The April 2018 Edition of the latest retail industry trends that are disrupting the future of retail. The East leads the West in new retail models. Innovation is everywhere.

1. THE DISRUPTIVE FUTURE OF RETAIL
WELCOME
Tony D’Onofrio

2. www.tonydonofrio.com© 2018 Retail Solutions. All Rights Reserved.
2
You are the Leaders to Shape It.
Global Retail Finds Its Groove
Where is the Global Shrink?
Digital Transformation Wake Up Call
The Disruptive Future of Retail

3. © 2018 Retail Solutions. All Rights Reserved.
The Disruptive Future of Retail
JAPAN
3

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Global Retail
Finds Its Groove
4

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The World and Retail Find their Growth Groove
5Source: World Bank 2018, The Economist August 2017
Global GDP 2015-2020 (% growth) Retail Sales 2012-2021 ($ Trillion)

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Global Retail Sales
6Sources: The Economist Intelligence Unit 2018, Focus Economics 2018, Chain Store Age / IHL Group 2018
Retail sales growth, 2018-2019 forecasts
(real % change per year)
2012 2013 2014 2015 2016 2017(*)
Retail Sales
(annual growth %)
14.3 13.1 12.0 10.7 10.4 7.2
China Retail Sales
(*) The Economist Intelligence Unit Forecast, August 2017
India 2021(*)
$1.5 Trillion
USA 2018
+6.2%

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The Global Top 250 Retailers
7Source: Deloitte Touche Tohmatsu Limited 2018
43 $10,055 17.2% 35.1% 26.5 14.0%
135 $21,685 54.0% 21.1% 5.9 38.5%
51 $14,698 20.4% 22.4% 8.1 33.3%
21 $14,354 8.4% 20.4% 6.7 38.1%
250 $17,643 100.0% 22.5% 10.0 33.2%
Number of
Companies
Average Retail
Revenue US$M
Share of Top
250 Companies
Average # of
Country
% of Retail Revenue
Average from Foreign
Operations
% Single-Country
Operators
Top 250
Apparel and
accessories
Fast-moving
consumer goods
Hardlines and
leisure
Diversified
Product sector profiles, FY2016
Level of globalization
by product sector, FY2016

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Top 10 Global Retailers & Fastest Growing
8
Top 10 Retailer Country
FY2011 - 2016 retail
Revenue CAGR %
RANK Fastest Retailer Country
FY2011 - 2016
Retail
Revenue CAGR %
Wal-Mart Stores, Inc US 1.7 1 Vipshop Holdings Limited China 103.8
Costco Wholesale Corp. US 6.0 2 Albertsons Company, Inc. US 74.0
The Kroger Co. US 5.0 3 JD.com, Inc. China 62.6
Schwarz Group (LIDL) Germany 7.3 4 Zalando SE Germany 48.1
Walgreens Boots
Alliance, Inc.
US 6.1 5
Reliance Industries
Limited/Reliance Retail
India 34.5
Amazon.com, Inc US 17.6 6
Southeastern Grocers,
LLC
US 31.7
The Home Depot, Inc. US 6.1 7
Axel Johnson AB/ Axfood,
Axstores
Sweden 31.6
Aldi Group Germany 7.7 8 Hudson’s Bay Company Canada 30.3
Carrefour S.A. France -1.1 9
Sprouts Farmers Market,
Inc. US 29.6
CVS Health Corp. US 6.4 10 Lenta Group Russia 27.8
Source: Deloitte Touche Tohmatsu Limited 2018

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APAC Leading Middle Class Evolution
9
500M
77%
66%
New urban middle
class globally
Of new urban middle
class in Asia Pacific
Working-age proportion
of global population (peaked in 2015)
1 2 33 Billion People Make Up
Global Middle Class
$33 Trillion Spent by Global
Middle Class in 2015
2021 is the Year Most People
Could Be in the Middle Class
2016 Urban
Middle Class
2026 Urban
Middle Class
Brookings Institution, 2016JCI Estimates based on UN, Pew Foundation, IMF, & CEIC Data

10. © 2018 Retail Solutions. All Rights Reserved.
10Source: A.T .Kearney 2017
2017 Global Retail Development Index
Rank Country
GRDI
Score
Population
(million)
GDP per
Capita, PPP
National
Retail Sales
($ billion)
1 India 71.7 1,329 6,658 1,071
2 China 70.4 1,378 15,424 3,128
3 Malaysia 60.9 31 27,234 92
4 Turkey 59.8 80 21,147 241
5 United Arab
Emirates
59.4 9 67,696 73
6 Vietnam 56.1 93 6,422 90
7 Morocco 56.1 35 8,360 40
8 Indonesia 55.9 259 11,699 350
9 Peru 54.0 32 13,019 61
10 Colombia 53.6 49 14,162 90
Emerging markets are ahead in growth
of mobile shopping

11. © 2018 Retail Solutions. All Rights Reserved.
11Source: A.T .Kearney 2017
Global Retail Development Index

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Where is The Global Shrink?
12

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Retailer Losses
13Source: Senormatic Global Shrink Index 2018, IHL Group
33%
23%
18%
26%
Shoplifting
Employee Theft
Administrative Losses
Vendor Fraud
$99.56B
Global Shrink
Loss
RETURNS
$643 Million
Lost in Returns
INVENTORY
DISTORTION
$1.1 Trillion
Lost Revenue Opportunity Due
To Inventory Distortion
Total Retail Losses

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Global Retail Shrink
$99.56B in losses
14
23%
18%
26%
33%
Shoplifting Dishonest
Employee Theft
Admin/non-
crime Loss
Supplier Fraud
Source: Sensormatic Global Shrink Index, 2018
14 Countries
13 Vertical Markets
“The Sensormatic Global Retail Shrink Index is the culmination of the
largest survey of senior retail executives with a view on, or role in,
loss prevention carried out in recent years.”
~ Planet Retail, 2018
51% LP Respondents
74% Senior Mgmt or Higher
73%
of Global GDP
80%
of Global Retail Sales

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LP Growing Industry Influence
15
15%
22%
23%
26%
37%
45%
54%
79%
34%
56%
38%
52%
32%
41%
33%
14%
51%
22%
40%
23%
30%
14%
13%
7%
0% 20% 40% 60% 80% 100% 120%
RFID
Fire Solution
Video Analytics
Data Mining
EAS
Access Control
Exception-based reporting
CCTV
Ranked 1-3 in importance Ranked 4-6 in importance Ranked 7-8 in importance
Technologies Most Critical in the US
Loss Prevention and Security Functions
Base: 182 USA Decision-Makers
Gaining
Influence
61%
Remained
the same
24%
15%Losing
Influence
LP
Department
Influence Over
the Years
Base: 168 US Decision-Makers
of US LP decision
makers consider EAS
tech extremely or very
important
56%
Very
important
32%
24%Extremely
important
Slightly
important
3%12
%
28% Moderately
important
Not at all
important
Base: 157 US Decision-Makers
Source: Loss Prevention Magazine, 2017

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Digital Transformation
Wake Up Call
16

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Store Systems Priorities
17Source: IHL Group, 2018
Top 10 Strategic Priorities for 2018
12%
15%
16%
33%
46%
54%
59%
72%
78%
89%
Store Network Upgrades
Workforce Management
Reducing Supply Chain Costs
Digital Transformation
Single Transaction Engine
One Cross Channel Customer Database
Empowering Store Associates
Upgrading CRM/Loyalty Programs
Inventory Visibility
Personalizing Customer Experience
5.6%
Average increase
Enterprise IT spending in
2018
vs. 4.5% last year

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Emerging Technologies
18Source: IHL Group, 2018
New Technology Priorities
1.3%
1.4%
2.8%
3.5%
5.3%
5.5%
6.7%
7.0%
7.3%
RFID
Augmented / Virtual Reality
SD-WAN
IoT
Big data
Conversational Commerce
Predictive / Prescriptive Analytics
AI/Machine Learning
Proximity / Location-based Mkt
Respondents Planning To Increase Spend by >10%
Who Are Leaders
42%
57%
60%
73%
74%
76%
80%
100%
100%
Big Data Integration
AI / Machine Learning
SD-WAN
Predictive / Prescriptive Analytics
Proximity / Location Based Mkt
Conversational Commerce
IoT
RFID
Augmented / Virtual Reality
0% 20% 40% 60% 80% 100% 120%

19. © 2018 Retail Solutions. All Rights Reserved.
Wake Up Retail Call: Tech Strategies & Obstacles
19Source: RIS / Gartner Retail Technology Study 2018
Top 5
Major
Strategies
over the next
18 months
54% 54% 51% 46%
Social Media
Engagements
Personalized Mkt
Capabilities
Unified Commerce
(Omnichannel)
47%
Increasing Customer
Engagement
Advancing Analytics
Top 5
Obstacles
over the 18
months
38%
Consolidating Sales
Channels
Application
Integration
Optimizing Digital
Commerce
Customer Data
Security
52% 41%
Retiring Legacy
Systems
37% 37%
Advancing mobile
commerce
Improving IT Networks
Big Opportunities and Strong Headwinds Accelerate the Pace of
UNIFIED COMMERCE and DIGITAL TRANFORMATION.

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The $15 Billion
Innovation Challenge
20Source: IHL Group
Over 50% of US Households
have Prime membership
66 Million Households
70% of Households > $112k Income
87% - 237%
Average IT spend increase required to effectively
compete with Amazon
USA 20
Amazon’s annual spend is more than the amounts of the
following retailers combined

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The Disruptive Future of Retail
CHINA
21
Fung Business Intelligence, July 2017

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22
Bricks vs Clicks
USA Channel Retail Growth
USA Channel Shopping Preference
Source: Deloitte Retail Bifurcation March 2018, Statista Digital Economic Compass 2018
E-commerce growth by country ($ billion)
If you want 10,000 new
customers, you have to build a new
warehouse and this and that.
For me: two servers.
~ Jack Ma, Alibaba
Average
Channel
Growth
Actual
2012-2016
of low-income consumers
choosing shop in-store.58% of high-income consumers
choosing shop online.52%
Predicted
2017-2022
1.3% 12.5% 1.7% 11.7%
In-store
$30B
Online
$40B
Online
$50B
In-store
$36B
Average CAGR
China
United
States
Japan
United
Kingdom
Germany

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Why Clicks NEED Bricks
23
CLICKS Getting Physical CLICKS Insights
• Amazon > Bookstores > Amazon Go > Whole
Foods ($13.7 Billion)
• Alibaba $8 Billion in Physical Stores Last 2 Yrs
> Hema Supermarkets
• The Delivery Last Mile
• INNOVATION Differentiation
• Expanding Loyalty Programs
• Return Rate – Online nearly 33% / instore 9%
• The Profit is in the Store
Forbes 19 April 2017, Forbes 27 August 2017), Economist 2017 / Bloomberg Business Week November 3, 2017
Where Do Apparel Retailers Make The Largest Profit ?
In Store Online Online In Store
Pick Up
Online Ship
From Store
32%
Profit Margin Profit Margin Profit Margin Profit Margin
30% 23% 12%
For each additional percentage
point of shopping that moves
online, a retailer’s margins
shrink by about half a point.
~ Morgan Stanley

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The Disruptive
Future of Retail
24

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25
Technology Driving Shifts in Retail Power
MANUFACTURER RETAILER CONSUMER
FUTURE OF RETAILFUTURE OF RETAIL
Pre-1970s 1970s 2010s

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Innovation SPEED
26Source: Singularity.com, Economist 2017, Ericsson Mobile Report 2017
Blowing away the cloud
Connected devices, worldwide, bn
*Everyday objects
Connected to the internet

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Retail Innovation
27
Fast Fashion – 10% CAGR
Market Share
Do you own a voice-
controlled digital home
assistant?
Cowen & Company 2017 RIS Shopper Insights 360, 2017
New Channels
Biz Models
Source: Cowen & Company, Company Reports
Buying Platforms
Shopper Purchase Frequency
Through New Channels

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The Evolution of Loss Prevention
28
Store Intelligence
Item Intelligence
Item Security
Data & Video Analytics
Traffic & Shopper
Analytics
EAS Video
RFID

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Retail Loss Prevention Disrupted
29
RETAIL THEFT
OPPORTUNITIES
DIGITALLY EMPOWERED
CONSUMER
Shrink
Brand Value Differentiation
Real-Time Consumer Loyalty
Immersive Unified Customer
Experiences
Smart Supply Chains
Brand Integrated Security / Video
Analytics / Machine Learning
Data / Visual Zone Deterrence
Prescriptive Data Analytics

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The Future Retail Ecosystem
30
CONSUMER
STORE DATA EXPLOSION
• POS
• Labor Scheduling
• Planograms
• Store Traffic
• Loyalty Programs
• EAS
• Video
• RFID
• HVAC
• Internet of Things
• Beacons
• Wearables
• Robots
• Unified Commerce
• Smart Mirrors
• Smart Floors
• Smart Fitting Rooms
• Augmented Reality
• Virtual Reality
INTELLIGENT FILTERS
• Video Analytics
• Artificial Intelligence
• Machine Learning
• Big Data
Seamless
Bricks & Clicks
Consumers
as Brand
Ambassadors
Associates
as Brand
Ambassadors
Unassisted
Self Checkout
Covert Intelligent
LP (deterrence)
IMMERSIVE
EXPERIENCES
The retailer of the future will likely be a retailer of the
past — just the most efficient version therein.
~ Goldman Sachs 2017

31. © 2017 Retail Solutions. All Rights Reserved.
3131
The Formulas for Retail Success
Wall Street Journal, 16 October 2017 / McKinsey October 2017, Deloitte March 2018
USA - 1.2 billion hours/week
driving to mall,
finding parking,
wondering around aisles,
checking out & driving home
Five-year revenue
growth
Premier
+81%
Priced-based
+37%
Balanced
+2%

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32
Stores Not Going AWAY
Source: Economist 2017, Cowen & Company 2017 / PSFK / RSR Research
Educate & empower in-store
employees using technology
Opportunity for improving
in-store experience*
E-commerce sales
As % of total

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33
Store Reinvented - Associate Brand Ambassadors
Source: Zebra Shopping Vision Study 2018
May I
help YOU?

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Global
Source
Tagging
34
18%
34%
37%
45%
50%
73%
50%
46%
41%
21%
9%
16%
17%
14%
29%
Latin America
Europe
Global
Asia - Pacific
North America
33%
28%
20%
12%
11%
51%
62%
67%
73%
78%
16%
10%
14%
15%
11%
Apparel and fashion Accossories
Food and Beverages
Health and Beauty
Electronics
DIY/ Home Improvement
Future Plans of Using Source Tagging Across Regions Future Plans of Using Source Tagging Across Product Categories
Not Planning to Implement Planning to Increase Planning to Maintain
Source: Global Theft Barometer
“There is only one boss: the customer. And he can fire everybody in the company from the
chairman on down, simply by spending his money somewhere else.”
~ Sam Walton
The Future of Retail
• Theft is not going away
• Branding and Customer Experiences everywhere
• Remove the non-customer facing store clutter

35. © 2018 Retail Solutions. All Rights Reserved.
35
Room for Growth
Internet usage % of population, 2016
Source: Economist, Statista Digital Economic Compass 2018
Thanksgiving Day Weekend
Single’s Day (Alibaba)
The retail industry is strong, but it is undergoing a major renaissance, a renewal
akin to the renaissance that took place between the 15th and 17th centuries.
~ Deloitte, March 2018

36. © 2018 Retail Solutions. All Rights Reserved.
36
THANKYOU
“Retail Success
is a Team Sport”
~ Tony D’Onofrio
You are the Leaders
to Shape It.
www.tonydonofrio.com