[As seen on Money Magazine Issue 30]
Retail has seen drastic changes over the last few years with the emergence of ecommerce and mobile commerce, with giant companies creating new industries previously unimaginable. New technologies such as 3D printing will further increase the pace of change of the industry.
Technology undoubtedly brings new opportunities, and just by being around local start ups that embrace such possibilities, sheds light on what is possible. I sat down with two start ups residing at TAKEOFF Incubation Centre at the University of Malta to understand their views and impact they want to have on the industry.
The first start up I met is Riccardo Lora, CEO of a company called CalypseLab. They have developed a software solution that uses in-store video analytics (amongst other technologies) to track, record and process human behaviours in a retail outlet.
Their highly effective pitch is that they “are the in-store Google Analytics.” Riccardo explains, “the traditional approach involves the construction of strategies on the basis of sales data and the sensitivity or impulses of the staff. How do we measure store performance other than sales?”
“What we want to do is give stores the ability to apply key performance indicators (KPIs) in real time to affect strategies in retail stores,” Riccardo explains. “We can measure the performance of a shop window for example. Using security cameras to capture images, we process data to give you a conversion rate of walk-ins.”
The impact that this has on how a store is managed is significant. If one had to look at ecommerce by comparison, it is entirely a numbers game based on conversions and ratios. Applying the same philosophy of data driven decision making to the retail space is certainly a game changer.
I ask Riccardo how sees this product impact the retail space. “Imagine you make a change in a shop, of a display for example, you can measure the performance improvement, apply the change to all the chain and all the outlets within the chain are more profitable, in only a few days. We measured a shop’s performance where we have installed our product, and saw an increase of 0.5% of walk-ins coupled with a 2% increase in engagement can generate a rise of 29.6% of sales.”
This is ecommerce speak in a retail environment. How will this affect the management skills within the industry?
“We are seeing that managers need new skill sets and are working with change management partners to assist our clients. However, we are also seeing data driven decisions meaning that managers are a lot more confident when deciding upon change.”
Riccardo ends the meeting with this: “Big retail giants have already made the shift in focus from product to customer, measuring and analysing their behaviour. Our tool simply gives you more data to measure and analyse more accurately, delivering less risk and more opportunity.”
Analytics in a retail environment using existing infrastructure and the cloud is certainly an exciting proposition. My next start up mixed retail with an industry well engrained in Malta’s economy.
Lewis Holland is the CEO of DiscountIF, another start up stemming from the local scene. “We are offering consumers cashback on everyday items, based on the outcome of a sporting event. We call it ‘The Power of IF’”.
“The concept is simple. Buy this Samsung TV and get 100% cash back if Chelsea win the league.”
What they are doing therefore is mixing retail (ecommerce) with a game of chance. How has the market reacted?
“We have reached 6 million people on twitter with our offers trending, many using hashtag #NoBrainer. For an early stage company, that is pretty significant. We have backing from major global brands and entrepreneurs further spurring growth.”
Lewis explains how the concept has been tried before with companies like Toshiba selling 10,000 televisions under cash back promises if England wins the World Cup. “The model clearly works, and we are continuously getting requests to add on more products. Our experience in hedging and gaming allows us to offer such a service profitably.”
Is DiscountIF a gaming or retail company? “We are most definitely retail. We offer products for a reasonable price, irrespective of outcome, within a new, gamification-type of customer experience.”
DiscountIF and CalypseLab have not changed the retail space but rather looking to offer their own take on what it could be. Both start ups are being incubated in Malta, currently going through investment rounds, backed by teams with high aspirations.
The retail industry is continuing to change, and great start ups will accelerate the pace at which it evolves. New skill sets will emerge and customer experiences will become the focus of the industry. Retailers need to decide whether they are ready for new customer expectations.