TWR: The State Of Retail Technology H2 2022, Retail Is Doing Just Fine – Aug 15th, 2022

This Week In Retail- The State Of Retail Technology H2 2022 And Retail Is Doing Just Fine

August 17th, 2022

A Note From Our CEO On The State Of Retail Technology In H2 2022

2022 has been a monumental year as retailers and brands are building on top of their foundational retail technology investments:

Standardizing product and inventory information across stores and channels

Providing better shopper identity and purchase tracking through mobile and loyalty 

As Shopify just announced, eCommerce penetration has reverted back to the pre-covid baseline with 3 straight quarters of in-store growth outpacing eCommerce.  Investments are being refocused back where profits are generated – in-store.  Retailers are realizing the value of the store as media by launching retail media networks at meteoric speed (great slides here) and digital shelf deployments are accelerating as evidenced by Walmart’s recent announcement of electronic shelf labels.

At Perch, we are seeing expansions at nearly every major brand client.  Retailers whose supply chains are normalizing are coming back and looking to launch in-store networks for 2023 that are more engaging and valuable to shoppers than glorified digital banner ads.  Perch deployments continue to show 30-180% sales lift, including our celebrated launch with Dove and Unilever that shows 42%!  

But the industry is not all roses. Worries about inflation and recession are giving many marketers pause, even though indications are that they are receding. Is now the time to invest in in-store retail tech or should you play it safe and wait and see?  With 2023 budget planning coming quickly and 2022 promotional dollars not spent, clever marketers are doubling down by making investments to allocate 2022 budget dollars to set up 2023 execution and to make sure they don’t lose budget next year.  

With higher volumes of Perch displays and our supply chains easing, Perch prices have come down.  We are launching new capabilities to measure traffic, demographics and sentiment at the shelf, better tools for A-B testing, more data analytics and have new lower cost options for intelligent interactive digital beyond lift-and-learn.  We are also working on next gen sensing which we can’t quite talk about yet … but it’s very exciting!

If you are looking ahead to making investments in-store, feel free to reach out.  I am always happy to learn where you are focused and to help in any way.   


Trevor Sumner

Why Hasn’t In-Store Interactive Retail Scaled Yet?

I had the pleasure of moderating the most well-attended sub-group (ahem) of the Rethink Retail July Mixer, attended by some impressive colleagues in the industry – The Rethink Retail 100. Our discussion topic was a hot one – interactive retail experiences. So much promise in technology. 85% of transactions occur in store and even Shopify admits that eCommerce has returned to the pre-Covid trend line. So as investment shifts back in stores, why haven’t we seen more interactive retail at scale defined as let’s say 50% of stores of major retailers? Why not ask the experts…

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The Latest Retail Technology News

Every week we cover the top retail technology news in the industry. Brick-and-mortar retail has often been overlooked and is experiencing a technology renaissance from the ways products are sourced, managed, inventoried, merchandised, marketed, sold and delivered. New technologies are being delivered from computer vision, QR codes, RFID, loyalty programs, lift and learn sensor technologies, smart shelves and electronic shelf labels, supply chain management, in-store analytics, personalization and payments. We believe in the bright case for the future of brick-and-mortar retail, and we highlight the technology underpinning it all. And if you are looking to the future check out our annual Retail Industry And Technology Predictions from our CEO Trevor Sumner.

Congratulations to L Brands CIO Nada Aried, Vera Bradley’s VP of Stores Kelly Brown, Dollar General’s CTO Julie Elmore, 7-11’s VP of IT Strategy Siva Surkunalingam, and Meijer’s VP of Customer and Digital Technology, Kristen Williams for being named RIS News’ Top Women in Retail Tech. Impressive accomplishments from an impressive group.

AIFI now boast 80 autonomous checkout stores, powered by Verizon and Microsoft. “The biggest challenge that tech providers in our space are experiencing is scalability, or in other words, figuring out how to meet the needs of each individual retailer and their respective customer base, while successfully deploying these autonomous stores at a rate that meets the fast growing demand we’re seeing,” says João Diogo Falcão, Chief Technology Officer at AiFi. “We are the only company that can deploy an autonomous store in less than a week within a vast range of venues and store formats.”

Whole Foods is adding Amazon’s hand scanning payment technology called Amazon One to 65 of store in California. This is an expansion to its initial testing in a couple stores in Austin, Seattle and New York in April. Hand payment will be more convenient than traditional credit cards, but doesn’t have the same benefits of store wide tracking and identity as facial recognition. Will the future hold digital screens that scan your hand throughout the store to provide personalization?

Smart shopping cart startup Shopic has raised a $35m Series B led by Qualcomm Ventures. Shopic offers a clip on device that uses computer vision to understand what products are being put in the shopping cart. Their analytics platform provides real-time inventory management and customer behavioral insights including aisle heat maps, promotion monitoring and new product adoption and conversion metrics. Shopic has been deployed in Europe, Israel, and the Americas, with Walmart and Aldi among its clients.

Nike’s supply chain digitization investments continue to pay off. It has invested in a wide range of technologies, including RFID to precisely track inventory, robotic distribution centers to speed delivery, and using machine learning and artificial intelligence to predictive analytics including acquiring Celect. To tie it all together Nike is introducing a new ERP system. “As we accelerate our consumer-led digital transformation, we are developing and refining new capabilities that are transforming our operating model, quickly becoming a competitive advantage for Nike,” the company’s EVP and CFO Matt Friend said during its 2022 Q1 earnings call with investors.

A new retail concept from DeStore is coming to San Francisco based on collective ownership and governing under the blockchain called a decentralized autonomous organization or DAO. Anyone can buy into the the ownership of the store and vote on what it buys and sells. Co-founder and CEO Itsuki Daito sees the store as both locally owned community space and global brand and the goal of their manifesto is to launch 5,000 stores. But can a retail concept or chain be governed in a democracy or will it be a confused mess with changing priorities?

The CEO of Google’s drone delivery arm Wing, had a wonderful interview with TechCrunch talking about how it is approaching a range of use cases with different types of aircraft. “The existing system that we built is a really strong foundation. The existing payload capacity carries about 2.5 pounds of stuff,” Woodworth tells TechCrunch. “The range is about six miles. That works really well for most of the on-demand delivery use cases that we’re focused on. While that main operational thread has been running, we’ve had R&D portions of the company looking at what other use cases there might be and what other vehicles can we develop in this same family of aircraft to be able to poke around different parts of the delivery ecosystem.”

Kroger has expanded OneView’s headless commerce platform to over 1,000 locations to unify shopping and abstract basket creation, calculation and checkout functions from siloed, disparate store and commerce systems. “Using OneView’s platform, we continue to deliver an innovative associate experience,” said Sriram Samu, Kroger’s customer technology VP. “The solution helps us create a seamless associate experience through guided processes and simplified training, ultimately reducing our customer wait times.” 

Walmart Connect, it’s billion dollar retail media advertising network, has opened up its platform to several key partners including Intentwise, Perpetua, Quartile, and Sellozo, which help clients optimize and scale their eCommerce advertising. “API partners, in particular, are an important demand lever for Sponsored Products — especially as Walmart Connect expands self-service to other products and our solutions allow for more than one partner to influence a campaign, wrote” Diana Finster, head of agency and tech partnerships at Walmart Connect, in a recent company blog post.

Remember Pokemon GO and the crazy antics of gamers trying to collect special items? For two weeks, Pokemon GO players can visit over 800 Best Buy stores that have been turned into “PokeStops” to collect essential items, like PokeBalls and Pokemon eggs. While it seems a little silly, the notion of using scavenger hunts like Nike does with its mobile apps, to direct people in-store is actually a brilliant tactic to drive in-store traffic and engagement as part of digital marketing.

Ulta has launched a new $20m early stage venture fund called Prisma Ventures focused on Seed and Series A stage companies in “Personalized & Data Driven Technology, AR, VR & the Metaverse, Technology-Powered, Custom Beauty Products & In-Store Services and Social Commerce.”

QuickTrip has opened a store in Tulsa with Amazon’s Just Walk Out cashierless checkout technology, its first in the checkout free space.

Retail Is Doing Fine, Despite Inflation And Talks Of Recession

A colleague of mine recently tweeted that this has been his “favorite recession thus far.” Despite a technical recession, consumer spending remains strong. Just look at this string of headlines on earnings:

Home Depot posts record profit, revenue; sticks to outlook, sale rose 6.5% to $43.79 billion, which topped projections of $43.35 billion

L’Oréal Second-Quarter Results Beat Analyst Expectations, growing sales 13% YoY

P&G net sales rose 3% from a year ago, driven by organic sales growth of 9% in both its health care and fabric and home-care units.

Olaplex earnings show net sales increased 38.6% to $210.9 million and net income increase 77.8% to $87.7 million

Ralph Lauren, Capri beat revenue estimates on resilient luxury demand

But the rising tide is not lifting all boats. Retailers and categories with stronger brick-and-mortar penetration are doing better than eCommerce plays. For example, released new data that mall traffic is increasing, up 1.5% vs. 3 years ago compared to February. Luxury, which is heavily in person, is doing quite well. Companies that cater to the ultra-rich, including Ferrari and the parent companies of Dior, Louis Vuitton and Versace, are all reporting strong sales and raising their forecasts. Beauty is another in-store category doing well. In the first half of the year, makeup sales are up 20%, skincare is up 12%, fragrance is up 15% and hair care is up 28%. Ace Hardware is opening up 60 stores by end of year and 105 total new stores (and Home Depot continues to roll).

Inflation Is Slowing, But Stagflation Risks Loom

Source: Bloomberg

Inflation is slowing and some prices are dropping, easing some industry concerns. The cost of apparel fell 0.1% MoM, and major appliances dropped 2.2%, while jewelry dipped 1.2%. Adobe reported that eCommerce prices have been dropping for the first time in two years.

One of the larger economic questions is how much inflation is affecting earnings both positively and negatively and long-term how that will affect demand as savings are depleted. As you can see from the graph from Bloomberg, pricing is being used to mask slowing unit sales at many CPGs. Thinner margin retailers who are absorbing price hikes from their suppliers to shield their shoppers are paying the near-term price. Target showed a 90% reduction in quarterly earnings as it heavily discounted inventories and fall receipts on discretionary categories has been reduced by $1.5 billion!

Stories To Share At The Retail Water Cooler

Finding qualified staff is hard as we all know. How hard though? Walgreen’s is paying signing bonuses up to $75,000 to pharmacists. Whoa.

Albertson’s has opened up a store that is self-checkout only. Ironically, the press reports are that there are more staff than customers so far. Seems to defeat the point.

Need that a really nice bottle for that special occasion? Why not stop by Harrod’s which was the first retailer to sell a $95,000 bottle of Louis XIII cognac. If that sounds expensive, don’t worry. It was a 6-liter Mathusalem. What a steal.