Golden Seeds

Deborah WeinswigManaging Director of Fung Global Retail & Technology

[email protected]: 917.655.6790 HK: 852.6119.1779 CN: 86.186.1420.3016

March 23, 2016

FUNG GLOBAL RETAIL & TECHNOLOGY GOLDEN SEEDS MARCH 23, 2016 2

ABOUT THE FUNG GROUPABOUT FUNG GLOBAL RETAIL & TECHNOLOGYMACRO AND RETAIL LANDSCAPE OVERVIEW 24 DISRUPTORS

AGENDA



AGENDA


TRADING

LOGISTICS

DISTRIBUTION

RETAILING

Li & Fung LimitedListed on SEHK

Global Brands Group

Listed on SEHK

Fung Retailing Limited

Privately Held Entity

Convenience Retail

Asia LimitedListed on SEHKTrinity LimitedListed on SEHK

Branded Lifestyle Holdings Limited

LiFung Kids (Holdings) LimitedToyrs “R” Us (Asia)Suhyang Networks

UCCAL Fashion GroupPrivately Held Entities

Fung Holdings (1937) Ltd. A privately held entity and major shareholder of the Fung Group

ABOUT FUNG GROUP



AGENDA


• The knowledge bank for the Fung Group

• Focuses on emerging retail and tech trends, specializing in retail and technology, intersections, and building collaborative communities

• Based in New York, London and Hong Kong

• Publishes thematic and global market research on topics such as the Internet of Things, digital payments, omnichannel retail, luxury and fashion trends and disruptive technologies.

FUNG GLOBAL RETAIL & TECHNOLOGY


• Fung Global Retail & Technology advises retailers, real estate developers and tech companies on projects situated at the intersection of retail, tech and/or fashion

• Our team offers a robust knowledge bank and significant experience in the retail, fashion and tech fields. We are involved in many areas of the business and believe this allows us to offer a unique perspective by focusing on the future and where the sector is heading

A UNIQUE COMBINATION OF RETAIL, FASHION AND TECH OUR EXPERTISE

FASHION TECHRETAIL


• Global macroeconomic trends• Demographic trends

(milennials vs boomers vs silvers)• Retail sales• Same store sales• Square footage/real estate analysis• Travel retail • Market share analysis by category• Inventory analysis• Margin dissection and analysis

• Expertise in subsectors of retail, including fast fashion, e-commerce, department stores, specialty stores, off-price and home improvement

• Experience following the tech space across hardware and software

• Partner and mentor accelerators and startups in retail and tech

• Coverage includes North America, Latin America, Europe, the Middle East and Asia

• Offices in New York, London and Hong Kong

• The Fung Retail & Technology team includes 20 analysts, each specialized in specific areas of the world, working together to offer a global perspective

• We leverage the Fung Group’s participation in 40 markets around the world

• We have industry contacts in the U.S., Europe and Asia

A DIFFERENTIATED PERSPECTIVEA BROAD KNOWLEDGE BASE COMBINED WITH SPECIALIZED EXPERTISE AND OUR GLOBAL NETWORK

Broad Knowledge Base Specialized Expertise Global Network


COMPREHENSIVE RESOURCESRESEARCH PROCESS

RESEARCH

Contacts

News

Databases

On the Ground

Partners

Internal

• Fung colleagues• L&F colleagues in the

US, Europe and Asia

• Planalytics• RetailNext• Prosper Analytics • Bloomberg

• S&P Capital IQ• Euromonitor International• Haver Analytics• Statista

• Analyst days• Industry conferences• Store tours

• Financial reports• Financial and industry news

• Finance• Retail• Tech


ENTREPRENEURSROUNDTABLEACCELERATOR

OUR PARTNERSHIPS WITH ACCELERATORS


• Warehouse Clubs • Department Stores• Discount Stores • Drug Stores / Pharmacy • Consumer Electronics Stores • Home Improvement • Hypermarkets/Supercenters• Supermarkets • Specialty Retailers • E-commerce Retailers• Convenience Stores

• Global Retail Market • Global Consumer Economics • Emerging Retail Technologies• New Retail Business Models • Retail Channel Studies• Startups, Accelerators in Retail • Retail Real Estate • Retail Business Strategy • Disruptive Technologies• Future Proofing

• North America• Europe• Latin America• Asia Pacific • Middle East and North Africa

OUR RESEARCH PROCESSBROAD COVERAGE

Sector Coverage Thematic Coverage Geographic Coverage



AGENDA


US: SHOWS CONTINUOUS IMPROVEMENTWeak consumer sentiment reflecting lower expectations for growth

Strong vehicle

sales and housingstarts

Unemployment rate fell to

4.9% in February

Low gas pricestimulates consumer spending

Consumer sentiment index

droppedfrom 93.0 in 2015

to 90.0 in 2016


US: SHOWS CONTINUOUS IMPROVEMENTMajor Economic IndicatorsIndicator 2016 2015 YoY Change Meaning

Unemployment Rate 4.9% 5.5% (60) bpsThe S&P/Case-Shiller 20-City Composite Home Price Index N/A 184.2 5.8%

Housing Starts (Mil.) 1.2 0.90 30.9%

Total Vehicle Sales (Mil. Units) 17.9 16.8 6.5%

Gas Price (USD/Gal.) $1.94 $2.35 (18.8)%

Savings Rate 5.2% 5.3% (10) bpsUniversity of Michigan Consumer Sentiment Index 90.0 93.0 (3.2)%

CPI: Apparel Prices 127.5 126.4 (0.9)%

Sources: Bureau of Labor Statistics, US Census Bureau, St. Louis Fed, University of Michigan, US Energy Information Administration


CONSUMERS PREFER DINING OUTSpending at restaurants and bars outpaced grocery stores for the first time in 2015

Source: US Census Bureau, data in billions USD

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

0%

5%

10%

15%

Grocery Dining Out

Groceries and Dining Out as a Percentage of Total PCE

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

$15

$33

$52

$70

Grocery Stores Dining Out

Spending at Grocery Stores vs. Dining Out

Source: US Census Bureau, data in billions USD


US: BUDGET & INTERNET SHOPPING DRIVE RETAIL GROWTH

BRICK & MORTAR:Traffic continues to drop

Digital influence continues to grow

ONLINE:

DEPT STORES& BIG BOX RETAILERS

Face price competition

OFFICE-PRICERETAILERS &FAST FASHIONRETAILERSRide the off-price/value boom

Led the group of top 19 apparel companies with growth of 26% in 2015

Source: Company Reports

ANNUAL SALES GROWTH BY COMPANY – 2015


In contrast to biggest US retailers, a number of European apparel names continue to see striking successEUROPE: STRONG PERFORMANCE CONTINUES

• These factors underpin global expansion opportunities• Plus, European shoppers remain more willing to spend on apparel

than US shoppers; and a European economic recovery

+15.4%FY15

+17.7%FY15

(+9% in local currencies)

+8%1Q16

Why?

Implications

More fashionable productsBetter stores


FASTEST GROWING EUROPEAN RETAILERS NOW AND THEN

Retailer

2005 Total

Revenue

(Millions)

5 Year Retail Sales

CAGR%

Baugur Group 12,549 106.2%

Dirk Rossmann GmbH 3,363 28.3%

WM Morrison Supermarkets Plc 21,840 28.1%

Mercadona, S.A. 11,958 25.2%

Inditex S.A 8,250 22.1%

Phones4U 2,754 18.9%The Carphone Warehouse Group PLC 2,821 18.3%

Luxottica Group 4,108 18.0%

Musgrave Group 5,417 16.7%

Next plc 5,325 15.3%

Retailer

2014 Total

Revenue (Millions

)

5 Year Retail Sales

CAGR%

Axel Johnson AB 9,733 49.3%

Jumbo Groep Holding 7,269 30.1%

PRADA Group 4,662 24.6%Compagnie Financiere Richemont 13,217 17.9%

Hermes 5,475 17.6%

Primark 21,447 16.4%

Sports Direct International 4,529 15.6%

LVMH 40,727 14.6%

Casino Guichard-Perrachon 64,462 13.1%

HTM-Group 3,714 13.1%Source: NRF, Deloitte, Company Reports


FASTEST GROWING US RETAILERS NOW AND THEN

Source: NRF, Deloitte, Company Reports

Retailer2005 Total

Revenue (Millions)

5 Year Retail Sales CAGR

%

GameStop 3,092 37.5%

Amazon.com 8,490 25.2%Dick’s Sporting Goods 2,625 24.1%

Wawa, Inc. 2,790 23.8%

Pathmark Stores, Inc. 3,977 21.6%Whole Foods Market, Inc. 4,701 20.7%

Bed Bath and Beyond 5,810 19.4%

Lowe’s 43,243 18.2%

Abercrombie & Fitch 2,785 17.6%

Kohl’s 13,402 16.9%

Retailer2014 Total

Revenue (Millions)

5 Year Retail Sales CAGR

%Albertsons Companies 27,199 45.3%Southeastern Grocers 11,500 36%

Apple 182,795 26.4%

Ascena Retail Group 4,791 26.2%

Amazon.com 88,988 25.8%

Under Armour 3,084 23.7%

Nike 30,601 21.8%

Forever 21 4,500 14.3%

Advance Auto Parts 9,844 12.7%

Whole Foods Market 14,194 12.1%


FASTEST GROWING ASIAN RETAILERS NOW AND THEN

Source: NRF, Deloitte, Company Reports

Retailer2005 Total

Revenue (Millions)

5 Year Retail Sales

CAGR%Kintetsu Department Store Japan $2691

Tokyu Corporation Japan $6,002

AS Watson & Company Ltd. Hong Kong $11,416

GS Retail Co Ltd. S. Korea $2,936

Yamada Denki Co., Ltd. Japan $11,363

Shinsegae Co., Ltd. S. Korea $7,352

Bic Camera, Inc. Japan $4,046

Beisia Group Hong Kong $6,505.32

AEON Co., Ltd. Japan $13,529.15

Lotte Shopping Co., Ltd S. Korea $8,005

Retailer2014 Total

Revenue (Millions)

5 Year Retail Sales

CAGR%

Vipshop China $3,701.18

JD.COM China $17,671.82

Yonghui Superstores China $5,719.18

Chongqing Department Stores China $4,712.00

CP ALL Public Company Thailand $11,436.07

China Resources Enterprise Hong Kong $14,110.28

Chow Tai Fook Jewelry Group Hong Kong $8,285.28

Central Group Thailand $6,800.00

Belle International Hong Kong $6,505.32

Fast Retailing Co. Ltd. Japan $13,529.15



AGENDA


1. Millennials Are Becoming The Trend Setter For The Consumer Market

2. Home Furnishings Market Disrupted By E-commerce

3. ACTIVE PURSUIT For Healthy Eating Lift Organic Grocers’ Sales

4. Last-mile Delivery Drives Online Grocery Sales

5. Ready-to-cook / Eat Economy Gains Popularity

6. Millennials Aspire To CAR OWNERSHIP But Also Like Sharing PLANS

7. Experiences Trump “Things”

8. Caring Economy Promotes Startups For Social Good

9. Subscription Economy Is Nibbling Away At Traditional Retailers’ Sales

10. Silver Economy: Aging Population Creates An Opportunity

11. Apps Become The Primary Way Of Communication

12. Social Shopping Is Made Simpler

LIST OF DISRUPTORS

13. Mobile Aggregators Create A One-stop Shopping Cart

14. Influencer Marketing Word-of-mouth Marketing Gains Upthrust

15. SEARCH Engines Seek OPPORTUNITIES IN RETAIL

16. Retail Store Closings And Openings Continue

17. Experiential Retail Brings Shoppers Back To Stores

18. Smart Malls: Reshaping The Physical Shopping Experience

19. Evolving Pure Plays

20. Online Fashion Resale Marketplaces Show Explosive Growth

21. E-commerce Disruptors In High-end Market

22. AMAZON LEADS FASHION Apparel Market

23. A Tale Of Two Retailers: Innovation Drives Growth

24. The Fall Of Disruptors: DEATH OF THE UNICORN?


• 80 million in US, biggest demographic group

• $1.3 Trillion buying power in US (BCG)

• Nearly half of workforce by 2020

• 5/6 Millennials in the US connect with companies on social media (SDL)

• Millennials are more into access over ownership- “The Renter Generation”

MILLENNIALS ARE BECOMING THE TREND SETTER FOR THE CONSUMER MARKET1

Source: Pew Research Center

1995 Q1 2015

31% 34%

49%34%

18%29%

2% 2%1%

Boomers

Gen Xers

Millennials

Post-Millennials

SilentsGreatest


• Founded in 2009, Houzz is aiming to disrupt the home furnishings space

• Houzz is an online home-remodeling community that connects homeowners with design inspirations and home professionals

• Its business model is driven by community, content and commerce

• Houzz has already attracted 35 million users across 200 countries

2 HOME FURNISHINGS MARKET DISRUPTED BY E-COMMERCE


2 HOME FURNISHINGS MARKET DISRUPTED BY E-COMMERCE

+15%

+20%

+44% Source: Company Report


2 HOME FURNISHINGS MARKET DISRUPTED BY E-COMMERCE• Startups like CIMAGINE are appealing to millennials’ tech

savviness with augmented reality to visualize furniture products in their space


• Millennials believe that eating right is the most important aspect to achieving well-being

• Millennials are more concerned with nutrition food labels regularly

3 ACTIVE PURSUIT FOR HEALTHY EATING LIFT ORGANIC GROCERS’ SALES

Millennials Boomersversus

24% 12%Exercise and Eating Healthy

40% 33%Artificial Ingredients

Source: Company Report


• Multi-cultural cuisines• Gluten-free baked goods• Organics• Avoid additives• Less swayed by traditional nutritional markers such as

calorie count and health claims• Buy frozen or prepared ‘healthy’ foods, adding fresh

ingredients and seasonings• In 2015, Whole Foods Market revealed perhaps the first

major millennial-focused store format• Prepared food departments are cooking to order, offering

greater variety, and healthier customized meals

3 ACTIVE PURSUIT FOR HEALTHY EATING LIFT ORGANIC GROCERS’ SALES


4 LAST-MILE DELIVERY DRIVES ONLINE GROCERY SALESThe on-demand economy has driven growth of delivery start-ups that provide innovative ways for consumers to ship or receive goods

CompanyLatest Funding

Roundcurbside $25 Million deliv $28 Million Doordash $40 Milliondrizly $13Million Instacart $220 Millionmunchery $85 Million nestdrop $150K postmates $80 Million roadie $10 Millionshyp $50 Million


Disruptors: Blue Apron, Munchery, Plated, HelloFresh

• Blue Apron was the fastest-growing US e-tailer

in 2014, with sales growing 550%, to $65 million

• Healthier and cheaper than eating out and takeout

• Convenience: ready-to-cook boxes and curated grocery according to menus, delivered to your doorstep

• US food market• $1.2 trillion, with $600 billion in

restaurants• Millennial focused

5 READY-TO-COOK / EAT ECONOMY GAINS POPULARITY

Up

300%

2015

Source: Forbes


• A recent survey found that 20% of Millennials take public transit once a week or more, compared with just 7% of Generation Xers and 10% of Baby Boomers

• 35% of millennials indicated that they plan to purchase a vehicle in the next 12 months compared to 25% of total U.S. adults.

• Millennials lease more than any other generation and are leasing 50% more often today than they were five years ago

6MILLENNIALS ASPIRE TO CAR OWNERSHIP BUT ALSO LIKE SHARING PLANS


• More than 3 in 4 millennials would choose to spend money on a desirable experience

• 60% of Millennials have shared their experiences online versus 34% of Gen Xers and 18% of Boomers

• Since 1987, the share of consumer spending on live events has increased 70% largely on the back of millennial spending.

7 EXPERIENCES TRUMP “THINGS”


Disruptors: Gigzolo, Zaptravel, OpenTable, Beautified

• Consumers are spending less on apparel and more on experience

• 78% of millennials prefer to spend money on an experience rather than buying something desirable

• Gigzolo: curated network of musicians and DJs available for hire for events

• Zaptravel: • Digital travel agent• Uses a semantic search engine to scroll

through its database

7 EXPERIENCES TRUMP “THINGS”


Disruptors: TOMS, Reformation, Warby Parker, NOURI, SoapBox Soaps, Zady, GoodXChange

• Social activism over self-indulgence• Consumers, especially Gen Z, are

increasingly demanding integrity from brands and retailers

• Startups for social good apply market-based strategies to achieve a social goal• TOMS, the shoe company, has a “one for

one” business model• Reformation designs and manufactures

sustainable apparel, sourcing sustainable fabrics and vintage garments

8 CARING ECONOMY PROMOTES STARTUPS FOR SOCIAL GOOD


SUBSCRIPTION ECONOMY IS NIBBLING AWAY AT TRADITIONAL RETAILERS’ SALES

Disruptors: Le Tote, Birchbox, BarkBox, Pijon, Stitch Fix

• Convenience and curated products for consumers

• Recurring revenue model for retailers• Element of self-gifting • Beauty is the biggest category • Fashion styling subscriptions are becoming

popular

9


SILVER ECONOMY: AGING POPULATION CREATES AN OPPORTUNITY • Senior population is growing across the globe• US has the largest market for seniors: 2.2 trillion in

2014• Older Consumers Are Increasingly Digitally Connected:

Increasing mobile device usage: Greatcall• Boom of healthcare tech industry: UnaliWear • Smart Home: healthcare and assisted living system

Source: UN Department of Economic and Social Affairs

10

2015 2020 20300

2

4

6

8

10

12

14

16

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

7 10 15

12.3%13.5%

16.5%17.0%19.0%

23.5%

Estimated Senior Population and Spending, 2020 & 2030

Consumer spending by senior population(USD trillion)Senior population as a % of total population % of total worldwide spending


APPS BECOME THE PRIMARY WAY OF COMMUNICATION

LINEFacebook Messenger

SnapchatWhatsAppWeChatViberSkypeVineKakaotalk

57%53%

45%

37%37%

29%27%22%

19%

Source: Globalwebindex as of Q1 2015

Messenger App User Growth YoY%

11


App Millions of Monthly Active Users

WhatsApp 900 million

QQ Mobile 860 millionFB Messenger 800 million

WeChat 650 million

Skype 300 million

Viber 249 million

LINE 212 million

Snapchat 100 million

APPS BECOME THE PRIMARY WAY OF COMMUNICATION

11

Source: Globalwebindex as of Q1 2015


12 SOCIAL SHOPPING IS MADE SIMPLER

• Buy on social media platforms without switch apps or websites

• Easy to curate content on social media • “Buy button” helps prevent shopping cart

abandonment • Youtube, Pinterest , Twitter and Google already

have buy buttons • Wechat is a pioneer in social shopping

Reading reviews, comments and feedback

Receiving promotional offerings

Viewing advertisements

Staying on top of current fashion and product trends

Writing reviews, comments and feedback

Associating with particular brands and retailers

Purchasing products directly via a social media channel

45%

44%

30%

25%

22%

20%

16%

How Social Media Influences Shopping Behavior

Source:PWC


13 MOBILE AGGREGATORS CREATEA ONE-STOP SHOPPING CART

• Aggregate and curate online content• Attempting to create a universal shopping cart• The Keep app allows shoppers to buy products from any

online stores and check out from one single cart on Keep • Shopspring.com: shop over 800 brands from one location,

purchasing directly from the brand


14 INFLUENCER MARKETING WORD-OF-MOUTH MARKETING GAINS UPTHRUST• Brand influencers: advocates on social media

platforms and review sites to support brands they love

• Influencer marketing: - 81% of marketers found IM effective in 2015- 59% of marketers will increase IM budgets in

2016• Influencer marketing agency is now a booming

industry • Each month over 50 million people watch over 1.6

billion minutes of fashion and beauty videos in more than 45,000 YouTube channels

• E-Marketer: YouTube has the highest ROI on influencer marketing

Social Media Users in Jan. 2016Facebook 1.5 billionYouTube 1 billionInstagram 400 million Twitter 320 millionSnapchat 200 million Pinterest 100 million

Sources: Statista


14 INFLUENCER MARKETING WORD-OF-MOUTH MARKETING GAINS UPTHRUST

Target collaborates with Joy Cho, a popular designer and blogger. They also launched Oh Joy for Target collection, an

exclusive party-inspired Home line

Emily Schuman a much-followed fashion blogger, author and

designer launched her Cupcakes and Cashmere

collection in collaboration with Nordstrom

Blogger star and entrepreneur Michelle

Phan launched her own makeup line, Em, with

L’Oreal


15 SEARCH ENGINES SEEK OPPORTUNITIES IN RETAIL

Who They Are Biggest search engine in China Most popular search engine in the world

Public Company Listed on NASDAQShell company in Cayman Island Listed on NASDAQ

Pay-per-click Marketing Baidu Tuiguang Google AdWords

Third-Party Payment Baidu Wallet Google Wallet

E-commerce Business Baidu Mall Google Shopping


15 SEARCH ENGINES SEEK OPPORTUNITIES IN RETAIL

Online Search • Chinese market focused • 82% of China online search queries • 1% of global searches share

• Expanding globally • 90% share of global searches • 10% share in China

Mobile Search • 80% of China’s mobile search market• In Dec 2015, mobile search users reached 657million.

21% YoY increase

• A starter in mobile search: early collaboration with Android operating system

• 78% of global mobile search market share; 1% in China

Online Marketing

• Revenue was $9.9 billion, 96% of total revenue

• 1,049,000 active online marketing customers in 2015

• Advertising revenue reached $67.35 billion in 2015• 90% of total revenue

Third-Party Payment

• Limited Presence: Market Share: Alipay: 61.9%; Tenpay: 14.5%; Baidu Wallet: 2.3%

• Rapid expansion: reached 53 million in 4Q15; 180% YoY

• Google’s payment (Android Pay/ Google Wallet) is stronger than Baidu wallet

• Paypal accounted for 78% of the digital payment

• Apple and Google compete for the 2nd

E-commerce• Dominance of Alibaba group(Tmall, Taobao)• Baidu Mall (2015): sell foreign branded and imported

goods to middle and high-end consumers • “Top Revenue Vertical”

• Google shopping vs. Amazon: shoppers directly click into the Amazon website that diverts Google search traffic away


16 RETAIL STORE CLOSINGS AND OPENINGS

CONTINUERetailer # of Announced Store Closings

Walmart 269Mens’ Wearhouse 250Sports Authority 140Sears 50Macy’s 40Kohl’s 18

Retailer # of Announced Store Openings

Dollar General 900Forever 21 600Under Armour 200Dick's Sporting Goods 135-150Ulta 100ALDI 45Costco 32Dollar Tree 13Stein Mart 12Target 11Source: ICSC Research and PNC Research

2015• There was a 7% increase YoY in store closure

announcements• There was 29% less square footage associated with

announced store closures in 2015 versus 2014

2016• Off-price/discount retailers are expected to see

major growth in 2016• Foreign discount grocers Aldi and Lidl plan to push

US expansion• E-commerce pure plays opening stores


17 EXPERIENTIAL RETAIL BRINGS SHOPPERS BACK TO

STORES

Urban Outfitters acquired Vetri Family group of restaurants in 2015

Club Monaco and Kohl’s are also opening food and beverage shops in their stores

Rebecca Minkoff offers interactive mirrors as well as virtual reality headsetsTommy Hilfiger stores have virtual reality headsets to allow consumers to experience runway shows

Lowe’s Holoroom allows customers to see merchandise in different color combinations and as they would appear in a home

Proliferation of mobile apps to improve in-store experiences, such as: customizable shopping lists, location-relevant promotions, and product and inventory information

Food & Beverages

Virtual Reality Technology


Data enabled personalized and timely promotions

Track movements, behavior and preferences

Beacon enabled

location-based advertising

SMART MALLS: RESHAPING THE PHYSICAL SHOPPING EXPERIENCE

18


• HGTV partnered with Macerich shopping malls to launch virtual and hand-on technology-based experiences

48

• RetailNext formed strategic alliance with StepsAway, an in-mall mobile retail solution provider offering shoppers smartphone access to hyperlocal in-store deals

• A Silicon Valley-based unit which designs and experiments with innovations to improve the retail experience

SMART MALLS: RESHAPING THE PHYSICAL SHOPPING EXPERIENCE

18

FUNG GLOBAL RETAIL & TECHNOLOGY GOLDEN SEEDS MARCH 23, 2016 49 49

AMAZON

BONOBOS

ATHLETA

CASPER

AYR

YOGIBO

HARRY’S INDOCHINO

EVOLVING PURE PLAYS19


Millennials prefer mono-brand brick-and-mortar stores, and they shift between online and offline along the shopping journey

50

Retailer # of Stores

1

2

3

20

26

EVOLVING PURE PLAYS19


20 ONLINE FASHION RESALE MARKETPLACES SHOW EXPLOSIVE GROWTH

Disruptors: thredUP, Tradesy, The RealReal, Poshmark, Vestiaire Collective

• Online resale industry is worth $34 billion in the US • Mobile is hot in resale; over 45% of thredUP’s sales

come from mobile devices• Patagonia, Eileen Fisher and H&M launched resale

programs2011 2012 2013


20 ONLINE FASHION RESALE MARKETPLACES SHOW EXPLOSIVE GROWTH

Disruptors: thredUP, Tradesy, The RealReal, Poshmark, Vestiaire Collective

Why Online Resale Marketplaces Took Off • Heavy venture capital investment in online

consignment industry (over $300 million)• Retail brands’ resale programs encouraged

consumers’ sustainable consumption habits• Consumers are convinced by great quality of

secondhand apparel bought via online platforms• Societal shift toward less ownership—

the art of decluttering


21 E-COMMERCE DISRUPTORS IN HIGH-END MARKET

• High-end consignment jewelry platform

• Merchandise, appraise, photograph and serve

• Partnered with E-bay valet

• On-demand personal shopping and styling subscription service

• Professional stylist bringing store inventory directly to customers

• Quinn has a built-in style school that ensures a talent pool

• Curates emerging artists• “Democratize" the process of selling artwork • Connecting artists directly with collectors


22 AMAZON LEADS FASHION APPAREL MARKET

• Winner: Amazon led the group of top 19 apparel companies with growth of 26% in 2015

• Runner Up: Fast Fashion Top 5 include Inditex and H&M

• Declining Players:Walmart’s apparel, Gap, Macy’s and Isetan Mitsukoshi each posted sales declines for the year

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2015 Annual Sales Growth by Company


23 A TALE OF TWO RETAILERS: INNOVATION DRIVES

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50%YoY Revenue Growth

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UA ARO


23 A TALE OF TWO RETAILERS: INNOVATION DRIVES

GROWTH

Under Armour is Innovative

• From sports clothing retailer to major player in fitness technology

• Introduced UA Healthbox along with HTC• Created “cognitive coaching system,”

with IBM’s Watson• Teams up with influencers such as

Dwayne Johnson or Muhammed Ali to promote the brand

Aeropostale is Stale

• Share prices have fallen close to 98% over the past 5 year

• Considering strategic alternatives including a sale or restructuring

• Failed to adapt to changing consumer tastes• Failed to drop large logos and identify trends• Missed the fast fashion boat


24 THE FALL OF DISRUPTORS: DEATH OF THE UNICORN?

• 146 privately held startups with valuations of $1billion or higher, or the “unicorns” in the US, 35 in China

• Gilt Groupe once valued at $1.1 billion, was sold at $250 million

• Good Technology, valued at $ 1billion, was sold at $425 million

• Square was valued at $6 billion when private. Market cap at $3billion now

• Current market can’t absorb existing unicorns and they are unwilling to go public

• At risk: Snapchat, Uber, Evernote, Vancl


Q&ADeborah Weinswig

Managing Director of Fung Global Retail & [email protected]

US: 917.655.6790 HK: 852.6119.1779 CN: 86.186.1420.3016

March 23, 2016

Deborah WeinswigManaging Director of Fung Global Retail & Technology

[email protected]: 917.655.6790 HK: 852.6119.1779 CN: 86.186.1420.3016

March 23, 2016

Golden Seeds

Retail

Transcript of Golden Seeds