A few years ago, industry observers wondered if retailers would survive in the face of ecommerce competition. Now it’s become apparent that brick-and-mortar companies have not only weathered the storm, they’ve emerged as a kind technology platform for vendors to build on.
But despite numerous startups catering to retailers, there aren’t any major players like there are in, say, ad-buying platforms. Gartner research director Robert Hetu said the lack of quality multichannel data has kept companies from taking over the niche.
Consequently, many of these startups seek to attach themselves to retailers that “have infrastructure and scale for startups to build off of,” said Dan Swartz, SVP of digital marketing at the marketing agency Upshot. This symbiotic relationship allows startups to leverage the scale and raw data owned by retail giants.
On the flip side, the retailers get functions enabling “personalization throughout the retail experience,” said Swartz, “from driving trips to the retailer to navigating throughout the store, driving incremental sales and how [customers] check out.”
And these are urgent issues for multichannel retailers, Hetu said: “Upward of 50% of store activity is now driven by digital channels.”
Consider Stary Browar, a Polish shopping center with more than 240 stores and 1.2 million monthly visitors, which began using the services of location-based retail software company Cosmose.
Cosmose places beacons at strategic in-store locations (or uses wi-fi or other location-based data) to build profiles of everyone who uses a retail app in that store or shopping center and connects those beacon-enabled profiles to desktop cookies.
“For years, we’ve been observing how online retailers like Amazon or Net-a-Porter are benefiting from advertising technology,” Kulczyk said. “Every day (they) increase conversion, return rate and advertising effectiveness.”
By creating a way to link offline activity with digital marketing (despite reach limitations, since Cosmose can only read customers using the app or a partner app in-store), the shopping center “can better understand our offline visitors, connect them with relevant online ads and bring them back to our physical stores,” said Stary Browar owner and founder Grażyna Kulczyk.
It’s notable that many retail startups rely so heavily on beacons. AdMobilize, which announced a $1.6 million funding round last week, installs face-recognizing beacons and cameras in brick-and-mortars in order to glean shelf-level analytics. (It doesn’t connect faces to specific individuals, said company founder and CEO Rodolfo Saccoman.)
For many vendors, beacons are both an essential tool and a severe limitation, because consumers have to be using a merchant’s app in order for the technology to deploy effectively.
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Beacons work for some retailers, but not all, said Jonathan Dyke, co-founder and chairman of Spring Marketplace, which helps merchants target customers based on spending history.
“There’s a bit of an app frenzy right now, and Starbucks or Target can get away with it,” said Dyke. He added that the glut of beacon-focused retail tech startups presents an opportunity for his company, which connects to the digital world via consumers’ credit cards, leveraging partnerships with Visa, MasterCard and American Express.
“We don’t have to change anyone’s behavior,” said Dyke.
It’s particularly helpful serving in the SMB market. “It’s tied to the credit/debit card our customers already carry and there is no integration work in my stores,” said TJ Wilt, owner of Cumberland Transit, an outdoor equipment store with locations in Nashville, which uses Spring Marketplace.
“Think of all the money and resources going into understanding how consumers act and shop online,” said Dyke.
That’s the same point made by Mike McMurray, SVP of marketing and business operations at Point Inside, which works with Target to digitize the retail giant’s physical locations, providing up-to-date data on inventory, foot traffic and layout. (Target declined to comment for this article.)
McMurray said new retail tech vendors are “applying that same way of thinking from online, but to in-store, which is 90% of where important shopper behavior occurs.”
