360 degree view of the U.S. retail market - etouches · PDF fileApparel and footwear (Ann Taylor, Gap ... Gen Z Young Mill Old Mill Gen X ... Younger generations retail lending consumers

360 degree view of the U.S. retail market

Introducing:

Mike Schmidt Alliance Data

Holly Deason Experian

Crissy Wallace Experian

©Experian 3 4/15/2017 Experian Public Vision 2017

1. Retail market insights

2. Typical retail consumer

3. The future of retail

Contents


Market insights


Macroeconomic trends

Source: Conference Board

0

5,000

10,000

15,000

20,000

25,000Dow Industrial average Apr 2017: 20,735

0

2

4

6

8

10

0%

1%

2%

3%

4%

5%

6%

7%

8%

Recession Mortgage rate Home sales

Home sales Feb 2017: 5.348M// 4.17% Rates

0

20

40

60

80

100

120

140

160Consumer confidence index Mar 2017: 125.6

Unemployment Feb 2017: 4.7%

0%

2%

4%

6%

8%

10%

12%

-1,000

-800

-600

-400

-200

0

200

400

600


So why are so many retailers closing stores in 2017?


Source: Moodys Retail Sector Forecast, Nov 2016; Mintel, May 2016

Some retailers expected to win big while others will see low growth or declines

Growth drivers Home improvement (True Value, Home Depot)

Off-price sectors (Dollar Tree, TJ Maxx)

Specialty stores (PetSmart, Tractor Supply)

E-commerce (Overstock.com, Amazon)

Continued weakness Department stores (Macy’s, Bon-Ton Store)

Apparel and footwear (Ann Taylor, Gap)

Office supply, discounters, warehouse

clubs (Costco, Sam’s Club, Meijer)


MYTH FACT

VS

Brick and mortar stores are dead

MYTH FACT


MYTH FACT

VS

MYTH FACT

Brick and mortar stores are dead

FACT


Credit originations are up; credit quality is stable

$-

$3

$6

$9

$12

$15

$18

$21

$24

$27

$30

4Q07 4Q08 4Q09 4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16

4Q16:

$31.24 BN

+5.91% YoY

696 686 684 686

300

400

500

600

700

800

0%

10%

20%

30%

40%

50%

60%

70%

2013 Q4 2014 Q4 2015 Q4 2016 Q4

Super Prime Prime Near PrimeSubprime Deep Subprime Average

Source: Experian Intelliview


Typical retail consumer


Analysis peer set

Q4-2016 Q4-2013

Starting population: Top issuers for retail type trades

Three year look-back period


Generation segments

Gen Z

Age 18–20

Gen Y

Younger: Age 21–27

Older: Age 28–34

Gen X

Age 35–49

Boomer

Age 50–70

Silent

Age 70+


MYTH FACT

VS

Younger people spend the most on retail.

MYTH FACT


MYTH FACT

VS

MYTH FACT

Younger people spend the most on retail.

0% 2%

10%

25%

38%

25%

0%

4%

11%

25%

37%

22%

Gen Z Gen YY Gen OY Gen X Boomer Silent

2013 2016

Generational breakout retail consumers

FACT


Retail consumer demographics Gender

0.4%

2.6%

6.0%

13.9%

22.7%

9.5%

Gen Z

Gen YY

Gen OY

Gen X

Boomer

Silent

Female

0.2%

2.0%

4.9%

10.7%

16.0%

6.5%

Gen Z

Gen YY

Gen OY

Gen X

Boomer

Silent

Male


Retail consumer demographics Marriage

Gen Z Gen YY Gen OY Gen X Boomer Silent Unknown

Married Single Unknown

61% Married

13% Single

26% Unknown


2% 10%

29%

28%

20%

11% Unknown

Less Than HS

High School

Some College

Bachelors

Graduate Degree

Retail consumer demographics Education level

60% have at least

some college


Income insight and debt-to-income insight Retail consumers by generation from 2013 to 2016

0.0%

7.9% 9.6%

13.2%

15.0% 16.7%

17.8% 18.0%

15.3% 14.6%

8.9% 8.6%

0%

5%

10%

15%

20%

25%

$0

$10

$20

$30

$40

$50

$60

$70

2013 2016 2013 2016 2013 2016 2013 2016 2013 2016 2013 2016

Gen Z Young Mill Old Mill Gen X Boomer Silent

Deb

t-to-In

co

me In

sig

ht

Inco

me I

nsig

ht

Thousands

Younger group

growing income

and debt


Spend Retail consumers by generation from 2013 to 2016

$0

$7 $8 $9

$12 $14

$21 $22

$24 $23

$16 $15

201

3

201

6

201

3

201

6

201

3

201

6

201

3

201

6

201

3

20

16

201

3

201

6

Gen Z YoungMill

Old Mill Gen X Boomer Silent

Total spend

0% 0%

26%

9%

29%

10%

23%

16% 15% 17%

8%

12%

% Change - Annual RetailSpend

% Change - Average %Retail Spend

Percent change 2013 to 2016

Gen Z Yng Mill. Old Mill. Gen X Boomer Silent

Double-digit

growth in 3 years


MYTH FACT

VS

Millennials expect to see brands on social media and have apps to connect online.

MYTH FACT


Millennials expect to see brands on social media and have apps to connect online.

MYTH FACT

VS

MYTH FACT

Source: Alliance Data www.knowmoresellmore.com

FACT


Percent of consumers with at least one open trade Retail consumers by generation from 2013 to 2016

28%

44%

3%

18%

34%

Auto Ploan Mortgage Student Stu-Def

Gen Z Young Mill Old Mill Gen X Boomer Silent2013

43%

60%

8%

26% 22%

Auto Ploan Mortgage Student Stu-Def

2016

Younger generations retail lending consumers are making an obvious impact across all areas

of the lending environment including auto, student loans, personal loans and even mortgage.


The future of retail


While …

• Payment security (89%)

• Easy brand interactions (76%)

• And transparent promotions (71%)

… are most influential when choosing where to shop, when asked about their memorable shopping experiences, all generations rank

Personalize in the moment


Customer service #1


MYTH FACT

VS

Gen X is most highly influenced by product quality and value for the money

MYTH FACT


Gen X is most highly influenced by product quality and value for the money

MYTH FACT

VS

MYTH FACT

Generation X needs variety and accessibility—but

they don’t have time to focus on too many of the details.

They’re balancing careers with family, and need to know

why what you’re selling is what they need. Make this

clear to them from the start.

When asked what influences which brand or store to

buy from, generation X over-index for:

• Ratings/reviews

• Atmosphere

• Availability of tech

• Fast checkout

Fewer factors mean more focus for generation X


FACT


Make doing business easy for the consumer, reduce all the friction points

• Online presence – always on 24/7

• Enticing shopping experience

• Competitive pricing

• Easy return policy

• Fast/free delivery

• Gift wrapping

Have respect for the consumer’s personal time

Show your customer you love them


Consumers will never stop shopping, so what does this mean for you?

Respect where your

customers are today.

Invest where your

customers will be

tomorrow.

Different generations have different goals

when selecting brand / store

Gen X and Baby Boomers are still the

highest revenue generating groups

Shopping online is nice, but social media

and apps are not always required

Brick and mortar shopping is alive

and well


Alliance Data’s The Generational Perspective

Study @ KnowMoreSellMore.com/Experian

Key insights

Current shopping behaviors are driven by past generational experiences 1

All consumers share some baseline expectations from brands 2

Each generation connects with brands differently 3


Crissy Wallace [email protected]

Questions and answers

CrissyWallaceMyler @CrissyWallace

Holly Deason [email protected]

HLYDeason @HollyDeason

https://twitter.com/CrissyWallace

https://www.linkedin.com/in/crissywallacemyler/








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Documents

360 degree view of the U.S. retail market - etouches · PDF fileApparel and footwear (Ann Taylor, Gap ... Gen Z Young Mill Old Mill Gen X ... Younger generations retail lending consumers