Retailers! Keep an eye out for startups – they are your new business opportunity

At Børsen Retail, the focus was on digitization and innovation – and of course, Accelerace was present to share our knowledge about the impact startups have and will continue to have on the corporate world.  All the big names within retail in Denmark were gathered in the beautiful Old Stock Exchange Tuesday when the daily newspaper Børsen held its annual Retail Conference in Copenhagen. Retail has gone through a tremendous transformation over the latter years. We are talking customer experience – online as well as offline – omnichannel, influencers, AI, and apps. We are talking about the retail apocalypse, the brick and mortar stores that are going out of business due to e-commerce, the new born-digital generations, and agile, opportunistic startups. But as Gregers Wedell-Wedellsborg, CEO of Matas, pointed out, the picture being painted of the evil Amazon threatening the livelihood of retailers is tiring. Instead, retailers must view technologies and entrepreneurship as opportunities. The retailer who is present and strikes at the right time and at the right place will always survive.

Corporate Startup Matchmaking

On stage was also Head of Scouting and Business Accelerator Martin Holmboe from Accelerace. He took a deeper dive into the world of startups together with Kalle Stenbæk, Business Development Manager in Coop, one of Accelerace’s partners. Coop has embraced working with startups and they do so in collaboration with Accelerace though Accelerace’s Corporate Startup Matchmaking model. But first:

Why is it important to talk about startups now?

Because they can change your world. Fast. And they are not going away any time soon. In the past five years, we have seen a 100 percent growth in funding rounds from 11,000 to around 22,000 rounds. In 2017, the world’s biggest startup campus opened in Paris underlining the trend that startups are not just a Silicon Valley thing anymore, and there has been a 400 percent growth in the amount of cash startups receive – from 20 billion dollars invested globally in 2012 to more than 80 billion dollars invested in 2017.

How are startups changing retail?

Martin Holmboe paints a picture of a foggy landscape to explain which technologies retail is facing. Some hide far away in the deep clouds, others are more clear, and some are right in our faces. Maybe we get the technology, but not the application of it to our sector. Sometimes we get the application, but cannot see how it can benefit retail in the future. Let’s venture into the fog. Furthest away is Virtual Reality. A technology that is widely known today but the application of it doesn’t go much further than entertainment. But it will. Walmart has acquired a Virtual Reality startup. Spatialand makes software tools that let creators transform existing content into immersive, virtual reality experiences. Walmart uses it to train employees and claims that VR has the potential to reinvent the customer experience. Together with VR, Autonomous cars still lie in the distance. The 135-year old grocery retailer Kroger has teamed up with startup Nuro to launch unmanned vehicles to tackle last-mile delivery. The vehicle can fit up to six grocery bags. But it cannot climb stairs…

Technologies in use today

Right in front of us, out of the fog, we have Visual Search, a combination of machine learning and computer vision technology. H&M, Asos, and Home Depot already use Visual Search to let customers take pictures of a piece of clothing or a tool and the app will then find it for you – or something similar to what you are looking for in case of dresses and the like. As an example, Israeli-based startup Syte.ai develops Visual Search technology for fashion brands and raised 8 million dollars from investors in 2017. Their product, Visual Search for All, is implemented on Kohl’s and Marks & Spencer’s sites. Robotics is another example of a technology with a clear application in retail. Again Kroger has embraced the technology and has invested in the startup Ocado to create automated warehouses to help drive Kroger’s online grocery operations. During the next three years, they will build 20 warehouses in the US. In the UK, where Ocado is based, 3500 robots are already getting ready to drive around in the biggest factory to date and will be handling 200.000 orders a week.

The next technologies we will see in retail

Blockchain is the talk of the town these days. Mostly within finance and cryptocurrency but soon we will see it in retail as well. Blockchain can create transparency in the value chain, something Carrefour has invested in with their blockchain-based food traceability program for chicken production. The customer can scan a code on the packaging and will then receive information from each stage of the production; from where the chicken was raised, to feeding, and processing. Last-Mile Delivery is another area which is facing changes. Here we are beginning to see online retailers investing in physical space. Hema, a Chinese grocery store in Shanghai, is originally an online retailer. In 2016, they opened their first physical store, and Alibaba wanted in. The customers can order online from an app, the staff will pick up the groceries, hang them in the overhead conveyor belt in insulated bags that are transported into the backend logistics, packed and shipped and at the customers address 30 minutes later.

What can retailers do about the technologies and the startups driving the change?

Back to the Corporate Startup Matchmaking Model. Accelerace sees a trend toward innovation created externally and through partnerships. In the 1920s, we talked about corporate R&D Labs only, then in the 1970s-1990s Corporate Venturing came into fashion, later we saw Corporate Accelerators. Today, we see Corporate Matchmaking. Corporate Matchmaking can be beneficial for both corporates and startups; startups get access to markets, traction that matter, and they grow mature faster. Corporates get access to new business opportunities, a change in mindset toward higher agility and exponential growth, and they can strengthen their brand as an innovative entity.

Coop sees the value in Corporate Startup Collaboration

Coop is one of the biggest retailers in Denmark with a turnover of 39 billion Danish kroner. To be part of the future change makers, Coop wants to work together with the people with the boldest visions for the future. They want to be inspired. And as Kalle Stenbæk pointed out, the innovation that comes from startups is priceless. Coop now collaborates with Accelerace to find startups matching the retailer’s strategy. A collaboration that has already paid off into several selected pilot projects with some of the startups that Accelerace handpicked to pitch in front of Coop.]]>