Technology, Disruption & The Digital Enterprise What Does it Mean for the Retail Industry? David Cox – Digital Futurist

Basic Principles

We Are Rapidly Approaching a 5th Industrial Revolution Steam, Water, Mechanical Production Division of Labor, Electricity, Mass Production Electronics, IT, Automation Blurring the Lines Between Physical & Digital Artificial Intelligence, Exponential Growth in Compute 18th Century 19th/20th Century 20th Century Early 21st Century Mid 21st Century Rate of Technological Change We Live in a More Connected World

New Technologies – Changing the Way We Work & Play Machine Learning Bots Internet of Things Virtual Reality Unified Communication Cloud Personalization & Customer Intimacy Digital Assistants Sensing & Tracking Richer Experiences Increased Productivity & Collaboration Level Playing Field Fundamentally Changing the Rules of the Game

New World – New Enterprise – New Expectations Connected Collaborative Insightful Mobile Digital Employee Digital Enterprise Digital Operations Digital Consumer Lean Agile Adaptive Elastic Empowered Informed Impatient Connected Virtual, Flat, Datacentric Digital Distribution Digital Products Faster Cheaper Automated Wearable Fashionable Personal

New Markets – Massive Disruption New Trends Emerge Innovative Start-Ups Create Disruptive Business Models Early Adopters start embracing the new models Advanced Incumbents start adapting to the new model Mainstream Customers Adopt Laggard incumbents die Tipping Point Advanced Incumbents and established start-ups constitute the new normal Margin Compression Flow of Value to adjacent industries Industry revenue rapidly compressing and shifting away from incumbents Digital Media Consumer/Retail Retail Banking Traditional Media Time Herald Tribune absorbed by NY Times Macy’s displaced by Amazon Blockbuster displaced by Netflix Banks displaced by Google? Digital Predators are Everywhere

Flourishing in the Digital Jungle PRISM FY16 5/21/2018 9:27 PM Flourishing in the Digital Jungle Leadership Capability Digital Capability Source: MIT/Sloan “How digital leaders outperform their peers in every industry” FASHIONISTAS Revenue: +6% Profitability: -11% Market Value: -12% DIGITAL MASTERS Revenue: +9% Profitability: +26% Market Value: +12% Revenue: -4% Market Value: -7% BEGINNER Revenue: -10% Profitability: +9% Market Value: +7% CONSERVATIVE +9% Revenue Creation +12% Market Valuation +26% Profitability Digital business transformation to date has largely focused on operational efficiency. The potential is much greater. Gartner defines digital business “the creation of new business designs by blurring the digital and physical worlds.” (http://www.gartner.com/it-glossary/digital-business). Digital business leaders are now thinking about how they will reinvent their vision based on technology. And when companies fully embrace technology as a way to transform their business, they outperform their peers in every industry. How Do You Become a Digital Master? © 2014 Microsoft Corporation. All rights reserved. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

Developing a Winning Digital Strategy Well Protected from Disruption Gradual Change Customers Services New Value Added Services Scalable Platforms New Methods of Consuming New Ways of Connecting Buyers & Sellers New Methods of Distribution New Sources of Supply Facing Massive Disruption Massive Change More Than One Way to Succeed Source: McKinsey

Retail Implications

Online is fastest growing 10X more than retail stores The Retailers Dilemma In 2020 more than 80% of U.S. retail sales will still happen within the four walls of a store Online is fastest growing 10X more than retail stores Where Do We Go From Here? Source: McKinsey

New Consumer – Living Longer, More Colorful Lives 60-70+ Birth of the New Millennials

We Must Reinvent What We Mean by Store

Think Differently How We Gain New Customers

Use Technology in More Creative Ways The Chatbots Are Coming to Retail

Embrace New Methods of Distribution

And New Ways of Doing Business JC Penney’s web sales rise 26% Web sales grow 46% for Lightinthebox

Thankyou