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JULY222016

DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&TECHNOLOGYDEBORAHWEINSWIG@FUNG1937.COMUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.

July 22, 2016

NRF Shares Positive Predictions for 2016

Back-to-School Shopping

The National Retail Federation (NRF) produces an annual Back-to-School Spending Survey, conducted by Prosper Insights & Analytics. Based on this year’s survey, the NRF expects to see considerable spending growth over last year. The organization anticipates that total spending on K–12 and college back-to-school items will reach $75.8 billion this year, up 11.5% from $68 billion last year.

The back-to-school/back-to-college (BTS/BTC) season is the second-largest spending season, and so provides early insight into consumers’ willingness to spend for the holiday season. The BTS/BTC period accounts for roughly 17% of full-year retail sales. NRF President and CEO Matthew Shay expressed optimism on consumer spending, saying, “Families are still looking for bargains, but there are signs that they are less worried about the economy than in the past.”

DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&TECHNOLOGYDEBORAHWEINSWIG@FUNG1937.COMUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.

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JULY222016

DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&TECHNOLOGYDEBORAHWEINSWIG@FUNG1937.COMUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.

NRF Shares Positive Predictions for 2016 Back-to-School Shopping

The Projections

Consumerconfidenceintheeconomyisgrowing,asreflectedbytheNRF’sprojectionthattotalBTS/BTCspendingwillincreaseby11.5%overlastyear,to$75.8billion.Thoughstillpriceconscious,consumersaremorewillingtospendthantheywerelastyear.Thepercentageoffamiliesshoppingforsalesisexpectedtoriseby2%fromlastyear,to43%thisyear.Atthesametime,thenumberoffamiliessurveyedthatplantospendlessoverallisdown4%fromlastyear,to23%thisyear.

Figure1.SpendingonBTS/BTC(USDBil.)

Source:NRFandProsper

FamiliesspendingintheBTS(K–12)categoryareprojectedtospendatotalof$27.3billionthisyear,a9.6%increasefromlastyear.Theaveragefamilyisforecastedtospend$673.57onBTSapparelandaccessories,electronics,shoesandschoolsupplies,upfrom$630.36in2015.

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2009 2010 2011 2012 2013 2014 2015 2016E

BTC

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JULY222016

DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&TECHNOLOGYDEBORAHWEINSWIG@FUNG1937.COMUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.

Figure2.BTSSpendingperFamily,byCategory

2015 2016E YoY%Change

Clothing&Accessories $217.82 $235.39 8.07%

Electronics $197.24 $204.06 3.46%

Shoes $117.56 $126.55 7.65%

SchoolSupplies $97.74 $107.76 10.25%

Source:NRFandProsper

TotalspendingacrossallBTCcategoriesisexpectedtoreach$48.5billionthisyear,upfromlastyear’s$43.1billion,duetoanincreaseinthenumberofconsumersshoppingthiscategory.TheaverageplannedspendingforBTCisgreaterthanforBTS,at$888.71perfamily,butthattotalisdownfromlastyear’s$899.18.BTCspendingincludesmorebig-ticketitems,suchaslaptopsandminirefrigerators,thanBTSspendingdoes.

Consumers Shopping Sooner

Consumersarebeginningtheshoppingcycleearlierthisyear.Ofthosefamiliessurveyed,73%saidtheywillbeginshoppinguptotwomonthsbeforethestartofschool,afigurethatis11%thanlastyear.Thenumberoffamiliesindicatingtheywouldwaituntilthelasttwoweeksbeforeschooltoshopwasdown8%fromlastyear,to22%.

Source:www.alwayssavemoney.ca

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JULY222016

DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&TECHNOLOGYDEBORAHWEINSWIG@FUNG1937.COMUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.

Thefamiliesbeginningtheprocessearlyareprimarilymotivatedbyspreadingouttheirspendingtoeasetheirbudgets,takingadvantageofsalesandavoidingcrowds.Consumersarefocusedonprice,qualityandvalue,andmanyfamiliesaretakingastrongerapproachtoBTSshoppingseasonthisyearbyshoppingearlierandtakingadvantageofvariousperksonline.

Shift to Online

Consumersareshiftingtheirspendingonline.OnlineBTS/BTCshoppingisprojectedtoincreaseby10%fromlastyear,to46%,andthemajorityofthosesurveyedwhosaidtheyplannedtobuyonlinesaidtheywerealsoexcitedaboutfreeshippingandbuy-online,pick-up-in-storeoptions.DiscountstoreswillstillattractthelargestshareofBTSandBTCshoppers,with61%ofthosesurveyedsayingtheywouldshopatdiscountstores;however,thatpercentageisthelowestinthesurvey’shistory.

Source:www.thinkwithgoogle.com

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JULY222016

DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&TECHNOLOGYDEBORAHWEINSWIG@FUNG1937.COMUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.

DeborahWeinswig,CPAManagingDirectorFungGlobalRetail&TechnologyNewYork:917.655.6790HongKong:852.6119.1779China:86.186.1420.3016deborahweinswig@fung1937.com

JingWangResearchAssociate

LeilaShevinsResearchAssociateHONGKONG:10thFloor,LiFungTower888CheungShaWanRoad,KowloonHongKongTel:85223002470NEWYORK:1359Broadway,9thFloorNewYork,NY10018Tel:6468397017LONDON:242–246MaryleboneRoadLondon,NW16JQUnitedKingdomTel:44(0)2076168988FBICGROUP.COM