THE FUTURE OF RETAIL: 2014

BI Intelligence
Is This How People Really Like To Shop?
Image: Reuters
Or This?
Images: Kim Bhasin / Business Insider
Lets Face It The Old Retail Model Is Dying
Image: Brian Sozzi / Belus Capital Advisors
Fast
Image: Nicholas Eckhart
Hundreds Of Retail Stores Are Closing
Because Store Sales Are Tanking
Holiday Quarters Have Been Terrible For Physical Retail
Where Are Shoppers Going?
Online!
We Are Here
Were in the midst of a profound
structural shift from physical to digital
retail ... its happening faster than I could
have imagined.
Jeff Jordan, partner at
Andreessen Horowitz, January
2014
E-Commerce Is Driving Nearly All Retail Growth In US
1 In 20 Retail Dollars Are Already Online
Mobile Is Also Gaining Fast
New Retail Is Nearly Equal To Old Guard In Market Value
Venture Capital Is Cashing In
Amazon Continues Growing Very Quickly
But Other Retailers Are Also Growing Online Sales

The Signs Are Clear
E-Commerce Is Booming.

Shippers Were Overwhelmed By
The Massive Volume Of
E-Commerce Orders Over Christmas 2013
Images, Right: Reuters
The Top Categories Electronics, Media, Clothing
Lets Look At Some Of The Retail
Categories Individually
ELECTRONICS
Image: Reuters
Best Buy Is Vulnerable. 85% Of Sales From Electronics.
Best Buy Offline Sales Plummeted 15% Last Year
BI Intelligence Estimate
All Of Best Buys Growth Is Online
BI Intelligence Estimate
Amazon Was Once Smaller Than Best Buy. Not Anymore.
Amazon
Already
1.7X Best
Buy
MEDIA
Image: Reuters
Media Is Still The Top E-Commerce Category ~$25 Billion
Amazon Got Started With Media Sales
Amazon Is Now ~14% Of All E-Commerce
Media Sales Are Going Digital
Benefiting Apple And Amazon
CLOTHING AND ACCESSORIES
Image: Reuters
More Than 13% Of All Clothing Sales Now Occur Online
J.C. Penney Is Vulnerable. 83% Of Its Business Is Clothing
And Accessories.
In-Store Sales At J.C. Penney Declined 10% Last Year
BI Intelligence Estimate
Online Is Growing, But Overall J.C. Penney Still In The Red
BI Intelligence Estimate
Gap Has Done Better
BI Intelligence Estimates
16% Of The Gaps Total Retail Sales Are Now Online
BI Intelligence Estimates
HOME AND FURNITURE
Image: Reuters
15% Of All Furniture Sales Now Occur Online
Helping Fuel The Rise Of Home Goods Online Retailers
FOOD AND BEVERAGE
Image: Reuters
For Groceries, Online Sales Are Still A Blip
Despite The Early Efforts Of Amazon And Others
Image: Reuters
What About The
Everything Retailer, Wal-Mart?
Image: Reuters
Some Perspective. Wal-Mart Is Still Much Bigger
Than Amazon.
Wal-Marts Advantage Is Still In Physical Retail
Wal-Mart still has 4,100 stores within five
miles of two-thirds of the U.S. population
The Wall Street Journal, October 2013
Online Is Still Just 2% Of Walmarts Total Sales
BI Intelligence Estimates
But Sales Growth Is Coming From Online
BI Intelligence Estimates
And Walmart Is Investing In Social And Mobile Tech R&D

Retail Is About Offering People The Services
And Products They Want On The Devices
And Media They Use
Image: Amazon
The Web
52% of all retail
sales are Web-
influenced
Smartphones And Tablets
Especially iPhones And iPads. ~75% Of Traffic.
iPad
iPhone
Android Phone
Android Tablet
Other
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013
Source: Monetate
Ecommerce Website Traffic By Mobile Pla orm
Mobile Is Now Of All E-Commerce Traffic
PC
Tablet
Smartphone
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013
Source: Monetate
Ecommerce Website Traffic By Device
0
20
40
60
80
100
120
140
160
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Source: comScore
Leading Retailers' Digital Audience Popula on
By Device
Desktop Only Desktop + Mobile Mobile Only
Retailers Are Finding Huge Audiences On Mobile
And On Social Networks

What Do Todays Customers Want?
Image: Amazon
They Want Price And Convenience
Convenience
Price
And They Want Individualized Services And Offers
They Want To Buy Things On Mobile! PayPal Does
~$30 Billion In Mobile Transactions
PayPal Mobile
Braintree Mobile*
$0
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2008 2009 2010 2011 2012 2013
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*PayPal counted a small por on of Braintree's transac on volume as its own in the last 12 days of Q4 2013.
Source: PayPal
PayPal Mobile Transac on Volume
(Including Braintree 2013)
PayPal purchased Braintree in late 2013.
Starbucks Payments App Does It All
Images: Starbucks And Square
Which Is Why It Is So Successful: $1 Billion In Annual
Volume!
The Shift To Online Retail Is Global
Image: Reuters
Alibaba Drives $157 Billion In Gross Merchandise Value
Chinas JD.Com Saw Sales Boom Last Year
Mobile Will Account Of 15% Of Chinese E-Commerce Sales
E-Commerce Is Taking Off In India, Too
Henry Blodget
CEO & Editor-in-Chief
Tony Danova, Research Analyst
Marcelo Ballv, Editorial Director
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Cooper Smith, Research Analyst
John Heggestuen, Research Analyst
Emily Adler, Senior Research Editor
Mark Hoelzel, Research Analyst