Retail Accelerator XRC Labs: Startups and Industry Shifts

By Kelsey Alpaio |  April 12, 2017

The latest cohort of startups graduating from the XRC Labs accelerator represented the forefront of innovation in retail — from on-demand activewear manufacturing to indoor mapping services to artificially-intelligent visual search.

XRC Labs is a NYC-based accelerator program dedicated to helping retail and consumer goods companies build and launch products — and ideally forge relationships with established players. Companies in the accelerator are provided with workspace at Parsons School of Design, and are given access to capital, mentoring, and operational support.In kicking off the demo day for the program’s third crop of companies, XRC Managing Director Pano Anthos discussed some of the trends he is seeing in the retail space, and what retailers must do to stay relevant. Four of the trends he discussed are recapped below, along with short descriptions of each of the presenting startups.

1. Retailers Need a Cultural Upgrade

“‘The streams have crossed,’ to use the old Ghostbusters phrase. Online traffic actually exceeded foot traffic in stores on Thanksgiving for the first time in history. That’s a pretty big statement, and it’s a pretty big dramatic shift going on. And what’s that led to… is that store closures are rampant. Why go into a store? What is a store? Do we redefine what a store is? And so we come back to the number one issue today is the pace of innovation in retail and consumer goods…In fact, we kind of frame everything we do, even with our startups, in respect to culture. And we look at it really as a comparison between technology and the way retail and consumer goods act today…”

Technology companies have cultures that support:

  • Fail fast and often
  • MVP
  • Build to learn
  • You know better
  • Beg for forgiveness
  • Open network

Retailers have cultures that support:

  • Never fail
  • Perfection is never enough
  • Built to last
  • We know better
  • Beg for permission
  • Closed, exclusive arrangements

“Retailers still think they know better. And no offense to merchandisers… but the reality is, you don’t. And the consumer is voting constantly with their feet, and with their wallet, and with their phones, in other directions. And until we start understanding that they know better, not we, this will never get fixed. We’re really promoting inside XRC not just the technology, but culture change to listen to the startups…Understand that your way of doing things may not be the correct way any longer.”

2. Stores as Experiences, Platforms & Plants

Experience: “Time is the most important commodity today. It’s more important than money…Are you meeting me halfway, or are you insisting on me doing all the heavy lifting to get to your product and service? We see a lot of work being done around [bringing] stores to customers — moving your brand and product into the streets, onto the sidewalks… We also think that the store as experience is full of friction. Way too complicated, way too difficult. Everything is about eliminating friction. And so you don’t want that friction in your store experience…How are you helping me get done faster and through this door?”

Platforms & Services: “You’ve got to move to the model of the store as platform. The largest store in the world… It’s the app store. Bigger than Amazon in number of downloads and transactions. And we ask ‘Are you a platform? Are your ratings and reviews in your stores?’ Probably not. And then are you a service or rental model? We’re seeing a lot around this whole notion of store as service. What does that mean? What does that turn into? How are you bringing that capability to the customer?”

Plant: “We believe very strongly in the whole 3D knitting, 3D printing… 3D wearables… It’s going to be challenging, there’s no question, but it’s coming…Adidas and other players are putting these machines in stores. It’s awkward. It takes a crane to put the machine into the store. It’s not trivial, but it’s powerful, and it’s starting to evoke the next generation.”

3. Listen to Your Consumers

“Walt Disney lived in Disney World for 1/3 of his life. And he would walk around at 8 in the morning asking people ‘What did you think of that? How’d you feel about this?’ And his staff was freaking out because they had no control over him. He was listening. Ask yourselves the question, ‘Are your executives doing that with your customers and consumers constantly?’

4. Design Comes First

“Design is first, consumers are first. Not your idea of what design is, but the consumer’s idea of what appropriate designs are. We believe in this notion that supply chains are going to have to change radically to be successful. And we believe that the analytics need to inform everything we’re doing.”

XRC Labs’ Third Cohort of Startups

The following descriptions synthesize information provide by the startups on XRC’s website and during their demo day presentations.

Andrew Chapin, CEO of Benja.

Benja Benja is a multi-channel merchandise ad platform that provides deals from top-tier brands via mobile, web, and social. For example, The Benjamin mobile app provides personalized deals and gives the user 60 seconds to decide whether to buy or pass on the product. On average, the platform has turned an $8 brand investment into $240 in sales revenue, and brands like Nike, Under Armour, Zappos, and Sperry are already using the advertising technology.

CheckOut CheckOut is bringing old-fashioned shopping into the digital age. With in-store display screens, retailers can use CheckOut’s machine learning to change their display based on the time of day, the weather conditions, the top-selling items online, or the customer’s in-store behavior.

ChatQuery ChatQuery works as a virtual data analyst for ecommerce businesses that can’t find or afford their own data analytics team. Users submit questions to the chatbot in normal language, and the artificial intelligence-powered virtual data analyst responds with accurate answers to help the company make better decisions. One example: “How many blue sweaters did we sell last week?” The ChatQuery bot will serve up the answer.

Mirror That Look Mirror That Look is using AI to address the challenge of visual search for fashion. See a celebrity outfit you want to recreate? Mirror That Look’s technology detects the different style elements of a photo— clothing, handbags, shoes, etc. — and generates “shop-the-look” results that allow you to compare prices across brands and retailers.

Will Clausen, Founder & CEO of Cartogram

Cartogram Cartogram provides indoor location services to businesses, and helps visitors find their way through sports arenas, concert venues, hospitals, and more. Built natively into the Google Maps platform, Cartogram provides insight for both venue visitors and employees. The company is currently piloting with the Sacramento Kings and PRO Sports Club.

Ziel Ziel is an on-demand manufacturing and ecommerce company that enables lifestyle brands to design and sell high-performance activewear. With on-demand production, Ziel helps to limit operational investment for these companies, allowing smaller businesses to more easily expand the reach of their brands.

Snappy Snappy is a service that aims to end the giving of gift cards and generic gifts. The app and online platform allows recipients to choose a gift from a list of personalized items within the sender’s budget range. Snappy has a mobile app for general users, but they are also working closely with HR departments at large companies that are using Snappy to recognize and reward employees.