The Rise of Retail Start-Up Incubators

When it comes to improving the in-store experience, industry watchers are describing an unprecedented amount of support and investment from retailers. Both established and plucky IT suppliers are generally the go-to for solving their technology problems. More recently, however, large chain retailers are supporting the effort by launching incubators and accelerators.

John Lewis welcomes junior partnerships

When John Lewis issued an open invitation to start-ups to develop software for its business, complete with a £200,000 bursary, it stemmed from the national retailer’s belief that better approaches to interacting with clients were there for the taking, and clever, burgeoning junior businesses were the most suited to identify them. John Lewis’s IT Director cited the flexible business structures of these junior partners and how that allows for the rapid delivery of innovative ideas. In contrast, the rigid mechanisms of larger corporations prevent them from responding to modern challenges in a timely manner.

Big retail and small companies

Stateside, retail giant Target teamed up with Techstars, a leading tech accelerator, for a project that provides financing and guidance to start-ups working on retail tech. The Target + Techstars accelerator, as it is called, met with success, having received more than five hundred applications from forty-five countries. Target has already chosen ten start-ups in which it will invest $20,000 in return for a 6 per cent share in their company. The programme forms part of the continuing effort to strengthen the Target’s e-commerce capacity; there is already an office in Silicon Valley and an innovation lab focused on food technology. As the Target’s chief strategy and innovation office has noted, ‘technology will continue to revolutionize retail’.

And the benefits can work both ways. Russ Lidstone, CEO of global advertising conglomerate Havas Worldwide, pointed to retail as a platform for start-ups to experiment. By launching their tech in a small number of stores, they can find out what works for a relatively small investment, affording them the required creative freedom for trial and error.

The benefits of collaboration

In addition to crucial financial help, incubators provide guidance and mentoring to inexperienced CEOs. Many start-ups are simply new and find the process of running a junior company replete with novel problems, such as finding a customer base. The relationship with the large retailers essentially puts them into close collaboration with experienced mentors for their first steps. When incubators host different start-ups in the same office space, there can be excellent opportunities for the cross-pollination of ideas.

The benefits of this sort of collaboration are not lost on the major players. Earlier this year Publicis partnered with London-based shared-space provider The Trampery to launch the Drugstore Retail Lab, an incubator whose sole purpose is to support groundbreaking retail ideas. Other than being a hotbed for innovation in ecommerce, customer service and inventory management, its aim is to be an important meeting place for the industry’s disruptors. Publicis’s global chief strategy officer told the Retail Bulletin that they’ll be ‘working with corporations in every sector around the world who are hungry for new ideas in retail.’

Send us a message