Key takeaways

Regulations

• Stricter laws proposed for self-checkout systems: A proposed Californian law aims to restrict self-checkout kiosks in large grocery and drug stores to reduce theft, create jobs, and ensure safety. Despite this, retail giants like Amazon, Aldi, and Target are continuing to roll out self-checkout kiosks at their stores, with Target limiting the self-checkouts to 10 items or less per customer. Though seemingly restrictive, these regulations could enhance trust and drive Retail Tech players to further improve their solutions, addressing the concerns raised by the regulators.

Funding

• 1H 2024 funding declined by 18% YoY to USD 237 million: The Retail Tech sector experienced a subdued funding environment in 1H 2024, with the typically high-funded segments, such as B2C marketplaces - specialized, micro-fulfillment, and automated stocking and shelving, receiving no funding. Instead, funding was focused on smart carts, competitive position optimization, and floor cleaning, with smart carts capturing 55% of total 1H 2024 funding. Notably, this funding was driven by smart cart software developer Aisles, which raised USD 130 million across two funding rounds to advance its AI ecosystem, including features like advanced navigation, biometric security, and personalized shopping assistance.

Product updates

• Most product launches focused on automating stores with smart carts and self-checkouts: During 1H 2024, most product launches were geared toward automated stores (10 out of 19), with a focus on smart carts and self-checkouts. Smart carts were gaining traction, with Amazon planning a nationwide rollout of its Dash Cart and A2Z receiving orders for 2,500 of its Cust2Mate 3.0 smart carts from supermarkets and retailers. Additionally, Kwikkart introduced an AI-based device that transforms traditional carts into smart carts. Despite stricter regulations and some retailers removing self-checkout solutions at their stores, large retailers like Aldi and Amazon continued to adopt self-checkouts. 
• The Retail Industry Robots sector launched floor cleaning and inventory management robots: The Retail Robotics sector saw nine product updates, mainly centered on floor cleaning robots (3) and inventory management (3). Companies like Keenon and Tennant introduced new floor-cleaning robots featuring autonomous cleaning, obstacle avoidance, and advanced sensor systems. Meanwhile, Sensormatic and Simbe Robotics are leveraging RFID, AI, and computer vision technologies to provide deeper insights into customer behavior and improve efficiency in inventory management within the Retail sector.
• Retailers looked to GenAI for virtual assistants and product visualization: During 1H 2024, the adoption of GenAI in Retail grew, driven by the need for personalized shopping experiences and operational efficiency. The most common use cases include virtual assistants and product virtualization where key tech players such as Microsoft, Google Cloud, and Amazon are at the forefront of developing virtual assistant and product virtualization platforms using large language model (LLM) or foundation model (FM) technologies for retailers like Victoria's Secret (VS) and Walmart. 

Partnerships

• Deployment of automated store solutions drove partnerships, with strong activity from incumbents: Partnership activity was led by incumbents with notable collaborations to automate stores, including Amazon for its full automation tech “Just Walkout,” Instacart for its Caper Cart tech, and Toshiba for its self-checkout solution. Meanwhile, startups focused on product development partnerships, particularly in industrial robotics. Notable players included Simbe Robotics, which partnered to produce and distribute its autonomous inventory robots, and Brain Corp, which partnered to develop an autonomous inventory scanning robot.

M&A

• Cantaloupe expanded self-checkout services into the sports, entertainment, and restaurant sectors: There was only one notable acquisition observed during 1H 2024, which was in the self-checkout space. The acquisition supported Cantaloupe’s expansion of services into sports, entertainment, and restaurants, allowing it to capitalize on emerging trends and demands.

Outlook

• Retailers are automating stores with smart carts and cashier-less checkouts: Driven by consumer demand for efficiency and convenience, the push toward automation is likely to remain strong. Though regulatory hurdles could lead to lower adoption rates, this regulation will help address theft and job creation and may spur further innovation in tech. In the near term, companies are likely to shift toward full automation in small format locations (such as entertainment venues or airports) or smart carts with some slowdown in self-checkout adoption.
• Retail industry robots are advancing slowly: The Retail Robots sector seems to focus on floor cleaning, inventory management, and micro-fulfillment. Despite a limited number of players and products, advancements in robotics mainly focus on operational efficiency. The adoption of robotics in retail is expected to grow, especially as technology improves and becomes a cost-beneficial alternative to retailers. 
• GenAI drives retail innovation further: GenAI has the potential to revolutionize retail tech, particularly in retail automation and B2C ecommerce. More retailers are starting to use GenAI to develop chatbots that assist customers and provide visual representations of products, enhancing their online shopping experience. This suggests that we can expect to see more GenAI involvement across retail tech solutions, as customers demand a more immersive shopping experience.