What the startup scene tells us about retail

The industry’s most promising young tech companies weigh in on the future of retail

Startups are known for turning industries on their head. The problem-solving nature of their very existence makes them a fascinating reflection of where an industry is — and where it’s headed. As the retail industry continues to undergo a transformation and traditional bricks-and-mortar stores reinvent to meet the needs of a digitally demanding customer, a look at the startups in retail tells us a lot about the industry’s future.

Each year as part of its Digital Commerce Startup of the Year competition, NRF looks for companies poised to significantly improve or radically alter how retailing is done. These are the folks helping retailers transform the industry, and though our competition finalists all have different perspectives, one thing is clear — effectively competing with the likes of Amazon and Walmart is top of mind for all retailers, big and small.

For more insights on the challenges and opportunities in the industry, we chatted with Startup of the Year finalists Rob Gonzalez, co-founder of Salsify; Christopher Day, co-founder and CEO of DemandJump; and John Squire, CEO and co-founder of DynamicAction. We’ll be announcing our Digital Commerce Startup of the Year September 27 at Shop.org in Los Angeles.

How do you describe what your company is all about to people outside the retail industry?

Rob Gonzalez, co-founder of Salsify

Rob Gonzalez, co-founder of Salsify:

When was the last time you saw a TV commercial? Traditional brand advertising is dying. The primary way that consumers find brands and build loyalty to them is online. When you shop, you search on Amazon or Google or Walmart, open like 50 tabs, read product specs and reviews and pick a product. Then you re-order the ones you like.

The future of brand marketing is digital-first. Salsify helps thousands of iconic brands like Coca-Cola, LEGO, Levi’s, Hallmark, Bosch, Johnson & Johnson and 3M manage and optimize their product experience everywhere consumers search for and purchase their products online.

Christopher Day, co-founder and CEO of DemandJump:

DemandJump’s mission is to help brands deliver more qualified traffic than their competitors. Today’s marketers wake up every day with one of the toughest jobs in business. They are accountable for revenue, yet they are not equipped with the right tools and solutions to help them achieve optimal results.

DemandJump set out to fix that. Our Traffic Cloud technology maps out a brand’s competitive digital ecosystem, and shows marketers where and when to invest to drive the most qualified traffic and revenue. By overlaying your data with competitive insights, we deliver truly prescriptive analytics and prescriptive attribution across digital channels.

John Squire, CEO and co-founder of DynamicAction:

When speaking with friends and colleagues outside the industry, you merely need to ask if they have shopped on Amazon, and why. That gives you a basis for their expectations as a consumer, and a starting point for explaining how incredibly complex it is for other retailers — with hundreds of physical stores, who sell online and on mobile — to earn a customer’s business, to do so repeatedly and, most importantly, to do so profitably. We help retailers do just that — connect their entire organization (their data, their technology stack and their decision making) — in order to understand, decide and act at the speed of Amazon.

Our advanced analytics system amplifies the efforts and actions of their greatest experts to make their best people better, their smartest decisions faster, their customer understanding more powerful and their business more profitable.

From your perspective, what’s the most interesting challenge facing the retail industry as a whole?

Gonzalez:

Consumers are now in complete charge of when, where and how they shop, and increasingly, they’re not starting their journey with an ad. They’re starting it in a search bar. That means that retailers need to stop talking at consumers and instead engage with them. That takes a deep, individualized understanding of the customer and the right content to personalize the entire journey, from discovery to purchase.

If you want a consumer to enter a store, retailers will need to give them a good reason — something they can’t get digitally: Touching and feeling the product, advice with humanity, a sense of community and connection. Price and convenience are table stakes. The winning opportunity, and challenge, is experience.

Christopher Day, co-founder and CEO of DemandJump

Day:

Retail is facing an intense era of challenges. The vast number of marketing channels continues to expand, the marketing technology landscape is inundated with silo-based tools, there’s so much data yet no good way to make sense of it and the competitive matrix continues to splinter and grow.

The single greatest challenge is knowing where to focus your time, investments and resources to drive the best return. How do we determine what really matters and what is merely noise? Meanwhile, internet behemoths like Amazon are learning about your business at your expense. Once they learn the industry, they start competing head-to-head. And massive ad networks show you data the way they want you to see it so they can sell more ads.

Squire:

The pace of change for retail is beyond what anyone expected who entered the industry five years ago, and it will only get faster in the next five years. The simultaneous digitization and globalization of retail and consumers has created a monumental challenge for the people who manage these businesses.

Retailers are challenged with the shifting economics of omnichannel, the complexities of consumer behavior, increased operating costs, declining store performance and the Amazon effect, and they are facing this challenge with siloed systems and data sources. It takes a customer-centric executive team focused on profit to transform at the rate at which the industry is shifting.

What do you find most fascinating about how retail is transforming?

Gonzalez:

Honestly, the “me-too” behavior of retailers. Everyone seems super-focused on what Amazon (and, to a lesser extent) Walmart does, and just plays catch-up. I don’t understand that strategy; you can’t out-Amazon Amazon. You can’t out-Walmart Walmart.

The only real way forward is to forge your own path and offer an experience that is unique and great and not available from those big players. So what I find fascinating is how few retailers — especially the big ones — are even trying to innovate in this way.

Day:

Artificial intelligence is here, and it’s here to stay. But it is hard for companies to decipher who is truly delivering these capabilities versus who is not. Also, there is still a significant portion of companies that aren’t willing to embrace AI. A clear sign of this are teams that don’t embrace ROI-focused solutions, strategies that challenge the status quo, companies that continue to blindly trust black-box agencies, the list goes on.

Successful companies of the future are ones that have marketing leaders maniacally focused on total data independence and using that data to inform strategy.

John Squire, CEO and co-founder of DynamicAction

Squire:

There are certainly people who envision a world where retail is 100 percent automated and self-driving (Amazon is ever headed in this direction). What I believe in is the ability for data action and understanding to amplify the intelligence of the individual people and the collective knowledge of an organization.

My vision is to deliver semi-automated commerce, where we automate the tedious tasks and proven decisions, but humans remain an integral part of continually honing how to inspire the desire of consumers to shop their brand or retail offering. Native to DynamicAction is complete transparency through the advanced retail analytics and a growing universe of algorithmically driven insights, alerts and actions.

We fundamentally believe people want to confirm their hypotheses, receive feedback on their actions and have a framework for easily multiplying their successful strategies in the days, weeks, quarters and years ahead.

What do you think the retail industry will look like in 10 years?

Gonzalez:

There will be far fewer big-box, lowest common denominator-type stores that try to be all things to all people. The top few — Amazon, Walmart, Home Depot, a few others — will consolidate their leadership positions, and many more stores will go bankrupt.

On the flip side, there will be many more specialized, more niche retailers that see huge success. Primark, lululemon, Uniqlo, Huckberry, Bonobos, Everlane and Hot Topic all represent great — and very different! — strategies to thrive in an Amazon-led world. This is going to be awesome for the consumer. On the one hand, you’ll have your go-to store for purchasing commodities — probably Amazon — and then you’ll have a whole array of specialty stores that make awesome stuff that you, specifically, love.

There is huge opportunity in retail to innovate, and we’re only seeing the beginning of it.

Day:

Brands will be relevant to a niche within someone’s lifestyle and they will be community contributors. Companies will deliver to consumers what they want, when they want it and how they want it. We will see a serious reduction in noise and waste, while relevant, useful customer experiences will become the norm rather than the exception. Interestingly enough, those brands who master digital now will end up owning bricks-and-mortar in 10 years as channels, technology and online and offline worlds collide.

Squire:

From the sharing economy to the increased capabilities of artificial intelligence, the future of retail is already in its early stages of evolution. As I look forward to 2027, I see the lines blurred between brand, influencer and shopper and between consumers sharing, renting, recycling or owning products.

There will need to be a drastic change in distribution (be that drones or otherwise) and supply chain that allows for shoppers in all areas of the country to experience localized or same-day receipt of purchases. Consumers will be able to utilize natural language search and conversational user interface in nearly every area of life. They will think of something they want to purchase, express that however they choose (with their voice, by typing) and retailers will be able to answer that need exactly as the consumer envisioned.

And there will be stores. Yes, I said it … physical stores. But these stores will be highly curated experiences [and] incorporate augmented reality, where retailers understand their customers innately and optimize their product assortment to the most profitable level through artificial intelligence.


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