Investment gap creates innovation vacuum: RTIH presents the retail technology week in numbers
Do you like numbers? Do you like retail systems news? Then this is the article for you. Including FreedomPay, Sitoo, Drovo, Timberland, Vyking, Amazon, the BRC, and the 2023 RTIH Innovation Awards.
$143.1 billion…Last night, Amazon reported that net sales rose 11% year-on-year in the third quarter, reaching $143.1 billion.
AWS sales were up 12%, broadly as expected. Advertising saw growth of 25%. And operating profit jumped from $2.5 billion last year to $11.2 billion.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, says: “Amazon results were always going to be about the cloud.”
“Thin margins in its retail business makes cloud so much more important than it does for the other tech companies, whose broader business models are a lot less capital intensive. When AWS does well, it manages the incredible feat of propping up the majority of Amazon’s bottom line these days.
She adds: “The retail division is sparking back into life, especially in North America and the losses are within a whisker of closing in international markets.”
“There’s been a significant increase in the number of seasonal workers Amazon’s taken on in readiness for the Christmas rush, which bodes well for expectations around discretionary spending, but we could be looking at a final spending push before a substantial pull back in the new year. So, this is a risk that will need monitoring closely.”
“The wider opportunity cost dynamics playing out in the market means keeping investors excited about Amazon stock is a harder task than usual, because of spiking treasury yields.”
“The sell off seen in recent days has been partially undone, but there could be more volatility waiting in the wings. The advertising potential is also an enormous opportunity, and one that isn’t necessarily fully baked into expectations over the long-term.”
This is creating an innovation vacuum which not only threatens retail performance, but also risks long-term sector health and business survival, the RTT’s latest quarterly whitepaper argues.
It suggests omnichannel retailers should be spending between 4-8% of their revenue on technology per annum. However, currently most retailers only spend between 1.5-3%, leaving an estimated best case of a 5% investment gap based on annual turnover.
With retail sector revenues in 2022 reaching £441 billion according to Retail Economics, the RTT estimates that this could see the potential annual tech investment gap topping £22 billion.
£210 billion…UK digital wallet transactions across retail, leisure and hospitality are set to rise to £210 billion by 2033, while cash usage halves, according to research from FreedomPay and Retail Economics, supported by a UK consumer survey across 2,000 households.
The nearly £138 billion shift to digital wallets over the next decade comes as 46.3% of shoppers look for easier payments, 27.3% want integrated loyalty schemes and 26% seek buy now, pay later options in future digital wallets – while retailers look to unlock new levels of personalisation across channels, putting smartphones at the heart.
However, not all Brits are equipped for this shift, with one in five reporting that they don’t trust using smartphones and wearable devices to pay for goods and services.
A key barrier to widespread adoption is the sizeable knowledge gap, as 49% of UK shoppers say they understand how digital wallets work.
$1 million…Jellibeans, a fashion intelligence and analytics startup, has announced the launch of jelli.studio, an AI enabled end-to-end collaboration fashion design to production intelligence platform that uses trend forecasts to prototype or optimise new collections in as little as 30 seconds.
Jellibeans has also raised $1 million from Aussco, a knitwear supplier for the likes of The Kooples, Kate Spade, and Coach.
jelli.studio is pitched as being akin to a Canva for fashion design, but bolstered by a Bloomberg Terminal like data analytics and AI image generation capabilities.
6.1%…Research released by Juni, a financial platform built for digital commerce, reveals that Amazon’s ad share among UK e-commerce businesses jumped from 1.7% in Q2 2023 to 6.1% Q3 2023 - knocking TikTok from third to fourth place.
Meta remains the dominant platform, securing 60.3% of total ad share in Q3. However, Google made the biggest long-term gains, increasing its ad share by 7.4% year on year, to 26.6% in total for Q3.
Overall ad spend by online retailers has jumped 67% YoY as peak retail season approaches.
Somewhat unsurprisingly, adoption of GenAI has also soared as online retailers increase their use of AI tools. 13% of UK e-commerce businesses who use Juni are now subscribed to ChatGPT in Q3 - up from just 3% in Q3.
1…Sweden-based Sitoo has rolled out out its first major US customer, sports merchandise retailer Rally House.
Rally House has deployed the Sitoo Point of Sale solution and the underlying Unified Commerce Platform in around 200 stores across 18 states.
£3 million…Drovo, a UK-based startup specialising in transit media advertising technology, has raised £3 million of funding following a Series A investment round led by Maven Capital Partners.
It plans to use the cash to further develop the dynamic digital rooftop screens element of its offering as well as expand its human resource and hardware acquisition. And also onboard new users for its proprietary technology platform.
Drovo pairs vehicle owners with advertisers to deliver targeted and measurable out-of-home (OOH) advertising campaigns through on-vehicle digital screens and wrapping.
Its geo-targeting and programmatic capabilities allow clients to customise their message to be seen at the right place and time.
The offering is used by Deliveroo, Paco Rabanne, Uniqlo and American Express, and features 28 real-time data points including location (down to borough, street and vehicle level), outside temperature, footfall and proximity to specific landmarks or stores.
£540 million…A new report by the British Retail Consortium (BRC) has found that UK retailers and their customers raised £540 million for good causes in the last financial year.
It also shows that in 2022/23:
Retailers raised £200 million for good causes through fundraising, with an additional £150 million donated directly by the businesses themselves.
A total of 69 million meals and £76 million worth of products were donated to charities and organisations supporting those in need.
Colleagues across the industry volunteered 1.7 million hours of time supporting retail community programmes. And they also donated £20 million through payroll donation schemes. This is despite economic headwinds and a rise in the cost-of-living.
2022 saw UK retailers donate huge amounts – both cash and emergency goods - to support the Ukrainian people in the aftermath of the Russian invasion.
Many retailers also set up fundraising efforts so that customers could offer their support, often matching donations to amplify the impact. Overall, tens of millions of pounds were donated to this cause.
2…Renovotec, a UK-based provider of end-to-end automatic identification and data collection (AIDC) technology solutions and services for organisations operating throughout the supply chain, has opened two new offices, one serving the Nordic region (Gothenburg, Sweden) and the other in North America (Chicago).
Since 14th July, Ocado Retail customers have been able to claim monetary rewards for recycling any of its own brand two and four-pint milk bottles using Polytag’s QR codes, redeemable via recycling app Bower.
The trial saw more than 20,000 Ocado Retail milk bottles scanned by over 3,000 consumers using their smartphones before being deposited into home kerbside recycling.
The QR code integrated onto the milk bottles’ labelling is scanned via the aforementioned app, the bottle disposed of in a person’s registered at home recycling bin, and the reward withdrawn into their bank account. Up to £4,000 worth of rewards were obtained during the nine week long trial.
1…There is now just one week left to submit your entries for the 2023 RTIH Innovation Awards, which takes place on Wednesday, 29th November at the Barbican Arts Centre in central London.
The event, sponsored by PMC, FreedomPay, Worldpay from FIS, CADS, 3D Cloud by Marxent, Goodays, and Vista Technology Support, celebrates global tech innovation in a fast moving omnichannel world.
Spread over 19 different categories, submissions are judged on the extent of innovation and transformation demonstrated, as well as the sustainability of the results. Previous year’s winners have included B&Q, Pets at Home, Walmart, Sook, AiFi, Compass Group, Obsess, and Ribble Cycles.
Deadline for 2023 submissions is Friday, 3rd November.
The awards culminate in a fantastic ceremony, complete with a drinks reception and Christmas themed three-course meal at the Barbican Arts Centre on Wednesday 29th November.
Key dates
Friday, 3rd November: Award entry deadline
Tuesday, 7th November: 2023 shortlist revealed
7th-10th November: Judging days
Wednesday, 29th November: Winners announced at the 2023 RTIH Innovation Awards ceremony
Categories, along with entry forms, can be found here.
250…Timberland has launched over 250 products for virtual try-on powered by Vyking across its EMEA platforms.
This follows the American manufacturer and retailer of outdoor footwear and apparel, which is owned by VF Corporation, testing out the technology.
In a LinkedIn post, Thibault Marion de Procé, Co-Founder at Vyking, said: “It's always great to get new clients but what's even better is when they decide after successful tests to roll-out on a larger scale.
“This innovative approach has been helping Timberland to increase sales and engagement.”
4…Dyson, which designs and manufactures household appliances such as vacuum cleaners, air purifiers, hand dryers, heaters, hair dryers, and lights, has opened its largest store in the world.
This can be found in Berlin, Germany, and offers shoppers the chance to learn about the company’s products and try them out.
In a LinkedIn post, Matt Shapiro, Global Retail Development Director at Dyson, said: “The wait is over. Berlin we’re here! After four years in the making, Dyson’s largest store in the world is now open. It was a tremendous effort from all teams involved.”
He added: “Our Demo Stores serve as a showcase of Dyson’s latest technology where customers can learn about our machines from highly trained experts or get hands on with our innovative demo experiences.”
38% and 61%…Consumers are looking to new tools and brands to access credit and other financial services, according to a survey published by Marqeta, a card issuing platform.
The company surveyed 3,000 consumers globally – including 1,000 in the United Kingdom – highlighting that 38% of UK respondents have used buy now, pay later (BNPL) services to make ends meet during the last 12 months, increasing to 61% amongst 26-34 year olds.
10…Lush will open a new Covent Garden store on Friday, 3rd November, after ten years away from the shopping and entertainment hub in London's West End.
This will initially open as an exclusive festive pop-up store with a retail space of 255 sqm and in spring 2024 an expansion of an additional 176 sqm will follow to include the retailer’s Lush Spa offering.
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