RetailTech
Report
2022
How technology can help tackle current challenges and upcoming trends in the Retail and Consumer Goods space
See all trends
Let's start with the good news
At first glance the retail market is bouncing back from the start of the COVID-19 crisis in 2020. Overall global retail sales have recovered, eCommerce growth has stabilized, and customers are returning to in-store shopping in key categories.
Still, There are many challenges ahead
Behind these outward facing successes there are big challenges still weighing on retailers:
Challenge #1
Continuing supply chain disruption is slow to repair and recover from
Challenge #2
A higher portion of shopping is now online, and new health, safety, and security standards are costly
Challenge #3
A shortage of retail workers may be increasing operational costs. All of these challenges can squeeze retail and manufacturing margins
Challenge #1
Continuing supply chain disruption is slow to repair and recover from
Challenge #2
A higher portion of shopping is now online, and new health, safety, and security standards are costly
Challenge #3
A shortage of retail workers may be increasing operational costs. All of these challenges can squeeze retail and manufacturing margins
Beyond addressing immediate challenges, retailers must also consider the implications of forward-looking technologies. As 5G capabilities roll out globally, and the time of content and data transmission becomes instantaneous, more complex digital experiences will become feasible and mainstream.
Some of these experiences may include augmented and virtual reality, and when the technologies are more mature, interactions through the metaverse may transform the online and offline shopping experience even further.
Luckily,
we have technology
In this report we will propose technological solutions fitting four main trends that address both current challenges and upcoming possibilities: Digital Acceleration, Supply Chain Resilience, Return to Physical Stores, and Cost Realignment. Three of these trends were first explored in Deloitte's annual Retail Industry Outlook.
The technology solutions we explore are drawn from the rich ecosystem of Israeli technology startups working in the retail space.
The technology solutions we explore are drawn from the rich ecosystem of Israeli technology startups working in the retail space.
The Israeli RetailTech Ecosystem
The RetailTech ecosystem in Israel has been attracting increasing global and local attention in the last five years, with 2021 representing another peak. Alongside “classic” ecosystem stakeholders, such as VCs, accelerators, innovation hubs, the RetailTech ecosystem has enjoyed greater attention in 2021 from two relatively new groups – corporate VCs and multinational corporates (retailers, manufacturers and tech companies). Many in these two groups have established or increased their local presence.
Investment
$2.4B
Investment Israeli RetailTech during 2021
(180% more than in 2020)
(180% more than in 2020)
46%
of investment rounds were early stage, Pre-seed through A
(Significant rebound from 39% in 2020)
(Significant rebound from 39% in 2020)
Percent of investment rounds participated in by Investor country, diversity has increased
(Source: Deloitte Analysis of 219 Investment events for >150 tech companies operating in RetailTech)
Main Investment Focus
Store Operations Technologies
Shelf maintenance, store-associates management and cashierless payment represent 29% of investments
Data
Data analysis and collection represent 16% of investments
IPO and M&A
In 2021, the number of acquisitions slightly decreased, while the number of IPOs has significantly increased.
As a result, alongside the public companies we see a growing number of large private startups, usually referred to as Growth Companies. The presence of large Growth Companies, and M&As between these tech companies illustrate that entrepreneurs and leaders have a belief in their ability to thrive in the market and to compete with incumbents.
As a result, alongside the public companies we see a growing number of large private startups, usually referred to as Growth Companies. The presence of large Growth Companies, and M&As between these tech companies illustrate that entrepreneurs and leaders have a belief in their ability to thrive in the market and to compete with incumbents.
IPO
M&A
(Non-Exhaustive List)
Most acquisitions were made by larger RetailTech firms or broader technology companies, while a few major acquisitions were by large international retailers
Most acquisitions were made by larger RetailTech firms or broader technology companies, while a few major acquisitions were by large international retailers
The Startups in This Report
This report is based on research that included conversations with over 100 RetailTech startups.
Fun fact: The most common words these companies used to describe themselves were "Platform," "Retailers," "Digital," and "Data".
Fun fact: The most common words these companies used to describe themselves were "Platform," "Retailers," "Digital," and "Data".
Trends
Digital Acceleration
In order for an interaction to lead to loyalty and drive future business, the consumers’ positive and rich memory of their digital experience matters. Retailers can achieve this by providing customers with convenience and connection.
Convenience means presenting the right product at the right time with smart recommendation engines and discovery platforms, creating confidence in purchases with AR, VR & 3D visualization and trusted security measures.
Connection means making both professional support and peer insights accessible with virtual assistants, chatbot, UGC engines and more.
READ MOREConvenience means presenting the right product at the right time with smart recommendation engines and discovery platforms, creating confidence in purchases with AR, VR & 3D visualization and trusted security measures.
Connection means making both professional support and peer insights accessible with virtual assistants, chatbot, UGC engines and more.
Supply Chain Resilience
The amplitude of Supply Chain turbulence has changed dramatically. Retailers were not pre-wired for such extreme changes in supply and demand.
Supply Chain Resilience can be created through a combination of prediction tools that alert the organization when there is disruption and of digitally-enabled business models that allow elasticity to react.
Sensing trends from within the business, broader consumer trends and market events must be met with the ability to act using more agile fulfillment fleets and production capabilities that are closer to home.
READ MORESupply Chain Resilience can be created through a combination of prediction tools that alert the organization when there is disruption and of digitally-enabled business models that allow elasticity to react.
Sensing trends from within the business, broader consumer trends and market events must be met with the ability to act using more agile fulfillment fleets and production capabilities that are closer to home.
Return to Physical Stores
The physical store will not disappear, but its role will change. In some cases experiential retail including in-store digital tools will be the right move.
In other cases, a contactless in-store experience with self checkout will give shoppers convenience while collecting more in-store shopping and behavior data. Finally, store operations can become highly quantified and automated with advanced store, employee, and inventory management systems.
READ MOREIn other cases, a contactless in-store experience with self checkout will give shoppers convenience while collecting more in-store shopping and behavior data. Finally, store operations can become highly quantified and automated with advanced store, employee, and inventory management systems.
Cost Realignment
From 2013-2019 the average US retailers EBIT margins dropped from 7.3% to 4.4%. Supply chain issues and the shift to online since 2020 are not likely to have helped. To combat this issue retailers and manufactures are looking to add new business models and revenues streams, cut out middle men, and increase efficiencies.
Technology can help manufacturers open their own direct to consumer or resale channels. Data-led personalization and targeting tools can make marketing much most cost-efficient, while competitive analysis engines can make sure that pricing is optimized.
READ MORETechnology can help manufacturers open their own direct to consumer or resale channels. Data-led personalization and targeting tools can make marketing much most cost-efficient, while competitive analysis engines can make sure that pricing is optimized.
Let's set an intro meeting
Rani Argov
Partner, Co-leader & Head of Strategy
Deloitte Digital
rargov@deloitte.co.il
Deloitte Digital
rargov@deloitte.co.il
Kayla Adams
Manager, Customer Strategy
Deloitte Digital
kayladams@deloitte.co.il
Deloitte Digital
kayladams@deloitte.co.il
Amit Harel
Partner, Services to MNCs, Co-Leader
Deloitte Catalyst
aharel@deloitte.co.il
Deloitte Catalyst
aharel@deloitte.co.il
Michael Marx
VP Innovation Israel
UST
michael.marx@ust.com
UST
michael.marx@ust.com
