Cannes 2015: Y&R Labstore's Retail Takeaways

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A Labstore Knowledge Report The Lions Through the Lens of Retail A Cannes 2015 Recap

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Introduction A RETAILER’S TAKE ON THE CANNES INNOVATION FESTIVAL ‘Innovation manifests itself in many different forms.’ That notion was very apparent at this year’s first Cannes Innovation Fest during the Cannes Lions Festival in France. From artifical intelligence, to the rise of the ever-present ‘Internet of Things,’ we saw a number of great inventions, inspiring talks, and have gathered our top takeaways. Enjoy! Cheers, Martin Wolf Managing Director – Europe Martin.Wolf@labstore.at Zac Kraemer, Brand and Business Development Manager – Global zac.kraemer@yrlabstore.com @zacharykraemer About Labstore: Labstore is Y&R’s worldwide retail and shopper marketing network with 20+ offices around the globe and was built to combat the new retail reality – a Globalized, Digitized, Polarized, Personalized retail environment. With a global perspective and presence, strong digital credentials, and powerful proprietary retail and shopper marketing intelligence, Labstore focuses heavily on the shopper, with a desire to create true Shopper Chemistry™. Visit YRLabstore.com Note: We do not claim ownership to any of the imagery showcased in this deck

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Ready...Set...Go! FIVE KEY RETAIL TRENDS SEEN AT THE LIONS INNOVATION FESTIVAL *Note: Anything that’s underlined in this document is an interactive link!

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OSHBOT, Robotic Concierge, USA, 2015 Pepper, Artificial Lifeform/Robot, Japan, 2015 JIBO, A Lifelike Family Member, USA, 2015 Trend One ROBOTS ENTER THE CONSUMER MARKET When The Jetson’s first aired in September of 1962, we were introduced to a futuristic world filled with astounding technology, like robotic maids that would wash your dishes, fix you dinner, and paint your nails. Even a few years back, those technologies were just a figment of our imagination. Today however, robotic lifeforms are increasingly becoming a part of our everyday lives. With artificial lifeforms like Apple’s Siri and the soon to be released JIBO, we’re well on our way to a Jetsons-like era. At Cannes this year, artificial intelligence was definitely a topic of conversation..but not Siri or Cortana. Pepper, the first ‘true social’ companion, which entered the B2C market earlier this year, is the latest hotbutton lifeform who is much more than a robot, he’s a companion. Able to communicate with customers through the most intuitive interface we know: voice, touch and emotion, Pepper was created for SoftBank Mobile—one of the largest mobile phone operators in Japan. Pepper is already greeting and interacting with customers in stores! Retail Insight We often use technology in retail for two key reasons – 1. To reduce the the friction of the shopping journey for the customer 2. To collect our shopper’s data, allowing us to learn more about them. Many people don´t trust certain types of technology, such as Facial Recogntion (which could give a personalised price or show an ad based on oour gender) in retail enviroments as it can seem ‘too intrusive.’ With robots like Pepper, retailer’s can continue to reduce friction, and gather data on shoppers through enjoyable social interactions. As technology advances, we continue to decrease the border between human and machine step-by-step, and will see a peak in automated services executed seamlessly by machines, robots and artificial lifeforms. The Jetson’s ‘Rosie Robot’, 1962

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TREND ONE // ROBOTS ENTER THE CONSUMER MARKET The Next-Gen Robot The Retail Concierge Another Member of the Family PEPPER OSHBOT JIBO Deemed the ‘first social robot,’ of his kind, Pepper is able to communicate with anyone through talk, touch and emotion. If you frown, Pepper will understand that something is bothering you. To cheer you up, he may play an upbeat song. He learns new things about individual tastes, capable of both adaptation and self-improvement. In a retail setting, Pepper is helping shoppers pick out mobile devices, checking customers out on his touchscreen chest pad, and entertaining unenthused guests as their parents shop. Implemented by Lowe’s in northern Califoria, OSHBOT is able to help shoppers locate any item in the store and take them to its exact location. Say ‘hammer,’ and OSHBOT will take you to the aisle, or hold up a specific screw in front of its camera, and OSHBOT will locate the item and show you exactly where to find it in-aisle. Assistant, photographer, storyteller, messenger and companion, Jibo is the do it all robot for families everywhere. Yet to launch, Jibo was created to seamlessly integrate with families in their daily lives. Jibo will take pictures at parties, read you your recipes as you cook, tell children stories and help them learn, and even moves and interacts like a real human being, with no activation required. Watch OSHBOT in Action See JIBO Here Experience PEPPER

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Nest Home Connectivity System, Global, 2013 Starbucks Mobile Ordering System, USA, 2015 AT&T Digital Life Home Security, USA, 2014 Trend Two THE AGE OF ‘INTERNET OF THINGS’ Today, there are over 2 billion smartphones, 15 billion connected ‘things’ and 200 billion+ mobile search requests on the ‘Internet of Things.’ Whether you think of Google’s ‘connected’ car, Apple’s wearable watch, or AT&T’s smart home system, you’re definitely thinking in the correct space, which is the simple, yet complex idea that everyday objects have network connectivity, allowing them to send and receive data, with the goal of making everyday lives more simple. As stated by Samsung’s VP of Product Development in North America “The Internet will be like electricity in 5-7 years. No one will care about it – it will be everywhere.” Retail Insight The consensus on technology was pretty clearly stated at Cannes time and time again: “If you are not fully in mobile within the next 1-2 years, you will lose the game forever,” as one speaker put it. For retail and shopper marketers, focusing on a mobile-first, digitally integrated solution in the shopper-journey is no longer a nice to have – it is a must-have, to remain relevant and stay in business.

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TREND TWO // THE AGE OF ‘INTERNET OF THINGS’ The New Line-Free Ordering System An Always Connected Home The Simple, Functional Smart Home System Starbucks Mobile Order & Pay system, added to the current Starbucks app began as a pilot in Portland in December 2014 and is now expanding to stores across the United States. The new system allows customers to skip the line with the easy-to-use feature that utilizes geo-location to select the closest Starbucks (or a ‘favorite’ store) in the area. Order your drink and food, pay via app, and pick up at the drink counter upon arrival. With AT&T Digital Life, users can stay connected to their home from just about anywhere, with 24/7 professionally monitored home security and automation from smartphone, tablet, or PC. Users can lock and unlock doors with their mobile devices, arm the security system with their PC, check in on the kids or pets via in-home cameras, or adjust the thermostat on daily work commutes. Nest Labs first introduced the Nest Learning Thermostat in 2011. Since that initial release, the company has introduced a second gen thermostat and smoke-and-carbon-monoxide detector, along with Nest Protect, which was purchased by tech giant Google, who launched its own Internet of Things (IoT) initiative called ‘Works with Nest,’ which pairs Nest products with third-party brands such as Whirlpool, Big Ass Fans and Mercedes-Benz to further connect devices in users everyday lives. STARBUCKS ORDER AHEAD AT&T DIGITAL LIFE NEST HOME SOLUTIONS See AT&T Digital Life in Action Learn more about the new feature See All the Connected Products in the Nest Family

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IBM Watson, Global, 2015 Macy’s Free Wifi Network, USA, 2012 Rebecca Minkoff Smart Mirror, USA, 2015 Trend Three MORE CONNECTED DEVICES. MORE DATA. It’s expected that marketers will have access to 20x more consumer data within the next 2-3 years, as connectivity and data volume increase and cost for data storage decreases. “9 out of 10 people don´t know what to do with their existing consumer databases” stated Marketing professor Jerry Wind. “Imagine how they will feel like in 5 years.” With this exact realisation in mind, comapnies like IBM are working on a realtime-data mining tool called Watson, that has the ability to source marketer data and compile it into infographics and consumer insights in real time. Retail Insight Mastering core-metrics of existing database structure is one of the most important first steps for marketers today. This means cleaning out old, invalid or incorrect data and building an ongoing development process for future data mining. Think before you open new input fields in your database. Focus on the most essential information you want want to have in future. With brands shifting large portions of media dollars to direct and digital media, smart, optimized data mining strategies can help to reduce media costs, optimize customer retention and loalty processes and allow for micro-segmentation campaigns. As we continue to further harness the true power of data, we may even be able to have real-time-optimized pricing structures based on number of people in the store, mood of the potential shopper or weather.

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TREND THREE // MORE CONNECTED DEVICES. MORE DATA. Showroom Away with Macy’s Free Wifi Network Rebecca Minkoff’s new Smart Mirror Technology IBM’s Watson For shoppers to give up their personal data, there has to be a strong give and take between the retailer and the shopper. Free Wifi is the perfect example of a tactic that works. Macy’s rolled out free wifi in select stores back in 2012, and today, offers free wifi in nearly all of its 850 store portfolio. Rebecca Minkoff is bridging digital and in-store in a new, seamless way. With a series of touch screen mirrors that allow shoppers to do anything from order a coffee or champagne, look at the latest collection of clothes, call a sales assistant, or even order clothes for in-home delivery, Minkoff’s new store is a shining example of how to properly use digital to create a great experience for shoppers, while also collecting unique data to better understand the retailer’s key customer profiles and shopping habits. IBM’s artificial intelligence system, Watson, learns as it collects and interacts with the world and the data in it. As IBM puts it, the system Observes, Interprets, Evaluates and Decides, just as a real human being would rationalize. What makes Watson different than most systems is it doesn’t just analyze numbers and statistics..it can also read through and interpret research reports, tweets, or even your mom’s latest facebook posts to form theories and reports in a number of unique ways. Get a tour of Minkoff’s new SOHO New York Store Here Take a look at Watson FREE WIFI. FREE DATA SEAMLESS DATA COLLECTION A NEW WAY TO HARNESS DATA

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Disney Magicband, Global, 2015 TapIt RFID Technology, Global, 2015 AWear Technology, Isreal, 2015 Trend Four RFID STORYTELLING Today, many brands are already embedding RFID technology into their marketing material. As RFID chips become increasingly affordable, and more mobile devices are able to interact with the technology, brands are increasingly utilizing the technology to the point of even starting to embed RFID chips into their actual product, to further extend the salesfloor and mine consumer data. Brands like Lego are utilizing RFID technology in-store, paired with augmented reality to showcase final built Lego products via digital monitors, and select winemakers even use the service directly on their product to tell the story of the wine right through the bottle. Retail Insight As content becomes increasingly important in the shopper journey, brands are continually leveraging RFID technology to further influence shopper decisions through a multitude of showcases across varying channels, from text, imagery, or video, all of which can be accessed with the tap of a mobile device. In a store, brands can push product recommendations at the shelf in real time, or even upsell the next best product after a shopper just started to consume a less expensive option. This developling communication platform gives brands the chance to stay connected with their customers throughout their differing shopper journeys, building new dimensions of brand and product exposure.

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TREND FOUR // RFID STORYTELLING TapIt’s easy to manage RFID system The Street Everything you need in life, right on your wrist Tapit is a global technology platform which leverages a range of contactless technologies including Near Field Communications (NFC) and Beacons (BLE), allowing brands to create, deliver, manage & measure engagement through a unique database management system. Unlike traditional RFID, brands can track unique TapIt buttons from anywhere in the world, change their forwarding location, and measure analytics in real-time. With the high speed chase that fashion has become in today’s culture, AWEAR’s new technology turns the streets into a shopping floor..literally. The small digital chips, which can be sewn into anytying from shirts to shoes allow anyone interested in products they see on the street to hold up their phone, and identify specific articles of clothing via the small chips. Disney has recently addressed the full experience guests partake in when visiting Disney resorts around the world and as a result, have launched MagicBand, a colorful, waterproof wristband that lessens the friction in a guests journey. The sensor-enabled bands allow guests to do a number of things like; unlock your hotel door, enter theme parks, get onto rides, charge food and merchandise purchases and even interact with Disney characters and rides throughout the park. TAPIT RFID TECH Find out about TapIt here AWear Fashion Learn more about AWear Here DISNEY’S ALL-IN-ONE WRISTBAND Get more information on MagicBand Here

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Birchbox Subscription Service, Global, 2012 AirBNB Room Booking App, Global, 2012 Fooji Food Ordering System, US, 2015 Urthbox Subscription Service, US, 2015 LOLA Tampon Replenishment, US, 2015 BirchBox New York Store, Global, 2015 Trend Five NEW BUSINESS MODELS MOLDING US New company structures and cultures are shaping the way brands across all categories conduct business and interact with their customers. Business models like Uber, AirBNB, Spotify, and new-age start-ups require little to no overhead to turn a profit. On average, Macy´s requires 62 employees to return $10mm in revenue, Sears requires 63 employees for that same turn, whereas Amazon requires just 17 people on average to return that same $10mm in revenue. Thus, as new businesses begin to form, existing well-established brands are being forced to evolve their business models to compete with the smaller, leaner competition. Retail Insight The founder and CEO of Soundcloud (who also operates with a start up mentality) summed up his business model quite simply, saying: “We build up one user-experience and spend as much time needed to fully optimize it. Once this is established, we can expand the dimension without any big increase of efforts. We started Soundcloud to be a good platform for musicians and worked 2 years on reaching that level until we were satisfied. Then we extended for music listeners, which took another 1.5 years. And now we are in a phase where we can monetize this thing.” Having a look at retail and it´s shift to become omnichannel, we many take a cue from the founder of Soundcloud, to perfect and optimize one shopper-journey at a time, to reach the best possible shopping experience and mirror more simple, newer retail business models.

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TREND FIVE // NEW BUSINESS MODELS MOLDING US FOOJI Offers Emoji-Based Social Media Ordering The new way to explore...ANYTHING! Hotel Booking...2015-Style Social Media meets Seamless meets Food Emojis. That’s the best way to describe the newest food ordering concept now launching in a number of urban cities across the United States. The idea behind the system is simple: Link your twitter account, tweet an Emoji at @fooji, and it’s ordered to your door for $15 all in. A new, simple, frictionless way to order at 4pm or 3am. Simple as that. There are subscription services for everything and anything these days. Birchbox for beauty, Dollar Shave Club for razors, Blue Apron for the meal maker, Urthbox for health nuts and even tampon replenishment! The fact is, Subscription Services aren’t going anywhere; the replenishment factor is a no-brainer for busy shoppers who are looking for ways to streamline their lives, and likewise, curious consumers who are interested in trying new products without commiting to a full-sized, full-priced product. Travel has reached a point of reinvention. Empowered Millenial shoppers, and even the younger Gen Z’ers are impatient and willing to go after what they want without willingness to wait. Companies like AirBNB, the global ‘Home to Hotel’ booking app, have recognized that core need for the younger, more impatient generation, and grown exponentially, since launching in 2012. They don’t ‘own’ properties, but rely on the people in the communities the play list their own properties for rent, to list on the app. See the new start-up here See above links which reference a multitude of subscription services Check out AirBNB Here EMOJI FOOD ORDERING SUBSCRIPTION EVERYTHING AIRBNB

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Get in Touch! Martin Wolf – Managing Director – Europe, Martin.Wolf@labstore.at Zac Kraemer – Brand and Business Development Manager – Global, Zac.Kraemer@yrlabstore.com, @zacharykraemer YRLabstore.com

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