The Line Between Tech and Retail Blurs Even More

Retailers become tech investors to keep ahead of the curve

Author: Andria Cheng

March 21, 2017

The line between retail and technology, already blurred by big data, the IoT, and digital shopping and buying habits, is growing fainter still as retailers become increasingly active investors in the tech market.

On Monday, Walmart said that it’s launching a tech incubator to invest in robotics, augmented and virtual reality, machine learning, artificial intelligence and other emerging technologies.

Walmart has invested in or bought other startups in the past, but the company said the latest initiative is about “making big bets on the ideas that will transform the future of retail.”

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The innovation hub is called Store No. 8, after an early experimental store Walmart founder Sam Walton used for new ideas.

“We are creating an ecom incubator and budgeting capital to build startups,” Marc Lore, president and CEO of Walmart.com and founder of Walmart-acquired Jet.com, said at the Shoptalk conference in Las Vegas. “It’ll be wholly owned by Walmart but made of independent companies.”

Lore promised that those startups will be empowered to make their own decisions, just as Jet.com was after its $3 billion sale to Walmart in September.

Walmart is far from the only retailer making bets on startups.

Discount rival Target last summer embedded 10 tech startups at its Minneapolis headquarters as part of its Target+Techstars accelerator program.

“More and more there’s a blurring of line” between retail and technology, Target CEO Brian Cornell said in an interview. “Technology is so important to what we do…. It comes back to the way consumers interact with our brands. Sometimes it’s physical. Sometimes it’s digital. We’ve got to make sure we are there at the intersection.”

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Cornell contrasted Target’s approach to Walmart’s “big bets” stance: Target wants to “make sure there’s an application” for its business with its investment, such as that of tech startup, Inspectorio, which guides supply chain inspectors using mobile platforms. Cornell told eMarketer Inspectorio has helped to give Target “greater confidence in the products we are buying.”

Cornell said the company isn’t hesitant about pulling the plug on something that may not work right away. Target this year killed its “store of the future” plan in Silicon Valley before it even opened.

“Innovation is key,” Cornell said at another Shoptalk presentation. “Our focus on innovation has to be something we can realize in the next three or four years. I want to make sure our investment dollars work.”

Like retailers, food and other CPG companies including Coca-Cola, General Mills and Unilever also have their own tech VC fund equivalents.

The hunger to find that one startup idea that marries retail and tech is also evident at the Shoptalk conference, which brings 5,500 attendees from major retail and CPG companies to large tech and startups eager to make their VC pitches.

And the investors don’t have to be the larger and more well-resourced companies or funds.

Fashion label Rebecca Minkoff, known for such tech initiatives including its connected “smart dressing room,” this year introduced a fashion tech venture fund in partnership with VC firm Quotidian Ventures.

“Tech is a key part of what we do,” CEO Uri Minkoff said in an interview, adding the chosen startups will be given the option to work one floor below the designer’s office at a Quotidian space. “We saw a lot of value in them being able to come work with us. A lot of companies have reached out to us.”