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The consumer is changingP E R H A P S N O T H O W Y O U T H I N K

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Panelists

Kasey Lobaugh Delloite

@Klobaugh

Agathe Westad Optimove

@Optimove

Doug Zarkin Luxxotica Retail @Dougzarkin

Virginia Wong L Brands

@VirginiaWong

Brendan Cahill Penguin Random

House @BrendanJCahill

#RIC19 3

Consumers are shifting from products to experiences.

Consumers are time-starved.

Consumers are no longer loyal.

4

Ethnicity

Income

Geography

Generation

CONSUMER DEMOGRAPHIC TRENDS

1

Spending Money

Preferences

Trips

Spending Time

CONSUMER BEHAVIORS2

5

CaucasianLatino AsianBlack

Who are our consumers?

Sources: US Census Bureau, 2017 Report, Pew Research Center

Baby boomers

75%

9%

10%6%

Millennials

56%21%

14%

9%

6

How is consumer health?

Sources: Deloitte Health and Wellness Progress Report; Center for Disease Control and Prevention

2.5 yearsbetween 1997 and 2017

(from 76. 1 to 78.6) Obe

sity

Rat

e

23%

27%

32%

36%

40%

1994 2000 2002 2004 2006 2008 2010 2012 2014 2016

O v e r w e i g h t / O b e s i t y R a t e f o r A d u l t s o v e r T i m eA v e r a g e L i f e E x p e c t a n c y

7

N E T C H A N G E I N D I S C R E T I O N A R Y I N C O M E ( 2 0 0 7 - 2 0 1 7 )

How are consumers doing financially?

Lower income

Middle income

Higher income

L O W M I D D L E H I G H

2 0 0 7 2 0 1 7

$5

$(5)

$10

$15

$K

Sources: US Census Bureau, 2017 Report, Bureau of Labor Statistics

8

$K

6

7.5

9

10.5

12

1990s 2000s 2010sYounger than 35 years

N E T W O R T H O V E R T I M E ( i n f l a t i o n a d j u s t e d )

Sources: US Census Bureau, 2017 Report

How are Millennials doing financially?

9

What is happening in Retail?

Sources: Various annual reports

1 Year Revenue Growth

-2%

0%

2%

5%

7%

9%

Balanced retailers saw -2% revenue

growth over this last year

5 Year Revenue Growth

0%

23%

45%

68%

90%

Premier retailers have seen 40x more revenue growth

than that of Balanced retailers over the last 5 years

10

W H E R E T H E Y

G O

H O W T H E Y S P E N D T H E I R M O N E Y

H O W T H E Y S P E N D

T H E I R T I M E

W H AT T H E Y T H I N K

11

How are consumers spending their money?

F O O D 12% 12%

H O U S I N G + E D U C AT I O N 29% 29%

E N T E R TA I N M E N T 5% 4%

A P PA R E L 4% 2%

1 9 9 7 2 0 1 7

H E A L T H C A R E 5% 7%

Source: Bureau of Labor Statistics

12

Who is spending on experiences?

Source: Bureau of Labor Statistics, Deloitte CCI Transaction Data Index

20%

35%

Low Middle High

M i l l e n n i a l S p e n d o n E x p e r i e n c e s b y I n c o m e ( 2 0 1 8 )

20%

35%

Age Income

$0 - 35,000

$35,001 – 80,000

$80,001 +

Millennials

Gen X

Baby Boomers

S p e n d o n E x p e r i e n c e s b y I n c o m e a n d b y A g e ( 2 0 1 8 )

13

How are consumers spending their time?

In 2017 76% of consumers reported having less or equal amount of free time

Decrease in hours worked per person since 1960

9% 76%

Source: Deloitte Change in Customer Survey, 2018

14

Where are consumers going? OVERALL FOOT TRAFFIC (MILLIONS)

Hospitality, Travel, and Entertainment Retail Total

1,865

1,013

475377

1,752

995

409349

2017 2018

Source: Deloitte Location index Data

15

What do consumers think matters most?

P E R S O N A L I Z E D E X P E R I E N C E

C O R E V A L U E SC O N V E N I E N C EP R O D U C TP R I C E

v

Source: Deloitte Consumer Change Study 2018

16

So why does it feel like there is so much change with the consumer? T H E N N O W

H O M O G E N O U S C O N S U M E R B A S E

H I G H B A R R I E R S T O E N T R Y

F E W , AT - S C A L E R E TA I L E R S

I N C R E A S I N G L Y H E T E R O G E N O U S C O N S U M E R B A S E

L O W E R B A R R I E R S T O E N T R Y

M A N Y C O M P E T I T I V E R E TA I L E R S

17

Panelists

K a s e y L o b a u g h C h i e f R e t a i l I n n o v a t i o n O f f i c e , D e l o i t t e C o n s u l t i n g

V i r g i n i a W o n g D i r e c t o r o f R e t a i l S t r a t e g y a n d G l o b a l T r e n d s ,   L B r a n d s

B r e n d a n C a h i l l V P P R H L a b s , P e n g u i n R a n d o m H o u s e

D o u g Z a r k i n V P – C M O P e a r l e V i s i o n

A g a t h e W e s t a d D i r e c t o r o f N e w B u s i n e s s , O p t i m o v e

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Thank you.

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Congrats to

Doug Zarkin

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