-location engages
customers at venues
Injects relevant retailer
content and promotions
Helps retailers increase
store foot traffic and sales
The average consumer attention span is 8 seconds.
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• Smart Data + Cognitive Technologies + Hyper
Personalization
• Product Recommendation: Amazon
• Voice Powered Search: Baidu
• Intelligent Agent
• Assortment Intelligence Tool
Consumer Engagement
Artificial Intelligence
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Consumer Engagement
Artificial Intelligence – Cognilyze
is a psychology-based recommendation engine powered by AI
Traditional engines see WHAT
customers buy, Cognilyze sees
WHY they buy
Builds psychological
profiles of clients
Relies solely on historical
purchases and other
shopper interaction data
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• Marketers felt the biggest issue is scale, with 59
%, intending to increase their influencer
marketing budgets. (Tidal Labs)
• A transparent marketplace can:
Search all influencers by relevant attributes
Streamline process to cut overhead
Remove friction in reaching out to startups via
email
• Problems the sector is facing: fragmentation,
scale, and authenticity
Consumer Engagement
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Influencer Marketplace Main Challenges When Rolling Out
Influencer Engagement Strategy
Source: Augure/State of Influencer Engagement Survey

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Consumer Engagement
Influencer Marketplace - Shopography
Owns data from 5,000
retailers and 130 million
products
Makes a perfect match
between retailers and the
right influencers
Helps minimize overhead
costs
is a data-driven influencer marketplace
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Consumer Engagement
Evangelize & Thrive
Group Shopping
Encourage people to
buy together
Shopping
Communities
Bring like-minded
people together to
discuss, share and
shop
Recommendation
Engines
Let shoppers provide
advice to each other
Social
Marketplaces
Connect buyers and
sellers
Social Media
Use social media
tools and influencers
to sell goods and
services
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Consumer Engagement
Evangelize & Thrive - Everfave
customers use the app to spread the word, refer a business to their
friends and get rewarded
Recommendation
Referrals are shared via
25+social media platforms
Reward
Increase conversation rates
and customer retention
Discovery
Discover and share on
mobile with customized text
message and emails
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FOUR-QUANDRANT
DISRUPTORS
FRAMEWORK
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NAME UR PRICE
SELF-CHECKOUT GAMIFICATION
EVANGELIZE THRIVE
NEW RETAIL MODELS:
HOW WILL THE CONSUMER SHOP IN THE
FUTURE
EXPERIENTIAL RETAIL:
MAKE THE STORE AN AWESOME PLACE
CUSTOMER ENGAGEMENT:
HOW DO YOU CONVERT THE CONSUMER
ALL CHANNEL:
The CONSUMER CAN SHOP WHEREVER +
WHENEVER
REACTION
COMMERCE