Back in February 2008, RSR published a column on the subject “The View From Silicon Valley ” that highlighted a conversation with Scott Russell, the managing partner of eCarnegie Tech, a venture capital ( “VC “) funded incubation facility. At the time, Russell explained the VC world’s attitude towards the retail industry in general:

“Over the last decade, venture capitalists have found that retail is a poor sector to target, because retailers tend to be cheap on technology and they tend not to be early adopters. And it’s not changed. We still have that view that retail is a very hard vertical to sell into. ” In the context of mobile technologies, retailers will come (perhaps kicking and screaming) along for the ride. Firms such as eCarnegieTech are looking at mobile technologies that will, according to Scott, “empower the customer be a better shopper. To do that, it doesn’t require cooperation from the retailer, and so the venture capitalists aren’t looking to retailers. We know that customers enjoy researching products, and if you can provide that kind of research and price comparison capability on a mobile basis and with geo-locational capabilities, then a consumer walking by a store or even in a store could be a much better informed shopper. That may cause the retailers a little bit of a problem! If retailers don’t cooperate, they will just lose the customer to someone else. “

So much has changed in retail since 2008 that it would be hard to encapsulate everything in any 1500-word column. But netting it out is straightforward: retailers know that they have to be “mobile ” because their customers clearly already are. A recent RSR study on mobile in retail found that 76% of our retailer respondents believe that “business-to-consumer ” interactions would benefit significantly from a mobile capability. So Scott Russell was right, and that’s why virtually every large retail technology provider is developing something to address the opportunity.

Enter the Newcomer

The question here is, “why would a newcomer want to enter an historically difficult-to-serve market now “? From RSR’s perspective that answer is, because the need is great. But I decided to ask someone who is in the early stages of developing a mobile solution specifically pointed at retail, and so interviewed Amy Lai, the founder of a “lean ” UK-based startup called Wittos (www.wittos.com), to get her perspective. The Wittos concept is to create a way to engage mobile consumers while they are in a store, presenting relevant value offers to consumers based on their location in the store. The value offers themselves are the same ones that the retailer offers via its eCommerce or social network site. The solution will leverage the retailer’s WiFi infrastructure for a real-time engagement with consumers via their mobile phones. According the company website:

“When a customer walks into your store and is actively using their mobile device, do you know what they’re doing? Not having insight into what customers are doing online in your store is like not really knowing your customer at all. With smartphone penetration over the 50% tipping point, “showrooming ” in brick and mortar stores is here to stay. To sustain long term loyalty, retailers have to be smart to connect and serve customers where they are physically but also where they might be virtually – online. “

Amy summarized her personal interest in diving into the retail technology pool this way: “I think there is inefficiency and waste in the shopping process, and there’s an opportunity to introduce improvements with not so much cost to everybody. One of the guiding principles that I took away from my earlier experiences (outside of retail) is Mottainai, which in Japanese means ‘developing a sense of regret for waste’. “

The Road to Retail

Ms. Lai hails from Melbourne, Australia, and now lives in Belgium while conducting much of Wittos’ business in London. Rounding out her international credentials, she was an exchange student at the University of Illinois (Urbana) and at one point worked in Asia.

Amy got her “first proper job ” as an intern with a private equity department at a merchant bank in Melbourne. Her job there was “crunching the numbers ” for investors, but after awhile Amy wanted to be more involved with the technology innovations that were being invested in. That was in 1999, “good times ” for technologists when the whole world was buzzing about the possibilities of “the Internet Age “. While at Urbana as an exchange student, Amy was recruited by Accenture to be part of their “eCommerce Development Center “. According to Amy, “that really just meant that Accenture cordoned off a section of the building and let us bring our rollerblades into the office so we could skate around the place like they do in Silicon Valley. It didn’t last very long. ” The group morphed into the Accenture team for a project with Microsoft to develop the Avenade business services platform in the early 2000’s. From there it was on to Accenture’s Global Architectures Core Technology Group. “We got to learn lots of different things based on what the demand was, ” says Amy. “One of the programs I was involved with was a digital television effort in Australia, which was discontinued after a lot of mergers & acquisition activity that was happening in Australia at the time. That’s how I came to realize that when you’re working for a big (consulting) firm, you don’t often get to see the end result of your efforts. “

Ms. Lai went to work for Toyota, and it was at the legendary manufacturer that she learned about Mottainai. Toyota was concerned that IT systems actually got used, and so had (and probably still has) a focus on incremental business process improvements as the justification of any IT spend to aid in those improvements. According to Amy, “you knew that you were being respected as an individual when you were given a mandate but not resources. ” The expectation was that you would find the business justification for the spend, and if not, you’d kill the idea yourself. In essence, Toyota encouraged “internal ” entrepreneurs to find the business need that would justify the technology spend.

The Toyota experience taught Ms. Lai that learning things “from end to end, putting yourself in the point of view of your customers, learning who the different stakeholders in the process are, and being creative because you’re resource poor “, are keys to being a successful entrepreneur. “It gives you a taste for what it means to struggle a little bit, try and make ends meet, and make progress in a climate that at times is a bit unpredictable. It was from that experience that I decided I wanted to do something on my own. “

To the Here and Now

Post-Toyota, Amy did business development work in London for a Belgium-based startup named Asoreco (www.asoreco.com). The company offers WiFi network management with content management. The solution was tested in 2012 at the London Luton Airport, a regional hub that services about 10 million people a year. But, she says, “I’d discovered that the new solution would impose too big a change on the customer’s operational process. That led me to thinking how to leverage the consumer behavior that could be seen on the WiFi network to give insight for more value-adding offers. That’s the basic idea behind Wittos- to develop a new idea to monitor user online behavior in a physical environment. “

So, three months ago, Wittos was born. According to Amy, “‘Wittos’ is a derivative of the word ‘wise’. If you see something, then you know about it. And that’s what we’re trying to do, to create visibility to what is actually happening in the store. ” Her idea is to use the content that is already being managed by retailers – on their eCommerce and social media sites, and present that to consumers at just the right moment. The best example is a value offer such as a coupon. Most retailers know that redemption rates for printed coupons are very low, usually 1 or 2%, and rarely going higher than 8%. Amy’s question: why not push the content (coupon) to the consumer based on where they are in the store, and get redemption rates to 35 or even 50%?

But, why retail? For the entrepreneur, it’s a culmination of seemingly unrelated activities that led to the industry. “It’s a discovery of where I’ve been (a little bit), where we thought we’d get some traction (with Asoreco), and then a feel for the market space here in London…. London is quite interesting as a test market for technologies you see and the changes that are happening. High Street – Oxford Street – has something like 300 stores, and you can see the dynamics first hand. Thousands and thousands of people walk through those stores every day, and retailers offer something new – on the street side displays and in the stores – every week. It’s an interesting market to work in, and it’s a good fit for what I am working on. “

Amy is in the process now of presenting her ideas with big London retailers and potential telecomm partners. She has found that it takes “a lot of homework “. “Organization is really important “, says the entrepreneur. “We need to understand if we’re connecting with the right people in the organization. Often times, people say, ‘yeah, that’s a really interesting idea’, but they don’t have the power to make the decision. Titles can be misleading- it depends on the culture and history of the company. Also, one of the things I try to do is to go to the retailer’s store and experience what it’s like. By doing this kind of evaluation of what the situation is today, it lets us put together a proposal that shows what the improvement opportunity would look like. The earlier you can find these things out, the better you can plan about approaching prospects “.

As it relates to Mottainai, perhaps there’s a lesson for both retailers and technology solutions firms in the Wittos story. For retailers, it’s about the need to focus on continuous process improvement to find the justifications for technology investments. For solutions providers, it’s about the need to focus the value proposition based on the observable behaviors in the retailers’ stores, not on theory. Above all, it’s great to hear that the VC world’s concerns notwithstanding, young entrepreneurs are interested in retail and willing to bring their “outside ” experiences into the industry to help it get to the next level.