All Access

Retail Deals

Standard

Retail Deals Alerts

Alert

Retail Deals Thought Bubble

Thought Bubble

mustard

BFD Expert Voices - Retail Deals

BFD Expert Voices

Touch-free checkout technology helps retailers better serve customers, protect stock and manage inventories, Richard writes. 

Why it matters: Retail observers expect Amazon's leading Just Walk Out touch-free checkout technology to expand its reach in 2023 as more third-party retailers embrace the solution. 

Details: Amazon's checkout technology solves retailers' labor shortage issue and creates a seamless customer interaction, says John Clear, a managing director at consulting firm Alvarez & Marsal.

The solution is most relevant for convenience stores, but as the wrinkles are ironed out, it will be scaled up to drug stores, dollar stores, and then grocery, he tells Richard.

When Clear purchased 19 items at Whole Foods' Glover Park location in Washington, D.C., four of the items were incorrectly charged on the receipt, he notes, though he did move the products around to vigorously test the system.

State of play: Grabango, based in Berkeley, California, and Israel's Trigo in Europe are two of Just Walk Out's biggest competitors.

Grabango has raised a total of about $73 million, according to PitchBook, which includes a $39 million Series B round led by Commerce Ventures in 2021.

Trigo has raised a total of $204 million, per PitchBook, including a $100 million equity financing round led by Temasek and 83North in October.

What they're saying: Education will be central to wider adoption of Just Walk Out, says Deborah Weinswig, the founder and CEO of Coresight Research.

Yet, customers can't see how much they are spending as they shop, Weinswig says, which is important to note, especially due to rising prices.

The shopper also needs someone to guide them through the process, she adds.

Driving the news: Kansas City, Missouri-based Community Groceries recently became the first non-Amazon grocer to adopt the technology, with the grand opening slated on Friday. (Some third-party convenience stores trialed it previously.)

How it works: Just Walk Out is essentially a sophisticated point-of-sale solution, says Kortney Lee, the founder of Community Groceries.

Amazon's solution frees up employees, including nutritionists, to focus on customer service, Lee says.

Just Walk Out also reduces shrinkage by eliminating theft and reducing food waste by helping improve inventory management, he adds.

Flashback: Amazon began selling Just Walk Out to outside retailers in 2020.

The earliest iteration was tested at the first Amazon Go concept in late 2016.

Amazon is now refining the technology at Glover Park Whole Foods.

The intrigue: Major Amazon competitors aren’t going to be signing up for Just Walk Out, Clear says, instead, opting to implement and even acquire competing solutions to build out their own versions, he says.

Walmart recently bought Alert Innovation to improve fulfillment, he adds.

The big picture: The real value in solutions like Just Walk Out is the ability to directly observe consumer behavior, such as when a shopper places an item in their cart but then takes it out and replaces it with another item, Clear says.

Store formats of several thousand square feet or less, such as convenience stores and airport and stadium kiosks, are most likely to benefit near-term, says Hemal Nagarsheth, a partner at consulting firm Kearney.

1 big thing: Checkout tech eases retailer burdens

Illustration of a dollar sign on a grocery store checkout conveyor belt.

Tech investments are proving their ROI in a challenging macroeconomic environment when retailers need an edge to ensure decent margins, revenue and cost savings, Kimberly writes. 

Why it's the BFD: The more retailers invest in technology, the more they’re able to widen the distance between themselves and their competitors, new data from research and advisory firm IHL Group shows.

What they’re saying: “Going into 2023 those retailers who will win will do so through better execution and improving margins of e-commerce transactions that are fulfilled through local stores. And that involves investments in technology,” says Greg Buzek, president of IHL Group.

What’s happening: Compared with their counterparts, top retail leaders are focusing their investments to a higher degree on enabling geolocation for marketing and inventory availability (by 13x their rivals), electronic shelf labels (by 12x their rivals) and updated point-of-sale software (by 7x their rivals), according to IHL.

Of note: There are three areas where retailers are likely to make investments this year, per the report:

Tech that helps reduce the margin loss from online transactions for store fulfillment.

Tools to enable retailers to operate their stores with less labor or more efficiently, such as through the use of self-checkout, scan and go and electronic shelf labels, or by providing workers with up-to-date mobile devices and with Waze-like directions for finding items in-store.

Security features that reduce theft’s impact, such as predictive and prescriptive analytics.

Zoom out: Retail tech startups have seen more than $3 billion in investment, per PitchBook, with IT-focused companies (such as Grabango and Trigo) garnering more than half of that.

Zoom in: 2022 was marred by excess inventory as consumer discretionary items fell out of favor and retailers over-ordered to mitigate supply chain disruptions, making real-time inventory data and store management tech all the more valuable.

“The combination of automated data collection with frictionless commerce is probably the next step that the market is looking for,” Anat Shakedd, CEO of Tel Aviv-based Nexite told Axios in August.

The company has raised nearly $100 million, per PitchBook.

By the numbers: During the past two years, the retail sector increased the amount of revenue it spent on technology purchases by 25% as it grappled with e-commerce’s rapid growth.

This year retailers will add another 4.3% increase to IT spend, IHL says.

The top performing retailers — defined as those that had more than 15% sales growth last year — are making IT investments at a rate 2.2x the average performing retailer.

What’s next: IHL expects retail’s tech priorities for the year to gravitate toward personalization, inventory visibility, empowering the store worker, and revamping its point-of-sale infrastructure.

2. The BFD: Money well spent

Illustration of a vintage cash register with an extra large display showing a dollar sign.

Flink, the European grocery delivery startup, projects it will reach profitability in its core German business by the end of the year.

The food delivery sector experienced a wave of consolidation last year after funding became tight and consumers began making more in-store visits.

Last month, Turkey’s Getir acquired Germany’s Gorillas, leaving Flink, as well as Philadelphia-based Gopuff and Latin America’s Jokr, as the last few stand-alone startups in the once-hot sector.

👩‍💻 Shopify told the Financial Times that its Audiences marketing tool was “a key area of focus,” aiming to fill a gap in marketing data spurred by Apple’s privacy changes.

The tool allows retailers to pool customer data and upload it to Meta and Google’s ad platforms. The company struck partnerships with the tech giants last year.

Marketers can then target ads at “lookalike” customers, per the FT.

3. Retail therapy

Illustration of Sigmund Freud holding a collection of shopping bags.

• Liberation Labs, a New York-based fermentation platform for producing alt proteins, raised $20m in seed funding. Agronomics and Siddhi Capital co-led, and were joined by CPT Capital, Thia Ventures, 8090 Industries and Echo. www.liberationlabsltd.com 

• Sheela Foam, a listed Indian mattress maker, agreed to buy rival Kurlon for around $241m, per The Economic Times. Sellers include Motilal Oswal Private Equity. https://axios.link/3QcNGuX

• Reliance Retail Ventures agreed to buy a majority stake in listed Indian chocolate maker Lotus Chocolate for nearly $9m. https://axios.link/3GhzbBM

• Butterfly agreed to buy Milk Specialties, an Eden Prairie, Minn.-based ingredient manufacturer focused on raw dairy imports, from American Securities. https://axios.link/3WTGRk0

• Pascal Raffy bought the 25% stake he didn’t already hold in Swiss luxury watchmaker Bovet from DKSH. https://axios.link/3i3ZHGG

4. Retail transactions

• Optoro CEO Tobin Moore will step down from the retail returns software maker, Axios’ Dan Primack scoops. Amena Ali, a veteran SaaS exec will succeed him. https://axios.link/3vz3Ghk 

• Zomato, an Indian food delivery company, said its co-founder and chief technology officer Gunjan Patidar has departed, following the exit of another of its co-founders, Mohit Gupta, and two senior executives last month. https://axios.link/3i7vMgJ 

5. It's Personnel

💵 Situational awareness: Axios Markets' Kate Marino notes that 2022 was quietly a big year for LBOs. 

📚What we’re reading: The tree was brimming with new books for George last week. The nightstand currently holds "Grant" and "Five-Carat Soul" with "Trust" and "The Revolutionary: Samuel Adams" on deck. Any new biz books I should put in the queue?

✅ Thanks to newsletter editor George Moriarty and copy editor Mickey Meece for today's edits. 

👀 Looking for anything new in retail deals this year? We’re always open to feedback, so please share your thoughts — or simply ask your friends, colleagues and fellow shoppers to sign up. Welcome to 2023!

January 03, 2023

1 big thing: Checkout tech eases retailer burdens