THE FUTURE OF RETAIL: 2014

BI Intelligence

Is This How People Really Like To Shop?

Image: Reuters

Or This?

Images: Kim Bhasin / Business Insider

Let’s Face It — The Old Retail Model Is Dying

Image: Brian Sozzi / Belus Capital Advisors

Fast

Image: Nicholas Eckhart

Hundreds Of Retail Stores Are Closing

Because Store Sales Are Tanking

Holiday Quarters Have Been Terrible For Physical Retail

Where Are Shoppers Going?

Online!

We Are Here

“We’re in the midst of a profound structural shift from physical to digital retail ... it’s happening faster than I could

have imagined. ”

— Jeff Jordan, partner at Andreessen Horowitz, January 2014

E-Commerce Is Driving Nearly All Retail Growth In US

1 In 20 Retail Dollars Are Already Online

Mobile Is Also Gaining Fast

‘New Retail’ Is Nearly Equal To Old Guard In Market Value

Venture Capital Is Cashing In

Amazon Continues Growing Very Quickly

But Other Retailers Are Also Growing Online Sales

The Signs Are Clear —E-Commerce Is Booming.

Shippers Were Overwhelmed By The Massive Volume Of E-Commerce Orders Over Christmas 2013

Images, Right: Reuters

The Top Categories — Electronics, Media, Clothing

Let’s Look At Some Of The Retail Categories Individually

ELECTRONICS

Image: Reuters

Best Buy Is Vulnerable. 85% Of Sales From Electronics.

Best Buy Offline Sales Plummeted 15% Last Year

BI Intelligence Estimate

All Of Best Buy’s Growth Is OnlineBI Intelligence Estimate

Amazon Was Once Smaller Than Best Buy. Not Anymore.

Amazon Already 1.7X Best Buy

MEDIA

Image: Reuters

Media Is Still The Top E-Commerce Category ~$25 Billion

Amazon Got Started With Media SalesAmazon Is Now ~14% Of All E-Commerce

Media Sales Are Going Digital

Benefiting Apple And Amazon

CLOTHING AND ACCESSORIES

Image: Reuters

More Than 13% Of All Clothing Sales Now Occur Online

J.C. Penney Is Vulnerable. 83% Of Its Business Is Clothing And Accessories.

In-Store Sales At J.C. Penney Declined 10% Last Year

BI Intelligence Estimate

Online Is Growing, But Overall J.C. Penney Still In The Red

BI Intelligence Estimate

Gap Has Done BetterBI Intelligence Estimates

16% Of The Gap’s Total Retail Sales Are Now Online

BI Intelligence Estimates

HOME AND FURNITURE

Image: Reuters

15% Of All Furniture Sales Now Occur Online

Helping Fuel The Rise Of Home Goods Online Retailers

FOOD AND BEVERAGE

Image: Reuters

For Groceries, Online Sales Are Still A Blip

Despite The Early Efforts Of Amazon And Others

Image: Reuters

What About The ‘Everything Retailer,’ Wal-Mart?

Image: Reuters

Some Perspective. Wal-Mart Is Still Much Bigger

Than Amazon.

Wal-Mart’s Advantage Is Still In Physical Retail

Wal-Mart still has 4,100 stores within five miles of two-thirds of the U.S. population —

The Wall Street Journal, October 2013

Online Is Still Just 2% Of Walmart’s Total Sales

BI Intelligence Estimates

But Sales Growth Is Coming From OnlineBI Intelligence Estimates

And Walmart Is Investing In Social And Mobile Tech R&D

Retail Is About Offering People The Services And Products They Want — On The Devices And Media They

Use

Image: Amazon

The Web

52% of all retail sales are Web-influenced

Smartphones And Tablets

Especially iPhones And iPads. ~75% Of Traffic.

Mobile Is Now ¼ Of All E-Commerce Traffic …

Retailers Are Finding Huge Audiences On Mobile …

… And On Social Networks

What Do Today’s Customers Want?

Image: Amazon

They Want Price And Convenience

Convenience

Price

And They Want Individualized Services And Offers

They Want To Buy Things On Mobile! PayPal Does

~$30 Billion In Mobile Transactions

PayPal purchased Braintree in late 2013.

Starbucks Payments App Does It All

Images: Starbucks And Square

Which Is Why It Is So Successful: $1 Billion In Annual Volume!

The Shift To Online Retail Is Global

Image: Reuters

Alibaba Drives $157 Billion In Gross Merchandise Value

China’s JD.Com Saw Sales Boom Last Year

Mobile Will Account Of 15% Of Chinese E-Commerce Sales

E-Commerce Is Taking Off In India, Too

Henry BlodgetCEO & Editor-in-Chief

Tony Danova, Research Analyst

Marcelo Ballvé, Editorial Director

BI Intelligence is a subscription service from Business Insider that provides in-depth insight, data, and analysis of digital industries.

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Cooper Smith, Research Analyst

John Heggestuen, Research Analyst

Emily Adler, Senior Research Editor

Mark Hoelzel, Research Analyst