Israeli start-ups keeping stores relevant in the Age of Amazon

While Amazon's expansion may give cause for concern, traditional street shopping is certainly not going anywhere soon.

By
June 4, 2019 01:43
Trigo Vision's pilot store at the company's Tel Aviv headquarters

Trigo Vision's pilot store at the company's Tel Aviv headquarters. (photo credit: PR)

 
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The long-awaited entrance of e-commerce giant Amazon into the Israeli market, welcomed by many eager consumers, is worrying some brick-and-mortar store owners.

The online empire, founded by Jeff Bezos in his Bellevue, Washington, garage in 1994, seized almost half of all online retail sales last year in the United States, and is now increasing its high street presence through its Click and Mortar pop-up shops and Amazon Go convenience stores.

While Amazon’s expansion may give cause for concern, traditional street shopping is not going anywhere soon. According to a report by consulting firm McKinsey, more than 80% of US retail sales in 2020 will still occur within the four walls of a store.

Forecasts show that shoppers are still interested in the traditional customer experience. The retail industry, not best-known for its technology but recognizing the need to adapt, is paying growing attention to innovation.

On Monday, 400 retail industry leaders, investors and entrepreneurs from Israel and around the world attended the first Retail Innovation Club conference in Netanya, seeking to leverage Israeli innovation to empower the retail industry.

The organization, established by Big, Fox and other leading retailers, aims to bridge the technological gap between retailers and the hi-tech industry.

“We believe that brick and mortar is not going anywhere, rather the question we are asking is what is the new customer experience,” Yasmin Elad, head of business development at the Retail Innovation Club, told The Jerusalem Post.

“We have an amazing asset here in Israel. We have great start-ups that are developing solutions that are no less revolutionary than Amazon’s solutions.”

Start-ups showcasing their innovation at their conference offered solutions in fields including logistics, in-store management, analytics and online shopping.

“We sit with the retailers and brands and try to understand what their needs are, and then look for relevant solutions,” said Elad. “We want to make it easier for them, and advise them if something is just a buzzword or a technology that they should really focus on.”

Stefan Laban, global head of Urban Outfitters parent company URBN International, told the Post that his company’s stores and e-commerce work hand-in-hand.

“Our website is good, but our stores are very inspiring – it’s often a combination of going to the stores and later shopping online,” said Laban.

“What has changed is that 10 to 15 years ago, we would come to Israel and say we need 25 to 30 stores. Today, we probably need nine or 10, combined with the digital component,” he said.

“With all this talk about retail being dead, I believe boring retail is not going anywhere. If your stores are inspiring, however, then you still have a long future.”

While impossible to compete with the hundreds of millions of items on sale through Amazon, Laban believes that there is a significant difference between “buying” and “shopping.”

“Buying is for all the convenience stuff, like books or toys, that will all go online. Shopping is with your friends. It is social, connected and instant gratification. You want this shirt. You can try it on and take it home. That will never go away.”


Among the many start-ups showcasing their innovation was Tel Aviv-based autonomous retail store developer Trigo Vision, founded by brothers Michael and Daniel Gabay.

The company installs a discreet camera network in existing stores which identifies customers via their smartphone and uses advanced algorithms to track their product selection, enabling automated billing and no need to stand in line at the checkout.

The company is currently carrying out pilot projects with a range of Israeli and international retailers, including Shufersal, the country’s largest supermarket chain.

“Especially in the grocery market, people buy food in an intuitive way, where they like to see and smell the food. This is an experience that e-commerce can never really provide,” Michael told the Post.

“When it comes to buying food, the physical world is still relevant and it’s not going to disappear. We do know, however, that people avoid entering stores when they see the checkout line, especially during peak hours.”

The company, which has raised $7 million in funding to date, expects to launch its first autonomous stores in Israel and abroad in 2020.

“We know that when people have a frictionless experience, they want to buy more and spend more time inside the store. The big pain that we’re going to solve for customers will also lead to higher revenues for stores.”

Although many cite Amazon’s increasing dominance as an ominous sign for street retailers, Binyamina-based Intraposition CEO Yaron Shavit highlighted the e-commerce giant’s acquisition of high-end grocery chain Whole Foods last year for almost $14 billion as proof of the future of brick-and-mortar stores.

“People understand that the stores or the customer experience in physical stores should change, and should move forward into the 21st century and digital age,” Shavit said. “A decade ago, GPS digitized the outdoors, and we are trying to bring this revolution indoors and into the physical stores.”

Using ultra-wideband (UWB) radio technology, retailers are able to provide customers with accurate location-based services, enabling in-store navigation and personalized offers. The service can also be used for online order-picking by store employees and maintenance of product location databases.

“For the retailer, we offer the means to increase the average basket size. For the shopper, if you are well-informed when it matters most, when the product is in arm’s reach, then there is zero hassle for you,” said Shavit.

Shavit, the holder of an MA degree in Physics, developed the idea when previously managing an Israeli product tracking cows in dairy farms. During that time, he understood that UWB would represent the future of high-accuracy positioning.

“I came back from an experiment in a farm where we were locating cows to an impressive level of accuracy. On the way home, I stopped to go shopping, and I couldn’t find two or three products,” he said.

“I said, how can it be this very morning I was locating cows in a farm and now I can’t find diapers for my baby girl? That was the moment that the seed for Intraposition was planted.”

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