With the introduction of online shopping, on-demand delivery, and e-commerce businesses, consumer behavior and preferences have shifted toward an era, dictated by these preferences. Personalization and individuality are in high demand, causing retailers to turn to disruptive technologies to keep their customers happy and serve them from all angles. One example of retailer’s efforts to motivate people to visit stores is called “just walk out technology”, first introduced in late 2016. The concept uses computer vision, deep learning algorithms, and sensor fusion to simplify the shopping experience: walk in, grab items, and walk out. Ultimately, developing technologies along with new customer expectations will deeply impact the retail industry, making tomorrow’s shopping a personalized, faster, and more convenient experience. Estimates put global retail sales at 23.6 trillion Euro by 2020, indicating the enormous potential of the industry.

This potential is driven by cutting-edge startups and the technologies they develop. At StartUs Insights, our unit dedicated to Innovation Scouting and Open Innovation, we run an extensive analysis on 8.000+ startups, recognizing multiple innovation areas which already are, or soon will impact the retail industry. To shed light on the major application areas and disruptive technologies, we will share most dominant fields and the startups leading them.

Augmented Reality (AR)

One of the more obvious innovation areas that are already being implemented in the retail industry is Augmented Reality. With rising challenges for brick-and-mortar stores due to the emergence of e-commerce, the evolution of traditional stores into showrooms has already begun. Retailers use this novelty to introduce new concepts of interaction with their customers, such as smart dressing rooms, beacons, or AR catalog apps, increasing customer satisfaction and rising sales.

Paris-based Augment is one example for a startup bringing together the best of both worlds. By connecting on- and offline channels through an augmented reality platform, they are able to create a seamless omnichannel retail experience, already driving engagement and sales for companies like Coca-Cola and L’Oréal.

Augmented Reality (AR)

Will this innovation area disrupt the industry?

Virtual Reality (VR)

Transferring virtual reality into very real stores massively increases opportunities for retailers. In the retail industry, VR offers two core cases of application. One is the virtual redesign of a physical store, allowing for optimization and the creation of a new experience for customers – every time they enter it. The second application area is the virtual demonstration of products. The popularity of apps used by the clothing and cosmetics industry proves its high potential along with a significantly improved shopping experience that, additionally, is very personalized.

By creating true customer journeys, Virt is bringing “reality into virtual reality”. Allowing retailers to upgrade from simple product or store photos to a virtual walk-through tour, Virt is fulfilling a wish 67% of people have, according to their research. Using a 360-degree video rover, the startup virtually maps a location before deploying it cross-platform.

Virtual Reality (VR)

Will this innovation area disrupt the industry?

Artificial Intelligence (AI)

AI makes use of data to understand customer behavior, including individual preferences consequently enabling retailers to anticipate what customers will purchase next and in some cases even customize entire web pages. That artificial intelligence has a history of achieving high accuracy rates was famously demonstrated with Target correctly predicting the pregnancy of 23-year-old in 2012 (!), even estimating her due date to within a small window. AI is a tool forward-looking retailers use to drive sales. Rumored to eventually replace shopping assistants, the technology drives chatbots and voice-activated shopping devices.

Equipping vendors with actionable insights based on shelf pictures, French startup Planorama makes use of deep learning algorithms and neural networks. Through incorporating and leveraging AI, their solution “Retail Execution” is capable of analyzing and recognizing millions of product items.

Artificial Intelligence (AI)

Will this innovation area disrupt the industry?

Mobile

A staggering 82% of customers are already consulting their smartphones before finalizing a purchase decision, suggesting that mobile will continue its monumental influence in the retail sector. As mobile purchasing is on the rise, retailers not only optimize their websites correspondingly but also add new technologies to their business models, such as AR and VR-enhanced apps or the upgrade of online and mobile payment models, allowing them to accept more payment options thus increasing convenience.

Not only increasing convenience but also building brand loyalty is the goal of SplitIt, formerly known as PayItSimple. The startup provides a unique way to make retail purchases by removing a barrier that often stops consumers to finalize a purchase. SplitIt 360° empowers consumers to pay by using their existing credit cards and divide the total cost across as many interest-free payments as they choose, without completing a credit application or qualifying for a new credit line.

Mobile

Will this innovation area disrupt the industry?

Internet of Things (IoT)

IoT allows for the gathering of data which further can be analyzed to enable more informed decisions with regard to stock control, product placement, and increasing efficiency – gaining a competitive advantage. One example of the application is Radio-frequency identification (RFID) sensor technology which tracks items through the supply chain and keeps an eye on in-store inventory in real-time. Another example are iBeacons, used to send consumers notifications on their smartphones when passing by a store in a pursuit to increase sales.

Israeli WiseShelf deals with one of the main challenges retail faces: product availability on shelves. To tackle this challenge, the startup has developed a solution that is designed to improve stock status visibility via an appliance that is mounted on top of any standard retail shelf. Equipped with dozens of light sensors that detect the light level above them allow for a visual presentation of shelf planogram and can highlight products that need attention or special promotions.

Internet of Things (IoT)

Will this innovation area disrupt the industry?

Big Data

Despite various data sources available, analyzing and making sense of them is key for retailers looking to improve their efforts. When done right, the possibilities of big data range from forecasting product demand, optimizing the price range (markup and markdown optimization) to identifying target audiences.

Berlin-based startup MiNODES promises exactly this: to understand and retain customers. Founded in 2013, the company provides consumer insights through a big data Software-as-a-Service (SaaS) solution by integrating a comprehensive set of technologies and tools, including state-of-the-art Wifi, beacon, and camera technology.

Big Data

Will this innovation area disrupt the industry?

The retail industry is in the midst of an evolution that challenges brick-and-mortar stores as well as online sellers. Emerging technologies shape the way people shop tomorrow and we can undoubtedly state that those who put these technologies best to work, innovate, and make use of analytics will experience great benefits from this transition. Disruptive startups like the ones we mentioned are the frontrunners of the implementation of these technologies, showcasing the potential it holds for larger enterprises. While the outlined innovation areas are expected to strongly impact the industry in the near future, there are other points of collaboration between entrepreneurial and organizational teams, such as 3D Printing & Imaging, in-store customization, biometrics, gamification, and face recognition. By integrating novelties into their existing business models, corporations gain a strong competitive edge, that ultimately will result in them emerging as industry leaders. StartUs Insights assists this process by providing actionable innovation intelligence on startup driven innovation.


StartUs Insights provides actionable intelligence on startup driven innovation.
Care to get more insights? We'd love to talk!

Author Andra Cataniciu|Design Luca Nagy|Executive Editor Susi Wallner|Copy Editor David Prasser, Iryna Bursuk|Web Development Reza Rastgoo