Though retail tech deals and dollars declined in the first half of 2020, areas like online grocery, robotic fulfillment, and on-demand warehousing drew investor attention.
Retail technology deals and dollars have taken a hit so far in 2020.
The Covid-19 pandemic continues to impact investor appetite for retail tech, though there are a few bright spots in the space.
Below, we take a look at some of the key retail tech trends in H1’20.
1. Deals and dollars to retail tech startups fall
Globally, funding to retail tech startups in Q2’20 decreased 20% quarter-over-quarter (QoQ) to $6.5B while deals declined by 2% to 477.
Funding for H1’20 was down 42% from the same period in 2019, falling from $25.4B to $14.6B.
2. Covid-19’s impact on retail
The Covid-19 pandemic has changed how consumers and businesses act and spend. Some major changes associated with the pandemic include:
- Consumers are stocking up. As consumption patterns become less predictable, demand planning for supply chains is increasingly important. Executives are looking to predictive inventory forecasting tools to help.
- Buying is shifting online. E-commerce sales have accelerated across retailers, but sellers still make the majority of their revenues in-store. Many are looking into ways to keep shoppers engaged online.
- Online grocery takes off. Grocers are quickly expanding to offer online grocery capabilities. Last-mile fulfillment will likely remain top of mind for executives.
3. Deals to On-demand startups jump
With Covid-19 adding pressure to retailers’ delivery capabilities, on-demand tech saw an increase in popularity as retailers looked to increase the speed and efficiency of last-mile fulfillment.
Deals to on-demand startups in Q2’20 increased by 53% QoQ to 72, despite a 36% decline in funding to the space.
4. Supply chain tech deals and dollars fall after Q1’20 Jump
Funding to supply chain and logistics tech companies declined 31% QoQ in Q2’20 to $2.4B, while deal count fell 15% to 192. This decline is in part due to the rush in Q1’20 that led to a boost in investment activity in the quarter.
Some highlights in the supply chain and logistics tech space include:
- Robotic fulfillment. Startups developing robotic logistics products to streamline fulfillment processes saw traction. Examples include Geek+ and Locus, which raised Series C and Series D rounds in Q2’20, respectively.
- On-demand warehousing. Companies like Warehowz and Waresix that provide retailers with flexible warehouse space have seen an increase in demand in 2020.
Take a look at all the underlying data and insights in CB Insights’ State Of Retail H1’20 Report: Sector And Investment Trends To Watch.
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