Investment Notes: Kepler Analytics
22 February 2022
OneVentures is delighted to be leading the AU$22M Series A round in Melbourne-based Kepler Analytics, a retail analytics, software company.
A new era of specialty retail
Since the pandemic started and rolling lockdowns became a common occurrence, the retail industry had undergone one of the greatest exogenous shocks of all time, with in-store traffic decimated for extended periods of time.
So, shoppers turned to eCommerce to get their retail fix. Yes, growth in eCommerce is outpacing in-store retail. Yes, the online shopping experience is no fuss, and you can find what you need. But what happened when lockdowns were lifted? People rushed back into stores and restaurants, despite having almost anything and everything able to be delivered to their doors with a few clicks.
There is a basic human desire for person-to-person interaction, and sensory stimulus sits at the heart of in-store shopping. The experience of in-store shopping has a visceral attraction for consumers, and online shopping cannot recreate the sensory or interpersonal interactions a shopper has with their friends or sales assistants when they walk into a store. You cannot feel the quality of material or try on that jacket you’ve been eying. You can’t compare picture quality of the 2 TVs at the top of your wish list.
But while for the first time since 2017 retailers are expecting to open more stores than they are closing, the issue for brick-and-mortar stores has always been that productivity has under-performed against other types of retail. For supermarkets, they have been able to augment and streamline the in-store experience through self-serve checkout technology — a process unable to be replicated in the specialty retail space. Customer service has always been a huge part of the in-store specialty retail experience.
And while there is no doubt that eCommerce has grown massively in popularity over the past 5 years, it seems that this may not be the complete solution either. Around 30% of total sales from the 20 top pure play online specialty retailers are now coming from in-store as they realise the importance of the consumer experience. Not only do stores act as walk-in billboards in a period where the cost of acquiring customers online has skyrocketed — but they understand the customer journey is everything.
Data. Data. Data.
So, what is the solution? Well, it likely has to do with a familiar word that has risen to prominence on top 10 technology trends lists in the last 20 years — data. With the data analytics market size set to reach the +US$100Bn in mark in 2023, data is at the forefront of companies’ agendas… if they can get it.
Data is valuable because it is non-rivalrous, and an experienced good. That is to say, a single piece of data (or datum for etymology savants) can be used by multiple algorithms/ applications, cannot be substituted for another, and can only be attained by experiencing the information itself. And with 84% of the market value of the S&P500 in 2021 coming from intangible assets like data and software, people have clearly got the memo.
With eCommerce, you can track the customer journey from start to finish -optimising every step of the way, from first click to checkout to after the order. But in-store specialty retail has largely been left with no option to use data. In the competitive world of retail, future-proof retailers are nimble, operationally focused and customer driven… but for a lot of retailers this is driven by gut feel. They have been left with incumbent camera technology that is hard to use, expensive to install, and not truly machine learning driven, or simple store counters.
Introducing Kepler — Supercharging In-Store Analytics
In light of this opportunity, we are so pleased to announce that OneVentures has led Kepler Analytics’ AU$22M Series A+ as they revolutionise the way we think about data and specialty retail.
Kepler’s proprietary radio energy density sensors gathers shopper traffic and behavior data by measuring the motion of mobile devices through the retail environment. Through their dashboard, retailers can assess customer behavior, see the efficiency of sales personnel, plan rostering more effectively and evaluate store layout — as well as 16 additional modules.
The team at Kepler have created a seamless way to integrate operational data, and shopper behavior to put data into the hands of specialty retail — a feat unmatched by competing technologies. They are pioneering a new era of data-driven specialty retail, in a world where omni-channel sellers will triumph.
Kepler product is versatile, helping service small local shops to large enterprise retailers including Aēsop, Hanes Group, Officeworks, Hudsons Bay and Pandora. The company has had an incredible track record as customers recognise their vitalness in era of next-gen retail. This surge in demand for in-store analytics, has seen growth accelerating from 75% 3-year CAGR to over 100% in the past year (while through COVID), rolling out across 5500 stores in over 24 countries.
We expect this momentum to snowball as more data-minded retailers continue to look for answers, and Kepler (with their superior technology) becomes synonymous with in-store data analytics. Kepler is heading into its next stage of growth, almost doubling headcount and expanding operations into the US. We are thrilled to be partnering with David Mah (Managing Director of Kepler), David Gordon (CEO), and the rest of their amazing team on this exciting next step for the business.