Summer has flown by- I’m hoping all of you enjoyed time relaxing, seeing new sights or unplugging from the crazy world of retail. Now that kids are returning to school and work is getting back to its fast pace it is time for the Q3’18 newsletter. Consistent with the prior formats I’ll share what is new in each of four key sub segments of retail as well as do a deeper dive on AI/Machine Learning technologies. Enjoy, Michelle
What’s new in Retail Tech
While many want to tell the salacious story of the “Retail Apocalypse”, the reality is the US Retail sector is doing quite well. On August 13th the National Retail Federation increased its projected Retail sales growth in 2018 to 4.5% over 2017 levels- an increase from the prior forecast growth of 3.8-4.4%. This is despite the increased threats from Tariffs on imported goods. Industry research firm IHL Group notes that this year the number of bricks and mortar stores is on the rise in a few categories- most notably mass merchandisers/superstores (up 1490 stores), convenience stores (1566) and restaurants (1823). Specialty and clothing retailers are declining store count this year- but overall the entire industry is up (3835). While the mix of retail sales continues to migrate to e-commerce paths I’m seeing a renewed effort by retailers to improve and redesign the customer experiences in store. This means investment (finally!) in store technologies- especially those that enable an omnichannel experience. For instance, SW solutions that enable new fulfillment methods like Click & Collect or Buy online and pickup in store. So as much as it is exciting to tell the story of demise you can’t count the retailers in the US as “down for the count” with a broad brush. Some brands that are attuned to the customer are alive, well and thriving!
New in Payments and FinTech
The Electronic Transactions Association (ETA) has been having a busy summer on Capitol Hill! I was able to get a policy update from CEO Jason Oxman at the Mobile Payments Conference last week on the most recent developments. The OCC is now enabling FinTech firms to get a Federal banking license. This will enable FinTech firms to now operate consistently across 50 states without having to analyze regulations and local policies. In the past, FinTech firms either had to go “state by state” or work with a national bank partner. This should increase innovation and offerings so expect to see more from strategic players in this market (example- Kabbage, CAN Capital). In addition, the ETA has been analyzing and supporting testimonials to Congress on the impact of Trade Tariffs. The original proposal was for tariffs on all POS solutions made in China that import to the US- which would be a 25% increase in price for Retailers to pay if they are in an upgrade cycle. The ETA was able to influence removing this tariff, but now they are appealing the new proposal which is a 25% tariff on the parts used for POS systems. Lastly- there have been updated statistics on the Zelle peer to peer money transfer product from Early Warning- it has now processed the same number of transactions as the incumbent- Venmo from Pay Pal. This horse race for the leader in peer to peer payments will continue to be interesting to watch!
New in Hospitality
Have you ever been disgusted by a dirty glass at a restaurant or bar? The experience is far too common- so a startup called SinkTech is working to solve this pain point with Internet of Things (IOT) tech for the standard three compartment sink used across the industry. The key to clean glasses is a three step process: soap, rinse and disinfectant dip. The challenge is the water level, temperature and cleanliness must be constantly monitored and yet many workers are too busy to stay on top of these levels consistently. In steps SinkTech! Their pumps fit into the drain plug of the sink and connect to the faucet taps. The system can now consistently monitor the level, temperature and opacity of the water 100% of the time. The platform is also cloud connected so a manager can check the status regardless of where they may be- even from summer vacation! If there is a metric out of spec the pump will dump the sink and refill it to the specified level and temperature. Bars and Restaurants will not only have happier customers but also eliminate fines for non-compliance. Truly a win-win I’m looking for an end to the lipstick of another person on my drink….
New in Event Venues
Events are always striving to have a full house for the performers. Many times tickets are freed up at the last minute and it is a challenge for the event venue to quickly monetize on these great seats. For instance, in many sports contracts players get seats to home games as a part of their benefits. However, if the seats are going to be unused they are to be returned to the team 24-48 hours in advance of the event. Broadway may have figured out how to solve this with same day ticket booths- but for many event venues this is a perennial problem. Reply Buy is a startup that is solving this problem with a digital platform. Teams sign up to use Reply Buy and consumers can gain access to the platform for free. They then select which teams they are “Fans” of and the will get a SMS text when tickets are available for purchase. The consumer can then “reply” to buy the tickets using a credit card on file. Reply buy has 100s of teams set up on the platform and adoption is spreading quickly. Full disclosure I’m a big fan of this digital distribution method and have invested in Reply Buy as an Angel round investor.