The Great Retail Tech Land Grab
How brick-and-mortar stores use acquisitions to stay ahead in the digital age.
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In the not-so-distant future, the retail landscape has undergone a significant shift. Amazon’s once-unbeatable grip on ecommerce has loosened, giving way to a new breed of challengers: tech-savvy retailers.
These forward-thinking companies are no longer satisfied with merely selling products; they are leveraging cutting-edge technology to create immersive and personalised shopping experiences, redefining the customer journey.
The driving force behind this retail renaissance is a wave of strategic acquisitions. Realising that building tech solutions from scratch is time and cost-intensive, retailers are turning to established tech companies with proven track records. The goal is to gain access to the latest innovations in artificial intelligence, data analytics, virtual reality, and more.
An illustrative example is Walmart’s acquisition of Shopify. The ecommerce giant, renowned for its low prices and efficient supply chain, viewed Shopify’s user-friendly platform and vast network of independent sellers as an ideal way to expand its online reach and compete with Amazon on its turf.
Meanwhile, Target has focused on enhancing the personalised shopping experience. The company’s acquisition of AI startup Style.me enables it to recommend products to customers based on their preferences and past purchases. Envision walking into a Target store and being welcomed by a virtual stylist, curating a selection of perfect clothes tailored to your taste and budget.
However, it’s not just traditional retailers partaking in this transformation—even upstart brands like Casper and Away leverage acquisitions to fuel their growth. The mattress company Casper acquired the sleep-tracking app Oura, while luggage maker Away purchased the travel planning platform Lola. These moves underscore that even smaller brands recognise the importance of employing technology to create a seamless and differentiated customer experience.
Making strategic Investments
The pervasive influence of software is reshaping consumer-facing industries, with the direct-to-consumer (D2C) model increasingly driving revenue online. This transformation is exemplified by industry giants like Nike, engaging over 500 million users through its apps, and Starbucks, the second-most-popular mobile payment platform in the US. To remain competitive, consumer-facing organisations must make strategic digital investments. While ecommerce revolutionised the sector, the next wave of change is imminent, demanding software-powered experiences akin to tech leaders. Companies embracing tech outperform peers, with a mature tech model yielding 2.2 times greater returns.
Generative AI, anticipated to impact the sector with a $400-660 billion annual productivity boost, poses high stakes. Six critical principles for consumer and retail firms to thrive in this tech-driven landscape include fostering a software-centric culture, driving product management consumer expertise, upgrading platform architecture, engaging with the tech and manufacturing ecosystems, implementing creative go-to-market strategies, and cultivating a deep tech talent bench and modern tech operating model. By adhering to these principles, consumer and retail companies can pioneer innovation and elevate customer experiences.
Of course, challenges accompany these tech-fueled acquisitions. Integrating disparate systems and cultures can be challenging, and there’s always the risk that acquired technology won’t meet expectations. However, for retailers willing to leap, the potential rewards are immense. Technology is the key to unlocking customer loyalty and driving sustainable growth in an age where consumers have more choices.
Here is a list of the top recent tech acquisitions by retail giants:
- Walmart purchases Aspectiva: AI solution that analyses product reviews for personalised recommendations.
- Nordstrom buys BevyUp and MessageYes: Customer service messaging platforms connecting in-store employees with app users.
- Ulta Beauty acquires QM Scientific and GlamST: AI and AR startups for enhanced digital experiences.
- Target buys Shipt (again): Strengthens last-mile delivery and store fulfilment capabilities.
- Sephora acquires a sentiment-reading AI: Tailor’s beauty routines based on unspoken customer desires.
- Home Depot swallows a robotics firm: Automates inventory management and customer assistance.
- Macy’s snaps up an AR startup: Transforms fitting rooms into virtual runways for enhanced clothing try-on experiences.
- Costco partners with an open-source data platform: Collaboratively optimises inventory and pricing across local stores.
The Great Retail Tech Land Grab is just beginning. As the lines between physical and digital shopping continue to blur, we can expect to see even more innovative acquisitions in the years to come. The retailers who succeed in harnessing the power of technology will be the ones who shape the future of shopping.
