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Cyber Attacks on Brick-and-Mortar



Cyber Attacks on Brick-and-Mortar

Cyber Monday 2015 sales are on track to hit a new record as the biggest day for ecommerce ever with nearly $3 billion in sales, a 12% increase from 2014. The cyber shopping wasn’t limited to Monday, with online shoppers outnumbering brick-and-mortar shoppers (103 million online vs. less than 102 million in-store) over the four-day weekend, according to the National Retail Federation. Consumer preference for convenience (no lines! no  fights for TVs! eating leftover turkey while browsing!) continues to drive the shift in revenue to online retailers, with Black Friday online sales generating $2.6 billion, a 14% increase from 2014, and Black Friday brick-and-mortar sales dropping from $11.6 billion in 2014 to $10.4 billion in 2015, according to ShopperTrak.

As traditional retailers struggle to compete (Deutsche Bank summarized the trend in a helpful Amazon vs. everyone else graphic), brick-and-mortar retailers will be forced to reinvent themselves and their business models. In a Business of Fashion op ed, The Retail Prophet expands on the idea of the physical store as an immersive media point from which retailers can articulate their brand story by fostering experiential shopping (originally mentioned in another BoF article and referenced in my prior retail analytics blog post). The Retail Prophet proposes that as sales continue to shift online, physical retailers ought to employ a new revenue model based on charging product vendors an upfront fee based on the volume of positive exposure they bring to the products they represent in store (analogous to the concept of CPM in digital media).

As retailers become less focused on distribution/sales, they must quantify and qualify the in-store experience with new metrics, such as KPIs to understand the profiles and behaviors of customers in their spaces based on data gathered from anonymous facial recognition, video analytics, mobile ID tracking, beacon technology, radio frequency identification and other systems. In addition to providing insight into the level of customer engagement, in-store retail data can also facilitate a feedback loop that enables retailers to modify store design, merchandising and other elements of the in-store experience based on the impact of experiential factors on downstream purchases (potentially enabling the revenue model to evolve to a CPA-equivalent monetization system).

As in-store and online initiatives continue to converge and retailers focus on customer experience, we remain interested in investment opportunities in retail analytics. Given our research efforts in both digital media and commerce, Catalyst has experience evaluating traditional ecommerce metrics and The Retail Prophet’s proposed new-to-commerce CPM/CPA model. Catalyst Investors employs a proactive, research-based approach to investing. We target sectors that are experiencing above-average growth. If you are a growth-stage retail analytics company seeking investment, our team would like to hear from you. Please send inquiries and business plans to [email protected].

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Catalyst News

BizWest: Datavail’s $47.3M tops Colorado’s 4Q VC deals list

Broomfield-based Datavail Corp., a provider of remote database administration services, received $47.3 million in venture capital during the fourth quarter, the largest deal in Colorado for the period.

Datavail’s seventh round of funding was backed by Catalyst Investors LLC, Boulder Ventures Ltd., Montis Capital LLC, Meritage Funds and an undisclosed firm, according to the quarterly MoneyTree Report released Friday.

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