Executive Summary

August has traditionally captures the lion’s share of BTS spending (about 60%) and with a buy-now-wear-now mentality getting more and more delayed until seasons ‘cool’ colors and silhouettes. A handful of retailers reporting Q2 results have commented on a recent pick up in BTS categories and are hopeful for an improvement in the category versus a year ago. However, we believe BTS is becoming less relevant for the consumer. Mom is not going into the stores and making one big purchase to get her kids ready for school like they have been doing since the 1960s. According to the NRF, “by mid-August, the average family with children in grades K-12 had completed just half of their back to school shopping. NRF’s latest survey shows that nearly 1/4 of families had not started shopping yet, up from 20% the same time last year.”

On the plus side:

• consumer metrics such as un- employment and housing prices are trending positive;
• about half a million additional students enrolled this fall support increased demand;
• BTS is after all a needs-based spend and consumers are not in dire straits like they have been in the past and going to school with half-used

On the negative side:

• retailers have not aligned supply with demand and they continue to overbuy for BTS leading to excess product on selling floors and unplanned markdowns;
• we believe that Holiday will start off slow as there is no MUST HAVE item ;
• “Christmas Creep” as retailers want to clear the selling floor and put out Holiday items earlier and earlier (think 9/1 versus 11/1), they will  start to clearance BTS items and think about ordering less and less over

Executive Summary

• In retail, we have rapidly and without hesitation entered an age of shopping diversity, but many product and service offerings have yet to catch up with their customer. Regardless of the customer base, the demand is the same—people want products that reflect their uniqueness.
• From the mature customer (age 60+) to shoppers size 14 and up, to Millennials and post-Millennials, the common thread is self-expression through their purchases. Their self-identity is embedded in each purchase choice. And this is the great white space of opportunity for the perceptive and nimble retailer.
• E-commerce is becoming a more pervasive animal, with giants such as Amazon and Alibaba crossing borders and changing consumer behaviors. As mobile devices get smarter and connection speeds faster, shoppers are conducting product searches and comparisons, locating them offline or making the purchase directly online – literally all at their fingertips. This fluidity has huge potential to increase retail sales with the biggest competition being of all things, mobile gaming.
• In this report we explore the instigators of change that are shaping the retail sector. We reveal important trends that have caused new consumption patterns, and examine some of the likely impacts that these developments will have on future retail environments, and how retailers can better respond to these changes.

Executive Summary

• 2014 is an exciting year for retail technology. In the past decade, e-commerce boomed at the expense of brick-and-mortar retailers, squeezing profit margins in both channels. Traditional retailers are fighting back. As e-commerce growth slows, brick -and-mortar retailers now supplement their shops with online businesses. We are entering an era where siloed e-commerce and brick-and-mortar are disappearing. What emerges is omni-channel retailing, with increased investment in retail technology both in-store and online.
• Technologies such as the Internet of Things (IoT) and 3D printing are fundamentally disrupting global supply chains. They are empowering consumers with the ability to customize products and services and providing them with the ability to interact with previously inaccessible upstream supply chain processes. The International Data Corporation (IDC) sees IoT spending nearly doubling to $8.9 trillion in 2020 as it supports operating efficiencies and higher value customer service. Social media continues to greatly influence the Internet community, and content is becoming increasingly visual (think Instagram). The intersection between online and offline will be facilitated by more sophisticated technologies in mobile devices, location-based services, augmented reality and virtual currencies. All this is possible as Big Data infrastructure matures and accelerators and incubators support these innovations.