Retail Revolution: Disrupt or be Disrupted The Connected Mall

1. 1
Deborah Weinswig
Managing Director
FGRT
August 30, 2017
Retail Revolution: Disrupt or be Disrupted
The Connected Mall

2. 2
• Managing Director of FGRT
• Award-winning global retail analyst and a specialist in retail innovation and technology
• Spent 12 years at Citi Research, where she served as Head of the Global Staples and
Consumer Discretionary team
• Ranked as #1 analyst by Institutional Investor for 10 years
• Serves on the advisory board of several accelerators, including Alchemist Accelerator,
The Cage (Lane Crawford Joyce Group), Entrepreneurs Roundtable Accelerator, Grand
Central Tech, Plug and Play, and TrueStart
• Certified Public Accountant, with an MBA from the University of Chicago
About Deborah Weinswig

3. 3
FUNG GROUP
PRODUCTS SERVICES DISTRIBUTION RETAILING
Li & Fung Limited
Listed on the SEHK
Global Brands Group
Listed on the SEHK
Fung Retailing Limited
Privately Held Entity
Convenience Retail
Asia Limited
Listed on the SEHK
Trinity Limited
Listed on the SEHK
Branded Lifestyle Holdings Limited
LiFung Kids (Holdings) Limited
Toys “R” Us (Asia)
Suhyang Networks
UCCAL Fashion Group
Privately Held Entities
Fung Holdings (1937) Ltd.
A privately held entity and major shareholder of the Fung Group
KNOWLEDGE
FGRT
Fung Business
Intelligence
Fung Academy

4. 4
• The knowledge bank for the Fung Group
• Focuses on emerging retail and technology trends
• Established in 2014
• Based in New York, with research teams in London,
Hong Kong, Israel and India
• Publishes thematic research and research with a
global scope on topics such as omnichannel retail,
fashion and retail trends and disruptive technologies
• Compiles the FGRT Retail Intelligence Index
FUNG GLOBAL RETAIL & TECHNOLOGY

5. 5
The Retail Revolution and
the Future Outlook
For Shopping Centers

6. 6
1. Urbanization
There will be 100 million more people living in Chinese
cities by 2019.
New infrastructure projects such as metro lines create more
local communities.
More people living in cities means smaller livings spaces and
necessitates more places where people can spend time
together outside the home.
Three Global Trends Impacting the Future of Shopping
Centers
Sources: Xinhuanet/The State Council of the People’s Republic of China

7. 7
2. Demographic Shifts: Millennials and Silvers Drive Experiential Spending
Three Global Trends Impacting the Future of Shopping Centers
415
353
300
350
400
450
Chinese
Millennials
Total working
population
Population(Million)
Western
Europe &
the US
65+ Population as a % of the Total Population, by Region,
2015 vs. 2030E
* Germany and France are included in W. Europe. The UK is included in N. Europe.
Source: UN Department of Economic and Social Affairs, Population Division: World Population Prospects: The 2015
Revision
26%
20%
15%
10%
6%
6%
8%
30%
26%
21%
17%
10%
9%
12%
Japan
W. Europe
N. America
China
S.E. Asia
India
World
2015 2030

8. 8
2. Demographic Shifts: Underserved
Markets
Three Global Trends Impacting the Future of Shopping Centers
• Plus-size US women’s apparel sales have outpaced total
women’s apparel sales for the past three years.
• According to The NPD Group, ~65% of women in the US
wear a size 14+.
• The percentage of teens buying plus-size clothing will
reach 34% in 2017, up from 19% in 2012, The NPD
Group estimates.
• Women who wear size 16 or larger buy more than 50%
of their clothing online versus 33% of those who wear a
smaller size, according to ModCloth.
• 75% of women wear a size 10 and above, but the only
account for 17% of apparel spending
For example, the plus-size apparel market is underserved and
there are limited in-store options.

9. 9
3. The Hyper-Connected Consumer is Always On: More Informed and With
Greater Access
Three Global Trends Impacting the Future of Shopping Centers
Physically Digitally
Mobile Broadband Connections
as a % of Total
Source: GSMA
Smartphones
Data Traffic CAGR (2015–2020E)
2015 2020E
47%
2.6 Bil.
49%
71%
5.8 Bil.
3.1%
3.7%
4.8%
6.0%
North America
Europe
World
Asia
Estimated Annual Growth Rates for Passenger
Air Traffic for 2016–2035, by Region
Source: Boeing

10. 10
The expectations of shoppers today
are constantly evolving, calling for
different retail experiences and for the
shopping center to reinvent itself.
TECH
EXPERIENCES &
ENTERTAINMENT
NEW TYPES
OF TENANTS
CONNECT WITH
THE CONSUMER

11. 11
Reinventing the Mall Experience
Mall operators are rethinking how they deliver experiences to consumers and how to keep occupancy
rates high.
Curation and Novelty
Pop-ups are a curated mix of
smaller stores that add a sense of
novelty and urgency to the mall
offering. Crowds were lined up to
get into Kylie Jenner’s pop-up shop
in the Westfield Topanga Mall in
Los Angeles.
Content and Events
Art exhibitions, performances and
exclusive events have proven
effective in driving traffic to
shopping locations. K11 Shanghai
featured a Vivienne Westwood
exhibition.
Convenience
E-commerce companies are
partnering with mall operators on
more compelling omnichannel
offerings, including a “drive up,
pick up” service at malls.
Locally Grown and Made
Consumers are seeking goods that
are locally grown, made and
produced, and that incorporate
more regional, artisan flavors and
designs. Kimco Realty has
expanded a program that offers
small businesses one year of free
rent and reduced property charges.

12. 12
Reinventing the Relationship with the Consumer
Mall operators must rethink how they engage and retain
their visitors.
Conversations
Community
Personalized
Services
The
Connected
Mall

13. 13
Reevaluating How they Think about their Tenants
Mall operators must revaluate who their potential tenants might be.
Online Going Offline
For e-commerce retailers, physical stores are marketing assets
that support their online business models. They require more
innovative leasing models.
Office and Wellness Service Businesses
Co-working spaces and gyms (Pure, SoulCycle) require flexible
access schedules to offer more convenience to users.

14. 14
Rethinking How they Approach Technology
Accelerators, Venture Capital Arms and Universities as Resources
Internal External
Venture Academia

15. 15
Rethinking How they Approach Technology
Startup investments made by US shopping center developers and REITS between 1Q2010 and 1Q2017,
by category.
Brands and Digital
Commerce
Platforms
Crowdsourced
Delivery
Digital
Loyalty
Marketing
Platforms
Parking
Data
Analysis
Pop-ups and
Retail
Experiences
Simon / Simon
Venture Group
Macerich
Westfield
Simon / Simon
Venture Group
Westfield
GGP
Westfield Simon / Simon
Venture Group
Simon / Simon
Venture Group
Simon / Simon
Venture Group
* Size is representative of the number of investments in each category.
Source: CB Insights/Crunchbase/Pitchbook/FGRT

16. 16
What if Storefronts Were Shoppable?
Ted Baker piloted interactive store windows for its
Keeping Up with the Bakers campaign in London.
The screens were produced by Nexus Interactive
Arts.
Glass Media offers projector-based storefront displays.

17. 17
Rethinking How they Leverage Technology
Can shopping centers provide value-added technology solutions to tenants?
Shopping center
Wi-Fi is a start,
but what’s
beyond?

18. 18
Partnering With Technology Companies to
Bridge the Gap: A Global Overview of Solutions

19. 19
Entertainment: Location-Based, Fully-Immersive Virtual Reality (VR)
Dreamscape Immersive: A new Los Angeles-based
startup for location-based VR that is planning to
open a VR Multiplex in Los Angeles.
Nomadic VR: A California-based developer of VR
games that can be touched and felt. The company
received an investment from Horizon Ventures and
demoed its technology at the Wonderful Worlds of
the Whampoa mall in Hong Kong in July 2017.

20. 20
Security: Robots in Shopping Centers
• The Prudential Center in Boston and the
Westfield Valley Fair in San Jose have piloted
security robots.
• The K-5 robot by Knightscope takes pictures and
video, and can detect heat and CO2. It leases for
a monthly fee of about $8,000.
• Westfield has also used SoftBank’s Pepper robot
to greet and offer assistance to shoppers at its
US properties.

21. 21
Security: Using Crowdsourcing to Catch Shoplifters
• SpotCrowd is an online platform that streams existing, real-time footage from retail
stores’ surveillance cameras.
• Registered users access those images to spot suspicious activities inside the stores
and alert shop owners.
• For stores to be informed, a spot needs to be confirmed by several other users. After
that, an alarm is sent to the shop owner, who can then decide whether or not to act
upon it.

22. 22
Loyalty and Rewards
• When consumers use their credit or debit card,
Spring tracks their spending in real time and
offers personalized marketing and rewards.
• It also creates a direct communication channel
and customer relationship management (CRM)
tool for shopping centers.
• Spring is used at 75 live mall locations in the US
to date. Clients include Simon, Taubman,
Macerich, PREIT and GGP.
• There are plans to add 50 more locations by the
end of 2018.

23. 23
Flexible Spaces: WithMe
• Pop-up stores are designed to be assembled
quickly from the ground up.
• Locations: shopping centers, office parks,
airports, campuses and festivals.
• All products and fixtures are RFID-embedded,
and the store includes beacons so that
customers with the ShopWithMe app can
receive product suggestions and personalized
messages.
• Eight locations in the US.
• Investment by Macerich.
Source: WithMe

24. 24
Short-Term Leases: Storefront, an Airbnb for retail, is a rental platform operating in eight
markets, including Hong Kong
Source: Storefront

25. 25
Omnichannel Solutions: Solving the Issue of Same-Day Delivery and Easy Returns
Happy Returns accepts in-person returns from participating online retailers at six malls.
ShopRunBack is an on-demand returns service for e-commerce businesses, which
operates returns drop-off points as well as a network of delivery professionals. The
company currently works with Mango in Europe.
ShopTurn, a Techstars-backed company, is an on-demand return service enabling
consumers to return purchases directly from home.
OLAM is a technology-enabled logistics platform solution for mall-based retailers,
providing convenient, same-day purchase options for shopping mall purchases. The
cost per pickup is $5.

26. 26
Hassle-Free Checkouts
Shopic is a QR code-based, express self-checkout
app. The company collaborated with Tyco on an
application that enables consumers to remove
the security sensor on items at the point of sale—
without requiring any assistance.
QueueHop lets customers check out on their
phones without having to wait in line. It uses
QR-code scanning and RFID-powered security
tags that automatically unlock after payment is
made.

27. 27
Personalized and Data-Driven Marketing
ActiMirror helps stores become omnichannel
hubs by creating a personalized consumer
communication channel and enhancing the
overall guest experience.
Neoma helps shopping malls create, launch and promote
beacon-powered and augmented reality (AR) applications, and
helps retailers within the mall inspire and attract customers as
soon as they enter the building.

28. 28
Personalized and Data-Driven Marketing
Using computer vision to analyze shopping
mall visitors’ shopping bags and provide
personalized marketing messages.

29. 29
Thank you
DEBORAH WEINSWIG
MANAGING DIRECTOR
FGRT
deborahweinswig@fung1937.com