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The Decade of

Unknowns in a Future

The global shift to the always

on and connected

David Marcotte

Senior VP Strategic Advisory Services

17 October 2018

The key current

demands and

building blocks for

the future in retail

The new solutions

of IoT, identification,

and transparency

How the future is

shaping up rapidly

in multiple places

and forcing out

some new thinking

Future proofing:

Omnichannel is a future

rushing at all companies

in retail.

The current, new,

and future solutions

for enabling fulfillment

are central concerns.

Future proofing is

preparing and outlining

the oncoming demands.

Practical steps

to future proofing

your business

The future is not on the predictable path in front of you.

It is a mugger waiting for you around the next corner.DR. LOWELL CATLETT, 1992

Changes and innovations will create far more omnichannel

opportunities on a global scale

Source: Kantar Consulting 2

WE WILL EXAMINE:

Source: Kantar Consulting

The Key to the Future is Integration and Parallel Transactions

Value chain = logistics, transactions, and fulfillment

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LOGISTICS

Shipping Receiving DC Store Distribution In Store B2C Transaction Post SalePackingField Management Allocate

Fulfillment

Fulfillment

A transaction is a change of status It is the transfer of ownership, movement, status, set of agreements, or terms and conditions.

There is no omnichannel without hundreds of transactions to manage, validate, and record for later verification.

Fulfillment is a completed set of transactions It is the process by which the final owner of product, services, or finance is reconciled.

It moves in both directions as does logistics and transactions.

Reverse Logistics

Transaction

Manufacturing

The key current

demands and

building blocks for

the future in retail

The new solutions

of IoT, identification,

and transparency

How the future is

shaping up rapidly

in multiple places

and forcing out

some new thinking

The Now

The key challenge

today is creating

and managing

frictionless and

transparent solutions.

For omnichannel,

this is the integration

goal of shopping,

transactions, and

fulfillment.

Practical steps

to future proofing

your business

Two years from now, spam will be solved.BILL GATES, 2004

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NOW

Source: Kantar Consulting

Increasing shopper empowerment and fragmentation giving rise to a new type of shopper

Epicurean shoppers will shape the retail and shopper landscape over the next several years

Source: Kantar Consulting

Who are the Epicureans?

A growing group of shoppers with

a unique approach to shopping

For Epicureans

SELF-GRATIFICATION is the

motive that informs decisions about

where, when, and how to shop.

SIMPLICITY is key.

The SELF is the reference point.

Epicureans will shape the future of shopping in three main ways

Value Diffusion

As self-gratification motivates

more shopping decisions

“Value” becomes less

price-focused

And more nebulous

Routine Reconsideration

Shopping routines that are not

gratifying

Or do not simplify shoppers’ lives

Face a heightened risk of being

eliminated

Self-Reflective Shopping

How we shop

WHERE we shop

What we buy

Are all reflections of who we are

Pre-Epicurean: Bodega Aurrera Back to School 2012

Source: Kantar Retail analysis

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Fintech as a physical and virtual enabler of a controlled environment

Expanding spend potential and limiting losses can be a significant boost to revenue

Source: Disney corporate, Globant.AR, Apple app 10

Alipay and WeChat continue to have global dominance if not always coverage

An expectation that tourists rather than retailers will further the spread of acceptance

Source: Alipay corporate, The Economist, Kantar Consulting 11

1.6 billion

between the two

The new integrated ‘employee-free’ stores are the latest expression of IoT integration

Moving stores to where they are needed — and providing them with a personality and means of engagement —

will be a requirement for them to grow in a meaningful manner

Source: Alibaba YouTube account, JD.com, Kantar Consulting 12

Alibaba’s variation

Reality check: Two Futures to Consider

Innovation is quite high in beta-comfortable China, while the Americas is more ‘version 3.0’

Source: Auchan PR, Amazon, Kantar Consulting 13

Beta: Three-Month Cycles

▪ Competitive pressure creating three-month

development cycles

▪ 500 million “beta users” mean acceptance,

rejection, or integration

▪ Low trust/high enablement

▪ Privacy is defined financially, not public

Fully Proven

▪ Risk-averse population and litigation management

▪ Expectation of existing platform release

▪ M&A hopes and dreams

▪ High trust/low enablement

▪ Privacy is personal

Finance

Ant Financial/MoneyGram

5G

Huawei/AT&T

Semiconductor

CIIF/Xcerra

Chips

Broadcom/Qualcomm

Ride Share

DiDi/Lyft

Access | Monitoring

Payment | Validation

The key current

demands and

building blocks for

the future in retail

The new solutions

of IoT, identification,

and transparency

How the future is

shaping up rapidly

in multiple places

and forcing out

some new thinking

The New

The Internet of Things,

the speed of

identification,

and the expectation

of transparency

continue to create

the new current

solutions.

They are positioning

the future thinking

within this space.

Practical steps

to future proofing

your business

Intelligent people need a fool to lead them. When the team’s

all a bunch of scientists, it is best to have a peasant lead the way.JACK MA, 2014

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NEW

Source: Kantar Consulting

Driving efficiency: Fulfillment by integrated trucking

and ultimately self-driving vehicles/robots

Source: Kantar Consulting, company websites

Self-driving cars capture most of

the press, but trucking is most

likely to succeed first as the need

for more efficient fulfillment

increases.

Autonomous trucks with a co-pilot

engaged in dedicated lanes and

routes can cut costs, along with more

predictable routes and scheduling.

Also on the horizon: Uber-like

solutions for bypassing the bottleneck

and expense of brokers to ensure

more options for both service

providers and shippers as well as an

expansion of the trucking network

into small neighborhood robotic units

for B2C fulfillment.

On-demand transportation greatly lowers costs, and self-driving vehicles

can cut costs further; smaller robots may be best for the ‘last mile’

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Supplier-driven fulfillment: D2C models drive distinctive

fulfillment options, flexibility to reduce friction

Source: Kantar Consulting, company websites

Modelo moved to direct-to-

consumer selling in 2014 in

various markets and had some

limited success selling its mainstream

products delivered by the brewer’s

existing distribution network.

Real growth started when Modelo

expanded the site into more social

media tools and moved the portfolio

into the more emotional space of

artisan beers and ciders. This got the

online community of under-35s far

more excited and orders started to

grow.

Based on that, the company created

three separate integration streams

and expanded its support store

network, which now numbers 8,000

locations in Mexico.

Modelo’s fulfillment models are flexible in terms of timing and size of need

and drive more consistent loyalty

Advanced digital content Fulfillment flexibility to personalize

Basket-based pricing to drive volume

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Source: Kantar Consulting, South Chain Times, WeChat

Micro payment and unstructured distribution models

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5G will accelerate and distort Internet use: Haves and Have Nots will be the surprise

The impact of 5G on all forms of media, gaming, and information transfer is clear, but it has become a politically

sensitive area for Europe and the U.S., with China providers in a clear leadership position

Source: GSA, Australia Telecom, Bloomberg, Kantar Consulting 18

▪ Ant Financial’s attempt to buy out MoneyGram to extend its global payment system was blocked,

the first U.S. political statement to Chinese leadership in this space.

▪ Huawei being prevented from working with U.S. telecommunication providers for 5G was more

serious. ZTE is the other leader blocked.

▪ Projections for 5G in major markets have to be adjusted for these realities.

Integrating fulfillment at home: The smart house is by definition IoT integration of retail and

fulfillment, but has room to expand

Source: Kantar Consulting, company websites

Directly connecting the home and retail greatly expands transactional relationships and longer-term loyalty drivers

such as preventive maintenance

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The key current

demands and

building blocks for

the future in retail

The new solutions

of IoT, identification,

and transparency

How the future is

shaping up rapidly

in multiple places

and forcing out

some new thinking

The Future

AI, complex

automation, and the

roles of service robotics

shift thinking.

Driving complexity

into the simple and

everyday will create

future solutions that are

intuitive for consumers.

Practical steps

to future proofing

your business

Much effort will be put into the designing of vehicles with ‘robot-brains.’

ISAAC ASIMOV, PREDICTIONS IN 50 YEARS, 1964

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FUTURE

Source: Kantar Consulting

Warning: The future has Six Sigma expectations

Anything short of that creates potential fatal disruption of new services

Source: FAA fact sheet, June 2016 21

Almost all countries:

Commercial drones can fly only in

daylight and 30 minutes before sunrise

and 30 minutes after sunset.

Speeds must be kept under 100 mph,

and the drones cannot fly above 400

feet (122 meters).

Drones must be kept within the user’s

line of sight and not fly over any people,

housing, or vehicles.

There were 40,000 fatal auto accidents

in the U.S. in 2017. In 2018, there were

two accidents with autonomous cars.

2018 drones = 0

Future = FAA says 0

The future has to be

99.999% safe.

Users and/or government agencies

will reject any system that is less

than that.

A 55-pound flying drone falling

400 feet would:

▪ Strike > 5 seconds

▪ At 120+ mph

▪ Explosion = 1.5 sticks of TNT

A 200-pound ground-based robot at

65 mph would have 15% of the

same force.

2017 commercial aviation = 0

2017 civil aviation = 425

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Currently, YI Tunnel can

identify 10,000 SKUs and

has marked over 10 million

items. The recognition time

of each item is 0.02

seconds, the accuracy for

recognition and checkout is

over 99.7%, and the error

rate is only 1/500 of that of

artificial checkout.

YI Tunnel visual self-checkout

Product and shopper/employee identification for fast checkout

23Source: YI Tunnel, Kantar Consulting

Mothership and mini-robot delivery system starts to reflect the reality of home delivery

and balancing costs with monitoring … also how to manage thieves and boys

Source: CNN Money video sIte 24

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Implanting connections to

the Internet is now possible.

In 2027, it may be common

to provide users with instant

access to information and to

monitor them.

Harris 2016 body

modification poll:

▪ 21% of Americans

▪ 40% Millennials

Body modification has

entered the global

mainstream. At CES,

there were 25 solutions

for evaluation and

testing.

The integration of the cloud

and its attending capabilities

are already well underway.

How do people fit into

fulfillment when they are

partially integrated without a

handheld device?

Everyday AR, Part 2

2027 augmented human: Cloud but intense on privacy

Devices are built to become part of the body… and stop moaning, this train has left

the station already

Source: The Harris Poll, February 2016

Android pets in 20% of homes: AR pets may be the main interface to shoppers

Providing companionship especially for elderly, but with very different needs than real pets

Source: VRcircle.com, Aibo.sony.jp/en 26

The key current

demands and

building blocks for

the future in retail

The new solutions

of IoT, identification,

and transparency

How the future is

shaping up rapidly

in multiple places

and forcing out

some new thinking

The Practical

Future proofing is not a

leap into the fanciful but

into the practical

demands of what will

become the “everyday.”

The key to success is

practical planning with

a focus on what is likely

versus how it occurs.

Practical steps

to future proofing

your business

The secret of our success is that we never, never give up.

WILMA MANKILLER, 1986

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PRACTICAL

Source: Kantar Consulting

Cultural awareness of where value lies and when fulfillment is accomplished

What are the requirements to a transaction? For acceptance and validation?

Source: Kantar Consulting, Alibaba corporate media, Amazon 28

Recognize that the new fulfillment model is often price-insensitive

How will you change product and service packaging? How will you meet Six Sigma expectations?

Source: Kantar Consulting, Lyft.com, Uber.com 29

How much did you spend last month on Lyft? If it is a self-driving Uber, will you be more aware?

The new employees: Are they fully part of the solution?

Enable, slow, sabotage — the process to the employee or …

Source: ArtStation.com, ConceptArtWorld, Whole Foods website 30

Source: Kantar Consulting, Sears archives, Google Maps

Has eCommerce reached the same level of expectations as 1905 Sears?

Would you order a house from Amazon … Alibaba … or others?

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For further information please refer to

www.KRIQ.com

Contact:

David Marcotte

Senior Vice President

T: +1 (413) 847 1067

david.marcotte@kantarconsulting.com

@kantarconsult

www.kantarconsulting.com

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