Looking for the Next Trend in Retail - Deborah Weinswig

 

SXSW:

Looking for the Next Trend in Retail

• This   week,   we   are   attending   the   South   by   Southwest   (SXSW)   Conference   and   Festival,   which   is   held   every   year   in   Austin,   Texas.   The   technology   component   of   the   event  is  called  SXSW  Interactive  and  runs  M arch  11–15.   • Key   themes   and   discussion   topics   at   this   year’s   technology   conference   include   wearable   technology,   enterprise  and  smart   data,   entertainment   and   content,   and  health  and  medtech.   • Here,  w e  summarize  some   of  the  most  interesting   panel   discussions   we   attended,   and   highlight   winners   of   the   SXSW   Accelerator   competition   along   with   a   few   of   the   innovative  wearables  we  saw  on  display.    

D EBO RA H WEI NS WIG M A N A G I N G DI RE C TO R , F U N G G L O B AL R E T A I L & T EC H N OL O G Y d e b or a h w e i n s w i g @ f u n g 1 9 37 . c o m U S : 64 6 . 8 3 9. 7 0 1 7 H K : 85 2 . 61 1 9 . 1 7 79 C H N : 8 6 .1 8 6 . 1 4 2 0. 3 0 1 6

DEBORAH  WEINSWIG,  MANAGING  DIRECTOR,  FUNG  GLOBAL  RETAIL  &  T ECHNOLOGY   [email protected]    US:  917.655.6790    H K:  852.6119.1779    CN:  86.186.1420.3016     Copyright  ©  2016  The  Fung  Group.  All  rights  reserved.  

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SXSW: Looking for the Next Trend in Retail This   week,   we   are   attending   the   South   by   Southwest   (SXSW)   Conference   and   Festival,   a   nine-­‐day   conference   focused   on   the   convergence   of   music,   film   and   technology   that   is   held   every   year   in   Austin,   Texas.   The   technology   component  is  called  SXSW  Interactive  and  takes  place  March  11–15.  Some   of  the  themes  covered  in  the  Interactive  segment  include:   • 3D  Printing   • Branding  and  Marketing   • Drones   • Fashion  and  Wearable  Tech   • Fintech   • Gaming   • Health  and  Medtech   • Internet  of  Things   • Machine  Learning     • Startups   • Virtual  Reality/Augmented  Reality   • Wearables   Below,   we   highlight   some   of   the   most   interesting   panel   discussions   we   attended   and   some   of   the   innovative   companies   and   products   we   learned   about  at  SXSW  Interactive.    

     

 

DEBORAH  WEINSWIG,  MANAGING  DIRECTOR,  FUNG  GLOBAL  RETAIL  &  T ECHNOLOGY   [email protected]    US:  917.655.6790    H K:  852.6119.1779    CN:  86.186.1420.3016     Copyright  ©  2016  The  Fung  Group.  All  rights  reserved.  

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PANEL  DISCUSSIONS   We  attended  a  number  of  fascinating  panel  discussions  on  a  variety  of  retail   topics  at  SXSW  Interactive.   Culture:  The  New  Currency  of  Retail   Panelists:   • Ethan  Song—Co-­‐Founder  and  CEO,  Frank  &  Oak   • Rick  Badgley—VP  of  Retail,  TOMS   • Robbie  Myers—Editor-­‐in-­‐Chief,  Elle  Magazine   • Lacey  Norton—Head  of  Retail,  Kit  and  Ace   The   discussion   started   with   Robbie   Myers   presenting   a   statistic:   although   e-­‐ commerce   is   a   $340   billion   market,   brick   and   mortar   is   a   $4.7   trillion   market.   The   panelists   argued   that   brick   and   mortar   is   here   to   stay   and   noted  that  even  pure-­‐play  players  are  starting  to  open  physical  stores.  The   reason   for   this   is   that   consumers   today   are   still   looking   for   a   personal   connection   with   brands,   and   e-­‐commerce   cannot   deliver   that.   The   leaders   from  the  three  retail  brands  represented  on  the  panel—Frank  &  Oak,  TOMS,   and  Kit  and  Ace—all  presented  a  common  vision:  get  your  customers  to  buy   into  your  culture  and  values,  and  they  will  become  loyal  paying  customers.   The  speakers  noted  that  brands  are  using  their  retail  locations  to  organize   events   that   gather   the   community   around   their   cause.   They   are   not   really   trying   to   sell   their   products   during   these   events;   rather,   they   are   selling   their  culture.  Rick  Badgley  referred  to  this  as  “emotional  ROI.”  

    The  $5  Trillion  Question:  What’s  the  Future  of  Retail?   Panelists:   • Christopher  Tate—CEO,  The  Bailey  Group   • Katherine  Power—CEO  and  Co-­‐Founder,  Clique  Media  Group   • Melanie  Bender—Senior  Marketing  Director,  Westfield   • Michael  Schrage—Research  Fellow,  MIT  Center  for  Digital  Business   DEBORAH  WEINSWIG,  MANAGING  DIRECTOR,  FUNG  GLOBAL  RETAIL  &  T ECHNOLOGY   [email protected]    US:  917.655.6790    H K:  852.6119.1779    CN:  86.186.1420.3016     Copyright  ©  2016  The  Fung  Group.  All  rights  reserved.  

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What   will   retail   look   like   in   2025?   That   is   the   question   that   a   panel   consisting   of   retail   veterans   and   one   think   tank   leader   set   out   to   explore.   Retailers   are   facing   many   challenges   today,   the   panelists   noted.   Established   retailers   are   racing   to   catch   up   with   the   incredible   amount   of   technology   that  is  required  to  compete  in  today’s  competitive  market,  while  emerging   brands   are   racing   to   achieve   scale.   In   addition,   customer   behavior   is   changing  rapidly,  making  the  market  more  reactive  than  proactive.  Michael   Schrage   said   that   instead   of   focusing   on   the   future   of   “retail,”   companies   should  really  focus  on  the  future  of  “shopping.”  “Retail  is  just  one  place  that   shopping   occurs,”   Schrage   said.   The   panel   sees   two   main   trends   in   the   future:   a   stronger   focus   on   customer   experience   and   the   improvement   of   personalization  through  machine-­‐learning  systems.    

  Neiman  Marcus  Innovation  Lab—The  History,  the  Memory  Mirror,  and   What’s  Next   Panelists:   • Scott  Emmons—Head  of  Innovation  Lab,  Neiman  Marcus   • Kiel  Werking—VP  of  Partner  Development,  Reflect  Systems   Scott  Emmons  and  Kiel  Werking  sat  down  at  the  Retail  Innovation  Lounge  to   talk   about   the   Memory   Mirror   project   and   the   process   that   Neiman   Marcus   uses   to   introduce   innovation.   “You   have   to   start   at   the   basics,”   Emmons   said.  “When  we  first  started,  our  stores  didn’t  even  have  reliable  networks,   so   it   was   impossible   to   build   any   innovation   in   the   store.”   Once   the   infrastructure   was   in   place,   Neiman   Marcus   started   using   a   process   to   analyze   all   the   innovation   ideas   that   were   flowing   in.   The   company   also   encouraged  its  associates  to  provide  ideas.     One   idea   that   emerged   from   the   process   was   the   Memory   Mirror.   The   mirror,   developed   by   MemoMi,   takes   pictures   while  a   customer   is   trying   on   clothes  and  allows  him  or  her  to  see  how  the  clothes  fit  from  all  angles.  It   also  allows  the  customer  to  easily  share  the  image  in  order  to  get  feedback   from  friends  and  family.  The  concept  started  in  just  three  stores,  but  quickly   grew  in  popularity  and  is  now  installed  in  18  stores.  It  has  received  a  lot  of   press   from   mainstream   media   as   well   as   attention   on   social   networks.   Emmons   said   that   the   company   really   only   focused   on   improving   the   user   experience,   and   that   the   media   exposure   was   “the   icing   on   the   cake.”   DEBORAH  WEINSWIG,  MANAGING  DIRECTOR,  FUNG  GLOBAL  RETAIL  &  T ECHNOLOGY   [email protected]    US:  917.655.6790    H K:  852.6119.1779    CN:  86.186.1420.3016     Copyright  ©  2016  The  Fung  Group.  All  rights  reserved.  

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Neiman   Marcus   was   not   always   so   open   about   its   internal   projects   and   processes,  Emmons  said.  “The  fact  that  I  am  speaking  here  today  is  really  a   testament  to  how  far  we  have  come  as  an  organization,”  he  noted.   Future  of  Retail:  Story  and  the  New  Paradigm   Panelist:     Rachel  Shechtman,  Founder,  Story   Rachel   Shechtman   presented   her   vision   behind   the   unique   retailing   experience   called   Story.   Unlike   regular   retail   stores,   Story   is   about   using   the   retail   space   as   a   media   channel.   It   operates   more   like   a   magazine   than   a   typical   retailer.   For   example,   it   has   editors   whose   job   is   to   curate   content   relevant   to   the   story   the   brand   is   trying   to   tell.   Also,   it   relies   on   a   sponsorship   model   that   dictates   what   will   be   sold   and   for   how   much.   Shechtman,   who   jokingly   says   the   demographic   for   the   store   is   men,   women   and   kids   ages   5–95,   claims   that   Story   can   make   10   times   more   on   activities  surrounding  a  product  than  could  be  made  on  sales  of  the  product   itself.   Since   the   focus   is   on   a   given   brand’s   story   and   not   on   its   product,   the   company  is  able  to  sell  luxury  brands  right  next  to  more  mainstream  ones— something  that  is  frowned  upon  by  most  department  stores.    

  In   addition,   Shechtman   holds   special   events   for   designers   to   come   in   and   present   their   work   to   the   community.   These   events   not   only   enhance   the   Story   brand   itself,   but   also   lead   to   discovering   some   great   commercial   opportunities.   The   store   uses   data   extensively   to   analyze   the   performance   of  brands  and  make  adjustments  as  needed.  Also,  the  company  makes  sure   the   experience   the   customer   gets   cannot   be   replicated   online.   For   example,   it   created   an   interactive   table   that   dispenses   Procter   &   Gamble   products   based  on  input  from  the  user.  It  also  features  a  Coca-­‐Cola  cooler  that  opens   when   a   customer   tweets   a   picture   of   it.   “No   one   needs   more   stuff,”   says   Shechtman,   “so   if   we   sell   something,   at   least   let’s   make   it   a   cool   experience.”      

 

DEBORAH  WEINSWIG,  MANAGING  DIRECTOR,  FUNG  GLOBAL  RETAIL  &  T ECHNOLOGY   [email protected]    US:  917.655.6790    H K:  852.6119.1779    CN:  86.186.1420.3016     Copyright  ©  2016  The  Fung  Group.  All  rights  reserved.  

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  SXSW  ACCELERATOR   Nearly   100   startups   participated   in   this   year’s   SXSW   Accelerator   pitch   competition,   representing   enterprise   and   smart   data,   entertainment   and   content,  health  and  wearables,  the  innovative  world,  payments  and  fintech,   and   virtual   reality.   Each   startup   had   one   minute   in   which   to   pitch   its   idea   to   the  three  judges  in  front  of  a  large  audience.  The  pitches  were  judged  on  a   1–20  scale  in  each  of  the  following  categories:  creativity,  potential,  impact   on  the  world,  functionality  and  team.   Here  are  the  winners  in  each  of  the  six  categories:   Enterprise  and  Smart  Data   Parknav   provides   real-­‐time,   on-­‐street   parking   availability   data   to   automotive,   fleet,   real   estate   and   Internet   companies.   Its   service   covers   over  70  cities  24/7  in  the  US  and  EU,  and  its  customers  embed  this  data  into   navigation  systems,  maps  and  real  estate  listings.     Entertainment  and  Content   PopUp   Play   creates   experiences   for   kids   that   blend   screen   time   with   playtime.  Kids  use  a  tablet  inside  the  store  to  draw  their  creations,  and  the   company   subsequently   prints   a   live   version   of   their   work   and   ships   it   to   their  home.     Health  and  Wearables   MUrgency   uses   the   power   of   mobile   technology   and   networks   to   make   emergency  medical  responses  available  to  anyone,  anytime,  anywhere,  with   just   one   tap   on   a   mobile   phone   or   through   auto   alerts   from   sensors   or   wearables  for  high-­‐risk  patients.     The  Innovative  World   Rorus   makes   the   Filter   Pack,   the   first   comprehensive   solution   for   carrying   and   instantly   purifying   drinking   water;   it   removes   both   biological   and   chemical   contaminants.   The   product   uses   nanotechnology   and   a   user-­‐ centric  design  to  make  extremely  simple  filters  for  humanitarian  relief.     Payment  and  Fintech   Chroma.fund,   a   Techstars   company,   is   a   blockchain-­‐based   exchange   for   trading   stocks   and   bonds   issued   by   early-­‐stage   companies.   Its   software   is   also  used  by  financial  firms  to  build  and  trade  software-­‐defined  exchange-­‐ traded  funds.     Virtual  Reality   Splash   is   an   iOS   app   that   captures   360-­‐degree   video   on   a   smartphone   in   seconds  and  enables  its  sharing  on  any  social  network  as  well  as  viewing  in   virtual  reality.   DEBORAH  WEINSWIG,  MANAGING  DIRECTOR,  FUNG  GLOBAL  RETAIL  &  T ECHNOLOGY   [email protected]    US:  917.655.6790    H K:  852.6119.1779    CN:  86.186.1420.3016     Copyright  ©  2016  The  Fung  Group.  All  rights  reserved.  

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WEARABLE  TECHNOLOGY  AND  FUNCTIONAL  GARMENTS   Wearable  technologies  of  all  kinds  were  on  display  at  SXSW  Interactive.  One   new   product   that   caught   our   eye   was   the   Augmented   Jacket   designed   by   Birce   Ozkan,   an   award-­‐winning   young   wearables   designer.   The   jacket   is   a   smart   and   fashionable   garment   that   includes   navigational   technology:   the   feathers   on   the   shoulder   ruffle   up   when   the   wearer   faces   north.  

  Ozkan   also   designed   the   Fall,   an   interactive   garment   that   mimics   nature’s   responses  through  a  hidden  electronic  mechanism.  The  dress  loses  its  fabric   panels  over  time,  like  a  deciduous  tree  shedding  its  leaves.  Although  there   is   no   practical   application   for   the   jacket’s   technology,   it   helps   express   the   wearer’s  uniqueness  and  individuality.    

  VESSEL   is   a   series   of   garments   specifically   designed   for   the   female   body.   Cutting-­‐edge   technology   embedded   in   the   fabric   of   these   garments   can   monitor  the  actions  and  physical  well-­‐being  of  the  wearer.  The  garment  can   change  colors  and  use  LEDs  to  alert  the  wearer  based  on  different  physical   conditions.  

  DEBORAH  WEINSWIG,  MANAGING  DIRECTOR,  FUNG  GLOBAL  RETAIL  &  T ECHNOLOGY   [email protected]    US:  917.655.6790    H K:  852.6119.1779    CN:  86.186.1420.3016     Copyright  ©  2016  The  Fung  Group.  All  rights  reserved.  

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    Deborah  Weinswig,  CPA   Managing  Director   Fung  Global  Retail  &  Technology   New  York:  917.655.6790     Hong  Kong:  852.6119.1779   China:  86.186.1420.3016   [email protected]     John  Harmon,  CFA   Senior  Analyst     GIL  Dror   Director  of  Operations  

  HONG  KONG:   10th  Floor,  LiFung  Tower   888  Cheung  Sha  Wan  Road,  Kowloon   Hong  Kong   Tel:  852  2300  2470    

LONDON:   242-­‐246  Marylebone  Road   London,  NW1  6JQ   United  Kingdom   Tel:    44  (0)20  7616  8988    

NEW  YORK:   th 1359  Broadway,  9  Floor   New  York,  NY  10018   Tel:  646  839  7017    

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DEBORAH  WEINSWIG,  MANAGING  DIRECTOR,  FUNG  GLOBAL  RETAIL  &  T ECHNOLOGY   [email protected]    US:  917.655.6790    H K:  852.6119.1779    CN:  86.186.1420.3016     Copyright  ©  2016  The  Fung  Group.  All  rights  reserved.  

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