2. This presentation, including any supporting materials, is owned by Gartner, Inc. and/or its affiliates and is for the sole use of the intended Gartner audience or other authorized recipients. This presentation may contain information that is confidential, proprietary or otherwise legally protected, and it may not be further copied, distributed or publicly displayed without the express written permission of Gartner, Inc. or its affiliates. © 2010 Gartner, Inc. and/or its affiliates. All rights reserved. 9 th Annual Gartner Sunrise Breakfast January 14 th, 2013 Presentation: 7:15-8:15AM

3. NRF Welcome 1

4. Agenda Overview NRF Introduction/Welcome Gartner Overview Moderator/Panel Introduction Gartner Retail Research Observations Panel Q & A 2

5. Gartner Overview 3 Kevin Sterneckert VP Research Consumer Value Chain

6. 4 Gartner delivers the technology-related and supply chain insight necessary for our clients to make the right decisions, every day.

7. 5 Helping you achieve demonstrable business results 65% of Fortune 1000 80% of Global 500 55 conferences 3,800 CIOs 10,000 media inquiries 5,500 benchmarks In-depth retail industry coverage 300,000 client interactions 60,000 clients 10,800 enterprises 730 analysts across 80 countries 450 consultants 1,500 engagements Gartner is uniquely positioned to deliver a depth, breadth and quality of IT expertise you won’t find anywhere else “Gartner acts as an extension of my staff and as an intelligent filter to the oceans of information I need to track and monitor. With Gartner, I get opinions that are objective, unbiased and candid.” JOSEPH D. “JODY” GILES CIO, Under Armour

8. Format & Panel Introduction 6 Kevin Sterneckert

9. 7 Retail Trends 2013 Jeff Roster VP, Industry Market Strategies, Retail Jeff.roster@gartner.com

10. A Day in the Life of an Analyst Source: Gartner Forecast Q2, 2011

11. Total U.S. Software SpendTotal U.S. IT Retail Services Spend Total U.S. Retail IT Spend

12. Extreme Behavior Pervasive Access Global Class Delivery "Big" Context A Nexus of Forces

13. 11 Are Retailers Asking About the Nexus of Forces?

14. Retail Marketing Becomes More Strategic Retail Industry (n=35) All Industries (n=512) Mean score (out of 7) 3.8 4.9 6.1 3.7 4.6 5.5 Q: Would you describe Marketing in your organization as more tactical or more strategic in nature? 1=More Tactical 7=More Strategic Copyright 2012, Gartner, Inc. All rights reserved. Source: Gartner survey conducted May, 2012

15. 13 The Year of Customer Innovation Robert Hetu Research Director Industry Research Retail

16. What Innovation Really Means in 2013 Key Issues How will consumerization impact retail innovation? What changes will your business need to make? How should you involve the customer in innovation? 14

17. Consumerization is irreversible and is leading to the end of consumers as we know them

18. Technology is accommodating customer behaviors Communicate Collaborate Co-create Customize

19. Customers Are Increasingly in Control of Your Business Model Consumers will become even more powerful and will change retail business models These business models will be consumer-centric — that is, with the consumer controlling the way in which the models evolve

20. The Evolving Customer-Centric Business Model for Retail Consumer Curator Aggregator Designer Builder

21. Technology is Not the Answer! Champion Capture Ideas Evaluate and Select Develop Implement Define Scope Socialize and Diffuse

22. Key Takeaways on Customer Innovation Open up the innovation process: 1.Understand that the customer is part of your business 2.Make the customer part of the decision making process 3.Know when and how to hand over to the customer

23. Relevant Sessions to Consider 14 th January NRF Keynote by Kofi Annan 10.30 am Special Events Hall Customer Centric Innovation at Brooks Brothers - 11.30 am, Special Events Hall The Changing Rules of Fashion in the Digital Age - 2.00 pm Special Events Hall Revenues Beyond Retail - 3.30 pm, Special Events Hall 15 th January Keynote A Job to Do: Retail’s Role in an American Renewal, Bill S. Simon Walmart CEO US - 8.30 am, North Hall Keynote The Great Convergence, Thomas Belk Jr. Et all – 10.00 am, North Hall Organizational Structure for the Future of Retail: The Digital Effect – 1.30 pm, Special Events Hall

24. Relevant Sessions to Consider 16 th January Retail’s BIG Fast Track Presents: Retail Re-imagined – Conversations on Storytelling, the Customer Experience and What’s Next! – 8.30 am, North Hall Keynote Doing Well by Doing Good -Fred Wacker, COO (The Home Depot Foundation) et al, 11.00 am, North Hall

25. 23 Key Initiatives for Demand-Driven Supply Chains Jeff Roster Mike Griswold Vice President Consumer Value Chain

26. Demand-Driven Value Network (DDVN) and Demand-Driven Retailing Strategies DemandSupply Product Understand and Respond to Demand Signals Build Value Networks Use the Supply Chain to Support Products and Services Innovation Fulfill Cross- Channel Demand Deliver Consumer-Centric Retailing 24

27. Demand-Driven Retailing Strategies DemandSupply Product Understanding and Responding to Demand Signals Building Value Networks Using the Supply Chain to Support Products and Services Innovation Fulfilling Cross- Channel Demand Delivering Consumer-Centric Retailing StrategyDescription Understanding and responding to the demand signalsSensing, shaping and responding to the consumer demand signal across sales channels Delivering a consumer-centric supply chainCreating a supply chain that supports and responds to the key merchandising planning and execution activities Fulfilling cross-channel demandCreating effective and efficient fulfillment strategies that support cross-channel and multichannel demands of the shopper Building value networksAligning the people, processes and technology that drive pull-based replenishment models and joint value creation Using the supply chain to support products and services innovation Creating an agile and responsive supply chain that enables and supports innovation across an organization 25

28. Demand-Driven Leaders Performance 26 Demand-driven Leaders Compared to Peers MetricDifference (2009) Difference (2010) Difference (2011) Difference (2012) Return on Assets (ROA) 73.8%2X 27.3%2X Inventory Turns19.1%4% 23.7%1.7X Revenue Growth55.0%3X 26.7%1.5X

29. Initiative 1: Demand Management Key considerations -Making the distinction between demand management and demand forecasting. -Determining ownership of demand management processes. -Migrating to a unified demand management platform. -Incorporate considerations for multichannel. -Focus areas trending toward promotions and new item forecasting. "Forecasting is very difficult, especially if its about the future" "Weather forecast for tonight - Dark"

30. Initiative 2: Merchandising, Inventory and Operations Execution Key considerations -Linking merchandise plans with inventory execution a key capability lacking for retailers. -Processes are happening today, they are just siloed and fragmented, and metrics are functionally focused. -Understanding the role of planning horizons in an MIOE process. -MIOE process enhances new product launch capabilities. -It really is what everyone else calls S&OP.

31. Initiative 3: Supply Chain Segmentation Key considerations -A seven-step process has emerged to help segment supply chains and tailor a profitable response. -Supply chain segmentation requires aligning metrics and incentives that enable trade-off decisions. -Advance supply chain maturity a precursor to success. -Segmentation enables a company to provide unique value to customers, while balancing cost with service.

32. Initiative 4: Network Design Key considerations -Omni-channel driving many network design initiatives -Ideally, network design is integrated with inventory optimization, but most organizations lack maturity. -Key considerations include business objective optimization, inventory and service-level improvements, risk pooling, and capacity planning. -Identify a "power user." -Pilots are a must. "Behind every great leader there was an even greater logistician." - M. Cox "The line between disorder and order lies in logistics…" "My logisticians are a humorless lot... they know if my campaign fails, they are the first ones I will slay."

33. Initiative 5: Inventory Optimization Key considerations -Understanding the connection to demand management -Understanding the changing role of inventory within your organization -Determining how to align inventory tactics with the underlying causes of inventory pooling -Increasing visibility capabilities to support multi-channel -Identify the "owner" of inventory, ideally from an end- to-end perspective

34. Supply Chain Hype Cycle - 2012 32

35. 33 Priority Matrix 2012 – Supply Chain New way of doing business Enabling new process, significant value opportunities Incremental improvement on existing processes

36. Key Supply Chain Technology Areas Demand & Supply Planning -Common demand platform for all channels -End-to-end replenishment capabilities Multi-channel Execution -Visibility -Optimization Supply Chain Optimization -Network design -Inventory WMS/TMS -Multi-channel execution support SaaS 34

37. Demand-Driven Business Value Growth Service Cost Agility Demand Management MIOE Network Design Supply Chain Segmentation Inventory Optimization Reduction in Out-of-Stocks 20%-30% Gross Margin Improvement 3%-5% Inventory ▼ 15%-30% Obsolescence 10%-15% less Productivity Increase 5%-10% Revenue Improvement 2%-5% Inventory ▼ 15% Cash-2-Cash ▼ 35% Working Capital ▲ 15% Better Service Gross Margin Improvement 3%-5% Asset Utilization ▲ 5%-10% Improved Productivity 3%-5% Profit Growth 2x Asset Utilization 3x Faster Runs 2x Value to Customers Cost/Service Choices Growth Potential Identification Cost of Complexity Unneeded Variability Unique Value and Agility per Segment Better Customer Choice No Negative Service Impact End-to- End Oriented Metrics Supply chain organization design (span of control) Proactive supply chain talent strategy Time-to-Market Lead Time Reduction 35

38. Relevant Sessions to Consider 14 th January The Role of Predictive Analytics in Retail, 10:15 Exhibitor Big Ideas The Importance of the CEO/CIO Partnership in the Retail and Cultural Transformation of A&P, 1:00 EXPO Hall Room 3D05 Lost in a Turbulent Sea of Data: Solving the Consumer “Search and Discovery” Dilemma, 2:00 Breakout Session Hall A, 1A 06-08 Renovate, Communicate, Invigorate – The Coordinates for Merchandising Success, 2:00 Room Hall E 1E 12-13

39. Relevant Sessions to Consider 15 th January Consumer Buying Behavior is Changing. How are You Responding? 9:15 EXPO Hall Room 3D08 Learning from Leaders: Gartner’s Top 25 Global Supply Chains, 2:00 Room Hall E 1E 12-13 Assortment Variety: Is It Too Much of a Good Thing, 3:15 Room Hall A 1A 06-08 How Metro Personalized Its Way to Growth, 3:15 Room Hall A 1A 10-14 RFID – What’s Next, 4:00 EXPO Hall Room 3 D05

40. Wrap Up & Q/A 38