u.s. retail trends winter 2016...u.s. retail trends winter 2016 december 13, 2016 vice president,...

U.S. Retail Trends

Winter 2016

December 13, 2016

Vice President,

Retail Research for the Americas

[email protected]

Garrick Brown

• RAMIFICATIONS OF THE CONTINUING GROWTH OF PEAK HOLIDAY ONLINE SHOPPING

• THE MINDS AND MOTIVATORS OF THE HOLIDAY SHOPPER

• LATEST TRENDS FOR BLACK FRIDAY AND CYBER MONDAY – AND WHY WE SHOULD CARE

• THE COMBINED POWER OF STICKS AND BRICKS

• HOW THE LARGE DELIVERY COMPANIES ARE PREPARING FOR PEAK VOLUMES

• TRENDS FROM AMAZON

• CHANGING CUSTOMER DEMANDS REGARDING DELIVERY – SPEED VS. COST

What does this all mean to the real estate world?

WHERE WE’RE GOING

Holiday Sales as % of Annual Sales

Source: Cushman & Wakefield Retail Research / National Retail Federation

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%

Building/Garden Equipment

Food & Beverage

Health/Personal Care

Furniture/Furnishings

Warehouse Clubs/Superstores

Shoes

Clothing

eCommerce/Mail Order

Electronics/Appliances

Discount

Sporting Goods, Hobby, Book, Music

Department Stores

Jewelry Stores

WHY THE HOLIDAY SEASON IS CRITICAL

8.0%

6.0%

4.0%

2.0%

0.0%

-2.0%

-4.0%

-6.0%

2001 2003 2005 2007 2009 2011 2013 2015

Source: Cushman & Wakefield Retail Research / National Retail Federation

(In

tho

usan

ds)

Holiday Season Retail Sales Growth

2.5% 10-YEAR ANNUAL AVERAGE

THE PROGNOSTICATORS:Cushman & Wakefield 3.7%

Deloitte 3.6% - 4.0%

National Retail Federation 3.6%

ICSC 3.3%

RetailNext 3.2%

BETTER THAN LAST YEAR....BUTBRICKS-AND-MORTAR SALES GAINS ARE

DWARFED BY ECOMMERCE GROWTH

US HOLIDAY SHOPPING SEASON RETAIL SALES GROWTH

Source: Cushman & Wakefield Retail Research / RetailMeNot.com

The Christmas Creep is All About Promotions and Markdowns

HOLIDAY PROMOTIONS ARE STARTING EARLIER, OFFERING MORE “PREVIEWS” AND

“EARLY ACCESS” CONSUMERS ARE STARTING HOLIDAY SHOPPING EARLIER

16% 46% 54%BEFORE BEFORE AFTER

SEP 1

NOV 1

NOV 1

WHY IS BLACK FRIDAY DIMINISHING IN IMPORTANCE?

Online Holiday Gift Browsing Takes Off in November


Imp

ress

ions

in M

illio

ns

October DecemberNovember

November 7

Black Friday

Cyber Monday

Christmas Day

IN 2015, CONSUMER INTEREST IN DEAL SEARCHING INCREASED 21% ON

NOVEMBER 7

CHRISTMAS CREEP APPLIES TO ECOMMERCE TOO

Retail eCommerce* holiday season sales Retail holiday season sales

Note: sales are for Nov. and Dec. of each year; excludes travel and event tickets.*Includes products or services ordered using the internet, regardless of the method of payment or fulfillment.

US Retail and eCommerce Holiday Season Sales Growth 2010-2016


19.4%

17.5%

13.3%12.1%

14.4%

16.0%17.2%

7.3%6.3%

3.4%2.9%

3.6%2.1%

3.3%

2010 2011 2012 2013 2014 2015 2016

% C

hang

e


3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16

eCommerce Acceleration

Source: U.S. Census Bureau

ECOMMERCE TOTAL SHARE OF US RETAIL SALES IS ROUGHLY 9.5%

(EXCLUDING AUTOMOTIVE AND FUEL SALES)

9.0%

4.2% Q1 2009

8.1% Q2 2016


Source: U.S. Department of Commerce

General Merchandise

Clothing & Accessories

Furniture & Home Furnishings

Electronics & Appliances

Sporting Goods, Hobby, Book & Music

Office Supplies, Stationary, Gifts

(In

Bill

ions

$)

$200,000

$180,000

$160,000

$140,000

$120,000

$100,000

$80,000

$60,000

40.0%

35.0%

30.0%

25.0%

20.0%

15.0%

10.0%

5.0%

Retail Sales: GAFO, ($Mil.) eCommerce Share

AUG 2006

AUG 2007

AUG 2008

AUG 2009

AUG 2010

AUG 2011

AUG 2012

AUG 2013

AUG 2014

AUG 2015

AUG 2016

WHAT IS GAFO?General merchandise, apparel, furniture and other

BUT ECOMMERCE NUMBERS FOR GAFO ARE FRIGHTENING…

Brown Thursday Continues But Momentum Slows

OPEN ON THANKSGIVING CLOSED ON THANKSGIVING

CLOSED ON THANKSGIVING

AND BLACK FRIDAY

WALMART ALL DAY ACADEMY SPORTS HALF PRICE BOOKS OFFICE DEPOT REI

JC PENNEY 3 PM BARNES & NOBLE IKEA PETCO

OLD NAVY 4 PM BJ’S WHOLESALE JO-ANN FABRIC PETSMART

BEST BUY 5 PM BURLINGTON JOS. A. BANK PIER 1

MACY’S 5 PM CABELA’S LOWE’S PUBLIX

TOYS R US 5 PM COSTCO MARSHALL’S SAM’S CLUB

TARGET 6 PM CRATE & BARREL MATTRESS FIRM STAPLES

KOHL’S 6 PM DILLARD’S MENARD’S TJ MAXX

SEARS 6 PM DSW NEIMAN MARCUS TRACTOR SUPPLY

MICHAEL’S 6 PM GAME STOP NORDSTROM ULTA


Which Gift Categories Will Shoppers Seek Deals on During the Holidays?

56% 51% 31% 20% 18% 15%

ELECTRONICS CLOTHING & SHOES

TOYS RESTAURANTS / ENTERTAINMENT

JEWELRY TRAVEL


PROMOTIONS AND MARKDOWNS MAKING THEIR LISTS

Pricing “Race to the Bottom” Will Remain An Issue This Holiday Season


MULTI-CHANNEL SHOPPING DRIVES DEAL SEEKERS

73% 50% 83%

OF SHOPPERS SAY THEY ARE PLANNING ON HITTING BRICKS-

AND-MORTAR STORES

OF CONSUMERS SAY FINDING A GOOD

DEAL BEFOREHAND WILL PUSH THEM

IN-STORE

OF SHOPPERS USE UP TO 6 CHANNELS

TO FIND THE BEST DEALS AND

PROMOTIONS

DEALS MAKE THE IN-STORE DIFFERENCE

Consumers Still Motivated by Markdowns During the Holiday Season


51%OF CONSUMERS

BOUGHT A GIFT FOR SOMEONE ON SALE IN 2015

19%OF SHOPPERS USE A DEAL OR SAVINGS

APP

73%OF HIGH

EARNERS BOUGHT

SOMETHING WITH A

PROMOTION IN 2015

95%OF PARENTS

PLAN ON PURCHASING

GIFTS FOR THEIR KIDS,

SPENDING AN AVERAGE OF

$361 PER CHILD

90%OF SHOPPERS

WITH A SIGNIFICANT

OTHER PLAN ON PURCHASING A HOLIDAY GIFT

FOR THEM

$218 VS.

$163MEN PLAN

ON SPENDING MORE THAN WOMEN ON

GIFTS FOR THEIR SIGNIFICANT

OTHER

PROMOTIONS AND DISCOUNTS TO DRIVE ACTIVITY

TGT CONCLUDES THEIR OMNI-CHANNEL SHOPPER IS 3.2X THE REVENUE

GENERATOR OF IN-STORE ONLY SHOPPER

US Average Total Annual Revenues

$1,400IN-STORE ONLY SHOPPER

$200ON-LINE ONLY SHOPPER

$2,500DUAL PLATFORM SHOPPER

THE NEW MATH OF THE OMNI-CHANNEL WORLD – WALMART EDITION

“The millennial impact is critical. It is the driving force behind a lot of the change in retail.” - Neil Saunders, CEO of retail analysis firm Conlumino

18-34 AGE GROUP RECENTLY PASSED

BOOMERS IN TOTAL SIZE

MILLENNIALS NOW MAKE 54% OF

PURCHASES ONLINE

UP FROM 51% IN 2015

AND 5% AHEAD OF ONLINE PURCHASES

BY NON-MILLENNIALS

MILLENNIALS DON’T VIEW THE WORLD

IN TERMS OF CHANNELS

SMARTPHONES,

TABLETS, SOCIAL MEDIA, STORES, ETC.

ARE ALL ONE BIG ECOSYSTEM

TO SURVIVE, RETAILERS MUST INTEGRATE THEIR

THINKING, SYSTEMS AND WAYS OF

DOING BUSINESS

DIGITAL NATIVES ARE A FORCE TO CONTEND WITH –

OR SUCCEED WITH

MILLENNIALS

Digital Natives + Demographic Shift = More Omnichannel!


13% 65+

19% 55-64

BLACK FRIDAY CYBER MONDAY

23% 45-54

21% 35-44

39% 25-34

35% 18-24

10% 65+ 15%

55-64

26% 45-54

36% 35-44

49% 25-34

48% 25-34

Millennials are almost twice as likely

to shop online or on smartphones this Black

Friday

Cyber Monday goes mobile too

MILLENNIALS LOVE MOBILE


Projected Top eCommerce Shopping Days in 2016

4 56 7 8 9 10 11 1213 14 15 16 17 18 1920 21 22 23 25 2627 28

S M T W T F S

1 2 3

29 30

NOVEMBER

2 34 5 6 7 8 9 1011 12 13 14 15 16 1718 19 20 21 22 23 2425 26 27 28 29 30

S M T W T F S

1

DECEMBER

31

128

3 1 6

10

4

27

6

5 10 9

4 7

3 8 9

5

Mobile Desktop

THANKSGIVING WEEKEND RULES THE ONLINE CALENDAR

Black Friday No Longer Number One! Surpassed by Final Friday and Super Saturday…

Source: Cushman & Wakefield Retail Research / RetailNext

10 Busiest Shopping Days (Sales) 10 Busiest Shopping Days (Foot Traffic)

4 56 7 8 9 10 11 1213 14 15 16 17 18 1920 21 22 23 24 25 2627 28

S M T W T F S

1 2 3

29 30

NOVEMBER

2 34 5 6 7 8 9 1011 12 13 14 15 16 1718 19 20 21 22 23 2425 26 27 28 29 30

S M T W T F S

1

DECEMBER

31

23

5 10 9

5

10104812

66

95

84

31

77

TOP BRICKS-AND-MORTAR RETAIL SALES DAYS

Internet Retailer, Adobe Digital Index

2015 PROJECTED 2016 DELTA

THANKSGIVING $1.7B $2.0B 17.5%

BLACK FRIDAY $2.7B $3.0B 11.1%

CYBER MONDAY $3.1B $3.4B 9.7%

SINGLES DAY GMV $14.3B $17.8B (ACT) 24.5%

ONLINE PEAK REVENUE MILESTONE DATES – COMPARISONS

eCommerce Retail Sales Nov/Dec

CHRISTMAS CREEP AND BROWN THURSDAY ARE FACTORS....BUT ECOMMERCE IS THE PRIMARY REASON

Source: Cushman & Wakefield Retail Research / eMarketer

(In

Bill

ions

$) $85

$90

$95

$100

$80

$75

$70

$65

$60

$55

$502012 2013 2014 2015 2016 (est.)

$94.71

$80.81

$69.68

$60.92

$54.34

WHAT DOES IT MEAN FOR THE HOLIDAYS?

Total Annual GDP vs. Cyber Monday:

Barbados $4.4B

Eritrea $3.9B

US CYBER MONDAY $3.4B

Andorra $3.3B

Aruba $2.7B

Greenland $2.4B

Source: Cushman & Wakefield Retail Research / ComScore

CYBER MONDAY SINGLE DAY SALES LIKELY TO EXCEED $3.36B

(In

Bill

ions

$)

$3.5

$4.0

$3.0

$2.5

$2.0

$1.5

$1.0

$0.5

$0.02005 2006 2007 2008 2009 2010 20122011 2013 2014 2015 2016

(est.)

9.7% INCREASED EXPECTED

CYBER MONDAY IS HUGE

Alibaba $17.8B ($1B in 5 MINUTES)

Total Annual GDP vs. Singles Day:

Honduras $19.5B

Bosnia & Herzegovina $18.5B

ALIBABA SINGLES DAY $17.8B

North Korea $17.4B

Iceland $17.0B

Cambodia $16.8B

Source: Cushman & Wakefield Retail Research / Statista

11/11/2016 Was the World’s Largest Retail Day By Far

(In

Bill

ions

$)

$14.0

$16.0

$12.0

$10.0

$8.0

$6.0

$4.0

$2.0

$0.020122011 2013 2014 2015 2016

(est.)

$18.0

$20.0

Singles Day Cyber Monday

BUT NOT AS HUGE AS SINGLES DAY

ASSUMING JUST 15 MINUTES PER EMPLOYED CYBER SHOPPER ($6.48 X 103.1M), LOST WORKPLACE PRODUCTIVITY

= $668.1M

121MCYBER MONDAY

SHOPPERS IN 2015

132MCYBER MONDAY

SHOPPERS ANTICIPATED IN 2016

132M CYBER MONDAY SHOPPERS X 78.2% (CURRENT EMPLOYMENT TO POPULATION RATIO)= 103.1M EMPLOYED CYBER SHOPPERS

THE AVERAGE U.S. HOURLY WAGE IS NOW $25.92 PER HOUR, OR $6.48 FOR EVERY 15 MINUTES

CYBER MONDAY LOST PRODUCTIVITY

WE HAD 3 DAYS OF GREATER THAN 25 MILLION SHIPMENTS DURING PEAK 2015 VS. AVERAGE NON-PEAK VOLUMES OF 12

MILLION SHIPMENTS PER DAY

PROJECTED 10-14% PEAK UNIT

GROWTH IN 2016

ESTIMATED 370M SHIPMENTS BETWEEN

BLACK MONDAY AND CHRISTMAS;

UP FROM 325M IN 2015

FEDEX GROUND INVESTMENT IN

INFRASTRUCTURE IN 2016: $2.0B;

OF TOTAL FEDEX CAPITAL INVESTMENT OF $5.6B (VS. $4.8B

IN 2015)

4 NEW DISTRIBUTION HUBS, 19 NEW

FULLY AUTOMATED STATIONS

TOTALING 12MSF

6 NEW TEMPORARY

HEAVY/BULKY ANNEXES

SORTATION HUBS

30 NEW AIRCRAFT; ENHANCED VISION

CAPABILITIES FOR 270

AIRCRAFT TO IMPROVE

WEATHER RESPONSE

FEDEX: MORE STRESS, MORE RECORDS

PROJECTING 13 OF 21 HOLIDAY DELIVERY DAYS BEFORE CHRISTMAS TO EXCEED 30M

SHIPMENTS VS. AVERAGE NON-PEAK VOLUMES OF 18M SHIPMENTS PER DAY

PROJECTED VOLUMES UP 10% TO 700M

SHIPMENTS DURING PEAK

EXPECTS FOUR MONDAYS BEORE CHRISTMAS TO BE ITS BUSIEST DAYS

IN HISTORY

INVESTMENT IN INFRASTRUCTURE

PROJECTED AT $2.8B (VS. $2.3B IN 2015)

AMONG BILLIONS IN CAPITAL INVESTMENT DURING 2016 ARE 15 NEW OR EXPANDED

SORTATION HUBS NATIONWIDE

PROMOTING EXPANSION OF

UPS ACCESS POINT NETWORK FOR

REMOTE DELIVERY

UPS: MORE STRESS, MORE RECORDS

Amazon

Apple

Dell

Walmart

Staples

Macy’s

Home Depot

Costco

Office Depot

QVC

Best Buy

Nordstrom

Kohl’s

Gap

Target

$0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100

$92.5B

$13.7B

$5.0B

TOP 2015 US RETAILERS BY ONLINE REVENUE

Staples

Williams-Sonoma

J Crew

Macy’s

Nordstrom

Gap

Sears

Kohl’s

JC Penney

Best Buy

Under Armour

Home Depot

Costco

Target

Walmart

50.8%

38.8%

20.1%

11.2%

14.9%

9.5%

50.7%

22.9%

16.1%

10.1%

14.7%

5.3%

3.9%

3.4%

2.8%

0% 10% 20% 30% 40% 50% 60%

TOP 2015 US RETAILERS BY ONLINE REVENUE AS SHARE OF TOTAL REVENUE

The Explosion of Online Fashion

AMAZON PROJECTED TO SURPASS MACY’S AS #1 APPAREL RETAILER

IN U.S. IN 2017 “

“

In 2016, Amazon’s apparel business is expected to reach $16.3B compared to Macy’s $22.2B. However by 2017, Amazon is expected to sell nearly $28B in apparel. Just four years ago, Macy’s apparel sales were 5X greater than Amazon’s.

ONLINE FASHION & AMAZON’S GROWING DOMINANCE

ONLINE FASHION & AMAZON’S GROWING DOMINANCE

$26B

TJ MAXX

$23B

MACY’S

PROJECTED AMAZON MARKET SHARE OF CLOTHING AND ACCESSORIES:

PROJECTED CLOTHING AND ACCESSORY REVENUES IN 2021:

AMAZON

$62B

6.6%

2016

8.2%

2017

16%

2021

%

BIL

LIO

N $

COWEN ANALYSIS

AMAZON FASHION OFFERING: TO MACY’S AND BEYOND?

30M SKUS = TOTAL # OF ITEMSNOT JUST CLOTHING SOLD IN 250

WALMART SUPERCENTERS

Mill

ions

of

SK

Us

(inc

lud

ing

FB

A/M

arke

tpla

ce)

35

30

25

20

15

10

5

0Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15

11 12 1316

1821

25

30

IT LOOKS LIKE AMAZON’S WORLD....AT LEAST ONLINE

Percentage of Total US Online Sales in Nov/Dec of 2015

NEXT 10 RETAILERS AFTER AMAZON TALLIED 24.9% SHARE

COMBINED%

35

40

45

30

25

20

15

10

5

0

Amaz

on

Best B

uy

Apple

Nordstr

omiTu

nes

Walm

art

Macy’s

Targ

et

Kohl’s

Groupon

Etsy

42.7%

2.4% 2.2% 2.0%

The downside of retailers being on the Amazon marketplace – Bezos gets the data along with the retailer

WHO DREW THE TRAFFIC DURING PEAK 2015?

Wayfair

Costco

JC Penney

Sears

Newegg

Macy’s

Kohl’s

Home Depot

Best Buy

Target

Walmart

Amazon

3.2%

1.6%

6.0%

34.5%

0% 5% 10% 15% 20% 25% 30% 35% 40%

MOST TOP SITES POSTED YOY VISIT GROWTH DESPITE THE FACT THAT MANY

ACTUALLY LOST SHARE DUE TO AMAZON’S ASTRONOMICAL GROWTH

WALMART GAINED 13.8M VISITS IN DECEMBER VS

2014, WHILE GOING FROM A 7% SHARE

TO A 6% SHARE OVERALL

Source: WSJ, StellaService, Internet Retailer, Slice Intelligencer

Amazon is Messing it Up For Everyone Else

IT PAYS TO BE PATIENT

50%OF THE TOP 30 ECOMM

RETAILERS FEATURED A “FREE” SHIPPING OFFERING;

UP FROM 33% IN 2014

4 DAYS THE AVERAGE ACTUAL

DELIVERY TIME AMONG TOP 30 US ECOMM RETAILERS

5.1 DAYS THE AVERAGE ACTUAL

DELIVERY TIME TODAY AMONG TOP 240 ECOMM RETAILERS

(EXCLUDING AMAZON), DOWN FROM 8.3 DAYS IN 2014

SHIPPING SPEED COSTS

Source: Slice Intelligence

Average Delivery Time in Days For Top Online Retailers by Package Volumes(Excluding Amazon)

APRIL 2014 APRIL 2015 APRIL 2016 % IMPROVEMENTNORDSTROM 7.9 6.3 4.9 38%WAYFAIR 5.9 6.0 5.9 0%WILLIAMS-SONOMA 9.3 7.0 6.0 35%JC PENNEY 9.7 6.5 5.1 47%KOHL’S 8.0 6.5 5.6 30%MACY’S 7.3 5.8 4.4 40%TARGET 7.8 6.5 4.8 38%WALMART 8/0 5.5 5.5 31%BED BATH & BEYOND 6.7 5.3 4.2 37%BEST BUY 6.8 5.3 3.3 51%NEWEGG 6.5 5.5 4.1 37%

BASED ON SURVEY OF 100M SHIPMENTS

WHO’S COMPRESSING TIME THE MOST?

WSJ and NRF; L2 Insight Report Department Stores: Omni-channel

US RETAIL SALES ON TRACK TO REACH $4.0 TRILLION BY 2017

BY 2017, PROJECTED US ECOMMERCE SALES WILL REACH $440 BILLION

TOTAL RETAIL RETURNS BY 2017 PROJECTED TO EXCEED $460 BILLION

9/100 IN-STORE PURCHASES

ARE RETURNED

30/100 ONLINE PURCHASES

ARE RETURNED

70-80% OF SHOPPERS MAKING ONLINE-PURCHASED RETURNS TO STORE ALSO MAKE A NEW PURCHASE

RETURNS – THE GIFT THAT KEEPS ON GIVING

OUR HOLIDAY PREDICTIONS SUMMARIZED…

It’s a make or break holiday season for some retailers

SURGING ONLINE SALES WILL AGAIN STRESS NATIONAL CARRIERS & FACE RISK OF FAILED DELIVERY PROMISES

TOO LATE TO FIX ANY PEAK SUPPLY CHAIN GAPS – SEE YOU NEXT YEAR FOR THOSE THAT SURVIVE

SEARSCLAIRE’SGORDMAN’SBON-TONTRUE RELIGIONNINE WEST99 CENTS ONLYRUE21NEBRASKA BOOK COMPANYRUBY TUESDAYCHRISTOPHER & BANKSCONN’SIGNITE RESTAURANT GROUP LUMBER LIQUIDATORSGANDER MOUNTAINSPORTSMAN’S WAREHOUSELE CHATEAUBEBEJ. CREW

RETAILERS ON THE EDGE

3.7%OVERALL

RETAIL SALES GROWTH

FOR THE 2016 HOLIDAY SEASON

17.2%TOTAL

ECOMMERCE SALES GROWTH

9.4%INCREASE IN

CYBER MONDAY SALES TO JUST

OVER $3.6B

DISCOUNTING & MARKDOWNS WILL CONTINUE

TO BE MAJOR DRIVER OF

SALES ACTIVITY

WHAT DOES IT MEAN FOR REAL ESTATE: RETAIL & LOGISTICS?

RETAIL CLOSURES CONTINUE, AND

WILL LIKELY INTENSIFY, IN 2017

FOOD & ENTERTAINMENT CONCEPTS DRIVE

GROWTH IN MALLS, LIFESTYLE CENTERS

& URBAN RETAIL

STRONG DEMAND ACROSS ALL

PRODUCT TYPES CONTINUES

LARGE PERIPHERAL FCS, SMALLER CLOSER-IN FCS, SORTATION HUBS/CROSS-

DOCKS & LAST-MILE DEPOTS

LAST MILE FULFILLMENT

CONTINUES TO BE THE HOLY GRAIL

INCREASING THE PUSH TO BE BETTER, SMARTER, FASTER &

CHEAPER

POSITION THE RIGHT INVENTORY CLOSER TO THE CUSTOMER AT

THE RIGHT TIME

u.s. retail trends winter 2016...u.s. retail trends winter 2016 december 13, 2016 vice president,...

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