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360 degree view of the U.S. retail market
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Introducing:
Mike Schmidt Alliance Data
Holly Deason Experian
Crissy Wallace Experian
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©Experian 3 4/15/2017 Experian Public Vision 2017
1. Retail market insights
2. Typical retail consumer
3. The future of retail
Contents
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©Experian 4 4/15/2017 Experian Public Vision 2017
Market insights
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©Experian 5 4/15/2017 Experian Public Vision 2017
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
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©Experian 6 4/15/2017 Experian Public Vision 2017
So why are so many retailers closing stores in 2017?
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©Experian 7 4/15/2017 Experian Public Vision 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)
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©Experian 8 4/15/2017 Experian Public Vision 2017
MYTH FACT
VS
Brick and mortar stores are dead
MYTH FACT
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©Experian 9 4/15/2017 Experian Public Vision 2017
MYTH FACT
VS
MYTH FACT
Brick and mortar stores are dead
FACT
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©Experian 10 4/15/2017 Experian Public Vision 2017
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
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©Experian 11 4/15/2017 Experian Public Vision 2017
Typical retail consumer
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©Experian 12 4/15/2017 Experian Public Vision 2017
Analysis peer set
Q4-2016 Q4-2013
Starting population: Top issuers for retail type trades
Three year look-back period
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©Experian 13 4/15/2017 Experian Public Vision 2017
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+
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©Experian 14 4/15/2017 Experian Public Vision 2017
MYTH FACT
VS
Younger people spend the most on retail.
MYTH FACT
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©Experian 15 4/15/2017 Experian Public Vision 2017
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
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©Experian 16 4/15/2017 Experian Public Vision 2017
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
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©Experian 17 4/15/2017 Experian Public Vision 2017
Retail consumer demographics Marriage
Gen Z Gen YY Gen OY Gen X Boomer Silent Unknown
Married Single Unknown
61% Married
13% Single
26% Unknown
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©Experian 18 4/15/2017 Experian Public Vision 2017
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
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©Experian 19 4/15/2017 Experian Public Vision 2017
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
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©Experian 20 4/15/2017 Experian Public Vision 2017
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
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©Experian 21 4/15/2017 Experian Public Vision 2017
MYTH FACT
VS
Millennials expect to see brands on social media and have apps to connect online.
MYTH FACT
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©Experian 22 4/15/2017 Experian Public Vision 2017
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
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©Experian 23 4/15/2017 Experian Public Vision 2017
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.
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©Experian 24 4/15/2017 Experian Public Vision 2017
The future of retail
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©Experian 25 4/15/2017 Experian Public Vision 2017
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
Source: Alliance Data www.knowmoresellmore.com
Customer service #1
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©Experian 26 4/15/2017 Experian Public Vision 2017
MYTH FACT
VS
Gen X is most highly influenced by product quality and value for the money
MYTH FACT
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©Experian 27 4/15/2017 Experian Public Vision 2017
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
Source: Alliance Data www.knowmoresellmore.com
FACT
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©Experian 28 4/15/2017 Experian Public Vision 2017
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
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©Experian 29 4/15/2017 Experian Public Vision 2017
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
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©Experian 30 4/15/2017 Experian Public Vision 2017
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
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©Experian 31 4/15/2017 Experian Public Vision 2017
Crissy Wallace [email protected]
Questions and answers
CrissyWallaceMyler @CrissyWallace
Holly Deason [email protected]
HLYDeason @HollyDeason
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©Experian 32 4/15/2017 Experian Public Vision 2017
Share your thoughts about Vision 2017!
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