Reinventing Retail with Technology

By: Avi Eyal, Co-Founder and Managing Partner, Entree Capital

Avi Eyal, Co-Founder and Managing Partner, Entree Capital

The last few years have witnessed a great amount of technology aiming to disrupt, digitalize or enhance the retail industry. As an early-stage funder of startups, we have witnessed many new ideas and teams attempt to build solutions that reinvent the retail experience. It is surprising to see the Uber of Retail, the We Work of Shopping, and other teams come and go.

"We are seeing fulfillment become more accepted with delivery to the home, collecting online orders in-store and so forth"

As venture capitalists, looking at retail from the outside, we have honed in on a few challenges and themes that we feel are important to consider.

1. Retail is SLOW: Retailers do not move overnight. They do not throw out their tech or abandon decades-old methods overnight. That represents a challenge for startups. On the flip side, any retailer that truly embraces a new information age approach can find themselves innovating and improving margins.

2. Customers want new ways to purchase. That means an omnichannel approach that covers online to offline, information at counter/aisle, fast checkout and payment methods, and better fulfillment. We are seeing fulfillment become more accepted with delivery to the home, collecting online orders in-store and so forth. Some countries have new payment methods and plans at point of sale. These features of retail are becoming a standard way to do business.

3. Managing Risk is of paramount importance, in an industry where margins are tight (single digits) and being squeezed every day. This manifests from fraud in-store (shoplifting, pilferage, etc.), security in-store, and payment/chargeback fraud. Multiple vendors are trying to address this using artificial intelligence, visual recognition and mass data analysis in real-time.

4. The automated store. Possibly a dream, and certainly a way off. AmazonGo is an intensely managed prototype and has years to get to the point of commercialization. Other startups have raised millions in the hope of delivering a similar experience to existing retailers. So far, retailers are not biting, and we would predict they won’t for a few more years.

5. RFID and next-generation technologies are achieving low-cost breakthroughs that will see the old plastic ink tags disappearing, in favor of new simple to apply labels that will yield much more information on the product, the person holding it, their movement through their store, and time to checkout.

6. Software trumps it all. Next-generation POS systems that allow omnichannel experiences, in-store financing options, dynamic real-time shelf scanning to replenishment and mapping are all getting to a point where their feature set and prices start making sense. Software drives most of the above points and is the glue that binds the retail experience.

As an example, self-checkout, in-store anomaly detection, and in-store finance are only now starting to make inroads after having been introduced over 5 years ago.

Some companies to watch include Shopic (visual, AI, self-checkout and security), Postmates, Bringg and Glovo (fulfillment and delivery), Afterpay and Klarna (in-store finance), Trax (shelf data analytics), Thumbzup (omnichannel in-store payment), and Lightspeed and ShopKeep (POS).