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THE FUTURE OF RETAIL Through the eyes of an investor

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BESEN – Who are we?

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DANIEL BESEN ANDREW POST

ANNA ELLIS JOE TACK

THIS IS WHAT WE LOOK FOR IN A RETAIL BUSINESSES NOW

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•  Profitable

•  A passionate entrepreneur or founder with a vision to grow

•  A unique or differentiated product, service or business model that consumers love and / or a sustainable competitive advantage

•  Growth potential

PAST EXAMPLES:

WHERE DOES BESEN THINK THE PITCH WILL BE IN 3 YEARS?

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Retail businesses in the future will need:

1.  To answer the question WHY not just WHAT

2.  To respond to “the age of the consumer”

3.  To have one strategy which covers physical and digital

1. BUSINESSES IN THE FUTURE WILL NEED TO ANSWER THE QUESTION WHY NOT JUST WHAT It is no longer enough to have a great product or service… Why should the consumer buy it? We will be looking for businesses that:

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1.  Stand for something

2.  Enhance value to the consumer

3.  Have provenance or an authentic story

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BUSINESSES THAT STAND FOR SOMETHING

SHINOLA TOMS

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BUSINESSES THAT ENHANCE VALUE TO THE CONSUMER

With an innovative or disruptive business model…

WARBY PARKER

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BUSINESSES THAT HAVE PROVENANCE OR AN AUTHENTIC STORY Mast Brothers Chocolate “bean to bar” concept

MAST BROTHERS CHOCOLATE

WHERE DOES BESEN THINK THE PITCH WILL BE IN 3 YEARS?

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Retail businesses in the future will need:

1. To answer the question why not just what

2. To respond to “the age of the consumer”

3. To have one strategy which covers physical and digital

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2. BUSINESSES IN THE FUTURE WILL NEED TO RESPOND TO THE AGE OF THE CONSUMER Consumers today:

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•  Are more connected than ever before

•  Care more about experiences than things

•  Want to be part of a community in-store and online

Let’s have a closer look at each of these and what they mean for what BESEN will be looking for from businesses in the future…

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CONSUMERS ARE MORE CONNECTED THAN EVER BEFORE

•  Online has long been a cost of entry but mobile enabled is next

•  Businesses need to be social – no longer an add-on but a necessity, part of the DNA of a business

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CONSUMERS CARE MORE ABOUT EXPERIENCES THAN THINGS

•  We have known for some times that affluent Australians rate enjoying experiences above acquiring material goods – this is translating to retail

•  We like retailers that provide in-store experiences that give consumers a reason to get off the couch and shop

MAST BROTHERS Chocolate factory and taste testing

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CONSUMERS WANT TO BE PART OF A COMMUNITY IN-STORE AND ONLINE

•  Being part of a community makes consumers happy – why do we think this is important for retail businesses?

1.  It costs 5x as much to acquire than keep a customer

2.  The #1 influencer of purchases is recommendations

3.  Community engagement can increase revenue by up to 25%

•  In New York in-store communal spaces such as lounges, coffee shops and free wi-fi are the norm rather than the exception

LULULEMON NYC CONCEPT STORE NIKE + RUN CLUB AUSTRALIA

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WHERE DOES BESEN THINK THE PITCH WILL BE IN 3 YEARS?

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Retail businesses in the future will need:

1.  To answer the question why not just what

2.  To respond to “the age of the consumer”

3.  To have one strategy which covers physical and digital

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3. BUSINESSES IN THE FUTURE WILL NEED ONE STRATEGY WHICH COVERS PHYSICAL AND DIGITAL

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1.  When it comes to bricks or clicks, the choice is both

2.  Physical stores are no longer one size fits all

3.  A seamless consumer experience across all channels

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WHEN IT COMES TO BRICKS OR CLICKS – THE CHOICE IS BOTH

The death of retail was overstated…

• We are not saying that online only retailers will not be successful, there are many businesses where a purely online strategy is the best one

• What we are saying is that we don’t believe it is bricks OR clicks – the physical and digital are complimentary

• Online retailers are opening physical stores because retail flagships are driving online sales

MICROSOFT

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PHYSICAL STORES ARE NO LONGER ONE SIZE FITS ALL •  Different store concepts and formats are required for different consumer markets – we like businesses that

are innovative in adapting their footprint, offer and location

•  Lowe’s – a traditional big box home improvement retailer adapting their model to the city market “Lowe’s urban stores”

•  Murray’s Cheese Shop – a NYC institution that has rolled out 350 store-in-store concepts in supermarkets across the US

LOWE’S MURRAY’S CHEESE SHOP

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A SEAMLESS CONSUMER EXPERIENCE ACROSS ALL CHANNELS

•  The physical and digital need to connect and the consumer needs to be able to move seamlessly between all channels

•  We think UK retailer John Lewis is a great example of how a seamless customer experience should look over the few years

–  80% of customers shop across both channels –  75% of all John Lewis transactions comprise some component of online and in-store (i.e. browsing

on mobile then purchasing in-store) –  40% of John Lewis sales are online –  Delivery options include next day, click and collect and commute and collect

JOHN LEWIS

AS AN INVESTOR I LOOK FORWARD TO SEEING HOW AUSTRALIAN RETAIL BUSINESSES RESPOND…

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