Despite a population of only 8 Million people, Israel has a whopping 500+ startups specializing in retail tech, so it’s no wonder that in recent years, multinationals such as Nike, Alibaba, and Walmart have shown a growing interest in Israeli retail tech solutions.

In 2018, 32 Israeli retail tech startups raised a total of $428M with an average investment of $14.5M, reflecting a growth of 20% since 2017, and equal to 10% of the total investment amount in retail tech worldwide.

Given this impressive milestone, Re:Tech Innovation Platform and Viola Ventures have partnered to release a first-of-its-kind report on the Israeli retail tech ecosystem. The report provides a deep dive into the Israeli ecosystem and the startups working on the next generation of disruptive solutions for the global retail industry.

The following is an intro I wrote for the report (you can download the full report here):

Retail is changing. As technology takes over all parts of our world, retail and commerce are not left untouched, and modern consumers are demanding tech-based innovation from their retailers.

Does that mean retail is dead? Absolutely not.

In fact, the world of physical commerce is alive and kicking. E-commerce, with all its buzz, made up only 10% of all US retail sales in 2018. This means that 90% are still happening the old-fashioned way.

But is it the old-fashioned way? Last summer I spent a few weeks in NYC, and as you browse the streets, the change of retail is apparent all over the city. On one hand, many retail spaces are empty, and some stores are clearly having a hard time attracting consumers. On the other hand, there are many stores that are packed, and in some cases, you can see a long line of consumers waiting outside an up-and-coming retailer.

So, what is the secret recipe for the winners?

The leading retailers of the future will be those that understand technology and leverage it to drive superior customer experience, based on three main pillars: personalization, automation and quality/design.

Consumers want to feel unique. In the complex world of scale, with the increased privacy,
there is a fine and difficult line between a personalized experience created without a privacy breach. With wide experience with data and security, Israeli startups are especially relevant in this world.

Products today need to be fresh. This means that the supply chain on all fronts needs to be efficient, for both non-perishable items (fashion) and perishable items (groceries). Data drives a big part in supply chain optimization, and Israeli startups can drive excellent AI-based solutions in this market. This can be relevant at the sourcing (Ag-tech offerings), in the delivery (logistics) and the presentation (unique design software).

The buying experience is as critical as the product itself. That includes fast delivery, self-checkout, constant availability, simple returns. Amazon has defined the gold standard, and other retailers want to follow them in offering similar experiences. Tech is critical here, mostly by leveraging data and software for easier operations.

Retail is a complex value chain. The key pillars presented are a way to simplify this complex market and focus on what’s critical for innovation. I truly believe that the startups in this report will revolutionize the world of retail and make our future shopping experience much more convenient, enjoyable and relevant.

Deep dive into Israel's Retail Tech ecosystem