Retail AV Vertical Markets. Corporate Government Education. Hospitality Healthcare Venues. Global End-User Perspective

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1 2015 AV Vertical Markets Global End-User Perspective Corporate Government Education Retail Hospitality Healthcare Venues infocomm.org/marketresearch

2 Copyright 2015 InfoComm International All rights reserved. Printed in the United States of America Published by InfoComm International, Waples Mill Road, Suite 200, Fairfax, VA No part of this work may be used, reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording or by any information storage and retrieval system, without prior agreement and written permission from InfoComm International. The contents of this work are subject to revision without notice due to continued progress in methodology, design, installation and manufacturing in the audiovisual industry. This material is sold as is, without warranty of any kind, respecting the contents of this work, including but not limited to, implied warranties for this work s quality, performance, merchantability or fitness for any particular purpose. InfoComm International and Acclaro Growth Partners shall not be liable to the purchaser, user or any other entity with respect to any liability, loss or damage caused directly or indirectly by this work. 2 Vertical Markets End-User Perspectives Study

3 Table of Contents About InfoComm International... 4 Introduction... 5 Study Methodology... 6 Research... 6 Analysis... 6 Assignment Timing... 6 References... 6 Contact Information... 6 Global Contacts... 7 Retail: Vertical Market Assessment End-User Interviews Executive Summary Products and Technologies Current AV Products and Technology Adoption Life Cycle Future AV Investment and Five-Year Outlook End-User Investment Decisions AV Purchase Decision Driver Channel Partners Impact of Convergence on AV Investment Decisions Value of the Integrated Service Provider AV Purchase Decision Factors Analysis Post-Installation Services Trends End-User Decision-Making Process AV Purchase Decision Organization and Degree of Centralization AV Budgeting Process and Sources of Funding Importance of ROI Sources of Information for AV Decision Makers AV Purchase Process Bid Out vs. Sole Source AV Purchase Process Spec-Driven vs. Consultative Concerns and Challenges Impacting End Users Appendix Geographic Region Definitions Vertical Market Segment Definitions Global Contacts, by Region End-User Interviews, by Vertical Acclaro Growth Partners InfoComm International

4 About InfoComm International InfoComm International is the international trade association representing the professional audiovisual and information communications industries. Established in 1939, InfoComm International has more than 5,000 members, including manufacturers, systems integrators, dealers and distributors, independent consultants, programmers, rental and staging companies, end users and multimedia professionals from more than 80 countries. InfoComm International is the leading source for AV standards, market research and news. Its training, certification and education programs set a standard of excellence for AV professionals. InfoComm International is the founder of InfoComm, the largest annual conference and exhibition for AV buyers and sellers worldwide. InfoComm also produces trade shows in Asia, Europe, Latin America and the Middle East. Additional information is available at infocomm.org. 4 Vertical Markets End-User Perspectives Study

5 Study Methodology InfoComm commissioned Acclaro Growth Partners to conduct a global vertical markets study covering trends and dynamics from the perspective of end-user organizations in the corporate, education, government, retail, healthcare, hospitality and venues segments. Research The data and information for this report was gathered through a combination of secondary research and personal deep-dive conversations and interviews. Secondary research drew on a wide range of published and online data sources to obtain relevant information in each vertical market. Information obtained through secondary research was used to support the interview process and make the interviews more effective. Insights were collected on market trends, issues, drivers and constraints, with a focus on their impact to the end user. The majority of the findings and perspectives put forth in this study were derived using primary research. The primary research consisted of approximately 170 personal interviews and conversations, the majority of which were with 130 end-user organizations in seven vertical markets and in all regions of the world. Interviewees also included manufacturers, AV and ICT integrators, distributors, manufacturer rep firms, design consultants and industry experts. See pages 7 and 8 for a break out of the end-user interviews by region and by vertical market segments. Analysis Qualitative comments such as the majority (indicating more than 50 percent) and most (indicating more than 75 percent) were used to indicate consistency of perspectives. End-user comments were used as representative examples, are identified with quotations, and are attributed to the type of organization making the specific comment. Comments such as several or some indicate multiple mentions but not necessarily the majority of opinion or circumstance. One-off comments were not included unless specifically identified. Assignment Timing The research and analysis for this study were conducted between January and May, References Please refer to the Appendix for definitions of the geographic and vertical market segment terminology used in this document. Contact Information Acclaro Growth Partners: Julia Baillie, Partner Phone: julia@acclaropartners.com InfoComm International: Kaitlyn McAuliffe, Market Research Phone: , ext kmcauliffe@infocomm.org 6 Vertical Markets End-User Perspectives Study

6 GLOBAL CONTACTS: All contacts, by region For this Vertical Markets End-User Perspectives Study, InfoComm interviewed 130 end users in seven vertical markets globally. Additionally, to supplement the information provided by end users, InfoComm contacted approximately 40 industry participants, including integrators, manufacturers, consultants, distributors, rep firms and industry publications. Total Contacts by Region all types (percent of total contacts) 30% 28% North America Asia-Pacific Europe 8% 14% 20% Middle East/Africa Latin America InfoComm International

7 GLOBAL CONTACTS: End-User Interviews, by vertical market The Retail Vertical Market Assessment is one in a series of reports published by InfoComm, collectively the Vertical Markets End-User Perspectives Study. InfoComm interviewed 130 end users in the following seven vertical markets globally. End-User Interviews by Vertical Market (percent of total end-user interviews) Healthcare Government 12% 11% Corporate 22% 12% 16% Retail 12% 15% Education Hospitality Venues 8 Vertical Markets End-User Perspectives Study

8 Vertical Market Assessment RETAIL InfoComm International

9 RETAIL: End-User Interviews InfoComm interviewed end users in the retail vertical market globally, including: Stores/chains: store chains (big box, department, grocery/convenience, fashion, technology), large independent stores, corporate stores Malls/centers: malls, shopping centers Retail End Users Interviews by Region (percent of total retail end-user interviews) 34% 27% 13% North America Asia-Pacific Europe Middle East/Africa Latin America 13% 13% 10 Vertical Markets End-User Perspectives Study

10 RETAIL: Executive Summary As technology becomes pervasive in our everyday lives, customer expectations are increasing that technology will be an integral part of the shopping experience. We have entered what end users refer to as the mobile age of retail. Customers are better informed than ever before and they have all the information they want at their fingertips. Consumers are relying on their mobile devices to deliver information and convenience, and their expectations are raising the bar for the retail industry. There is a growing demand, especially with millennials, for anywhere, anyplace, anydevice connectivity, and this expectation extends to the retail environment. As reported in InfoComm s 2014 Market Definition and Strategy Study, the global retail pro-av market will grow from $5.6 billion in 2014 to $6.9 billion in End users project increased spending on AV technology. The retail market is projected to grow at an 11 percent CAGR for the next two years, which is a slightly lower rate than the overall market. Most of the growth in this segment is in the high- end of the retail segment, while the low end is more cost conscious and driven by the trend to lower-cost displays and outof-the-box digital signage offerings. Retail in Asia-Pacific is booming, although end users acknowledge they lag behind international standards. The growing Technology is changing the way we operate in a major way. A lot of retailers are having to reinvent themselves and struggling in the face of Amazon and the Internet. Most people that have uncovered the formula have kept it to themselves. (big box store chain, U.S.) InfoComm International

11 number of shopping malls in Asia-Pacific and a rapidly expanding middle class are helping to drive growth in the retail sector across the region. o o In China, the number of shopping malls has almost doubled over the past three years. Meanwhile, the consumer class is expected to grow 70 percent over the next five years, reaching 220 million consumers by 2020, as reported in Jones Lang LaSalle s China60 report. According to the Boston Consulting Group, the retail market in India will grow from $600 billion in 2015 to $1 trillion in In Latin America, some retailers use no technology, while a few have invested in the most advanced technology. For the most part, retailers in Latin America prefer lowcost solutions. The Middle East has a dynamic retail market, driven by growing populations, more urban centers and increasing wealth. With Dubai hosting the 2020 World Expo and Qatar the 2022 World Cup, the region s construction boom will continue, and retail will undoubtedly benefit. The increasing amount of data on the network, coupled with a number of recent high-profile data breaches, make planning for and preventing cyber-attacks a top priority for retail CIOs. According to the National Retail Federation/ Forrester Research Retail CIO Agenda 2015: Secure and Innovate report, managing data security is the number one area of focus for retail CIOs in the coming year. The way we shop is different today, and leading retailers are looking to deliver a seamless cross-device experience across all channels, so the shopper can easily make the jump from one channel to another. Forrester cites omnichannel initiatives as the second most important area of focus for CIOs in Consumers are gravitating to brands that are technology savvy. So merging digital and in-store experiences is critical for brick and mortar s continued relevance. End users report that consumers expect to see dynamic content everywhere they look. This is driving investment in digital signage technology, with an outlook for continued strong spending. 12 Vertical Markets End-User Perspectives Study

12 Sophisticated retailers are increasing their use of integrated technology solutions to manage security and store operations. Surveillance cameras are increasingly leveraged for both security and video analytics purposes. This trend is far more prevalent in retail compared to other verticals, where security is typically handled separately from AV and IT. The levels of interest and investment in AV technology varies widely from end user to end user. The decision to invest or not invest in AV has little to do with the nature of the retail business and more to do with the retailers beliefs about technology. For example, the following two responses come from end users that are both addressing the same challenge. o o We are a high-volume, low-margin business, so we have to use technology to be competitive against the Amazons of the world. (regional home furnishings chain, U.S.) We are a high-volume, low-margin business and margins are getting tighter. There is not a lot left over to invest in technology. For our business, AV is still a luxury. (big box retail chain, U.S.) These two retailers could not have more different opinions about their need to invest in technology and the perceived benefits. Retail brands that are not investing in the latest digital, mobile and social technologies will continue to fall further behind. InfoComm International