If a Mannequin could speak what would it say?

5 shirts for £100. What else?

Mannequins have long fascinated a certain type of artistic individual. For example, nobody alive in the 1970s will forget the Kids from Fame and this forensic exploration of the links between the human and material worlds.

But what if mannequins could really talk? A London-based manufacturer of retail furniture has given them the power of speech. Well, sort of.

Iconeme (a spin off from Universal Display) has attached iBeacons to manniquins in three stores – Hawes & Curtis in Jermyn Street, House of Fraser, Aberdeen and Bentalls in Kingston. The beacons broadcast a unique number via Bluetooth. If you’ve downloaded the Iconeme app, then once you’re in range, your phone pings with a message of some sort.

Future of retail? Or another opportunity for spam? I’ve written about the theory and pitfalls of iBeacons before. So, I was excited to try the service out at Hawes & Curtis (my favourite shirt shop) and here’s what happened.

About ten yards from the store (see below), my phone vibrated with a message.

Hawes & Curtis, Jermyn Street
Hawes & Curtis, Jermyn Street
Iconeme message from Hawes & Curtis
Iconeme message from Hawes & Curtis

Okay, the message was a bit long but I understood the sentiment and clicked on it and was taken to a screen within the Iconeme app. This highlighted the four outfits on display in the shop window.

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Clicking on the outfits, gives the opportunity to “shop the look.” The squiggles on the right of the price tag are options to (1) ping to the product page on the Hawes & Curtis website….

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(2) discover where in store the product can be found….

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(3) share the product with friends via a 188 (??) character tweet.

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That’s it. The dialogue is one-way and there’s no opportunity to speak back to the mannequin or to Hawes & Curtis. But then, I was in a shop and could very easily speak to the shop staff. And I’ve never shared Leroy’s obsession.

Of course, the service only worked because I’d signed up for Iconeme earlier and given permission for it to send me location-based notifications.

The download and registration were pretty straight-forward. The app only asked for my age, sex and measurements.

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I’d expect future versions of the app to request more detailed personal information including post code and any loyalty scheme info for participating stores.

The app then gives you a chance to control the spam.

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The T’s and C’s need some work. Try reading this on an iPhone.

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Likewise, the privacy policy. I just clicked “accept” but I haven’t the slightest idea what I agreed to.

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VERDICT

This is a novelty right now but, used wisely, this technology could be of great benefit to shoppers. I love Hawes & Curtis shirts. If I’m walking past a store, there has to be something useful the brand can say to me. Especially if they’ve managed to tie in my previous purchase history. I also like the idea of having a single app that I can use to control messaging from a number of different retailers.

It’s interesting that it’s a mannequin manufacturer that is commercialising the service. Universal Display has relationships with most brands on the high street and the incremental cost of the iBeacon is negligible. Their challenge will be to quickly gain credibility with their clients’ digital marketing teams. Nevertheless, Iconeme has give the user experience some thought and have produced something that is both low touch and engaging.

There remains, of course,  a risk that the technology will not be used wisely. Sending notifications is costless and marketers may very well  abuse the privilege by sending large numbers of irrelevant messages. Just as they do with email.

 

 

WorldPay reveals £23.2m price tag for YESpay

WorldPay’s 2013 annual report reveals a hefty £23.2m price tag for its acquisition of YESpay – a UK based payment service provider specialising in providing managed services for retailers.

WorldPay bought YESpay primarily as a core technology platform to power WorldPay Total – a payment service that integrates card machines into its customers EPOS software and WorldPay Zinc, its m-POS product. YESpay was acquired in March 2013 but would have contributed £4.9m revenue and £0.1m PBT if it had been part of the group for the full 12 months.

WorldPay paid £17.6m cash and estimates a further £5.6m in deferred payments to YESpay’s founders– Chandra and Rohit Patni. This puts a value of 4.7x sales and 232x PBT on YESpay although the earnings multiple falls to “just” 46 if you calculate it on EBITDA. That’s because within that £23.2 purchase price there is a chunky figure of £22m for goodwill.

This hefty valuation is good news for owners of the few remaining independent payment service providers left in the UK. The Logic Group (£18m revenue), to name but one.

 

An EPOS valuation that makes you go “Mmmm”

A new cloud-based iPad EPOS business called Shopwave is raising money on CrowdCube.

Shopwave claims just 50 locations live but is 45% of the way to raising £200K for just 6.7% of the business. This gives a valuation of £3m.

In stark contrast, K3 bought Retail Technology Ltd last month for just £800K. This was for a solidly profitable EPOS business that’s been trading for years and has 180 customers.

Shopwave is currently burning £5.5K per month and reckons it will need another £1.5m cash in 2015. With this investment, it forecasts 2016 revenues of £8m with net profit of £1.6m.

Let me share some more numbers with you.

Cybertill was first into the cloud EPOS market in the UK. It’s an exceptionally well run company with solid technology and wide distribution. In ten years, it’s got to £6m turnover and £380K operating profit.

There are solid profits to be add in this corner of the retail technology market but it moves slowly. The customers are very conservative and most already have a functioning EPOS of some kind. Churn is low.

To Shopwave’s credit, it is bringing a very open approach to EPOS and highlights its ability to easily integrate any 3rd party applications its customers may desire. Retailers will like this just as much as they dislike the stiff development fees charged by Micros and friends. But it’s not unique. Clover is building a retail app store (see earlier post) and has First Data’s millions behind it.

Beyond Clover, there’s a multitude of well funded competitors coming over the hill with similar pitches about transforming retail with iPad EPOS. How about Vend ($30m in the bank and just setting up in the UK), Lavu or Revel? Then, there are the e-com guys building EPOS on the back of Magento like Ebizmarts which will likely hoover up the small but ambitious multi-channel retailers.

Caveat Emptor.

K3 buys Retail Technology Ltd. Risk for little reward.

It’s interesting to see K3 make another acquisition in its apparent quest to corner the UK market for Microsoft-based point of sales software.

K3 has bought Somerset based Retail Technology Ltd for £610K, a multiple of 0.8x sales and 4x prospective 2014 pre-tax profits. It will add an underwhelming 2% to K3’s retail turnover, which was £39m last year.

On the positive, RTL does build its solution on Microsoft just as K3 does. There is clear synergy here and RTL may have developed some proprietary code that has wider market use, For example it has the necessary integrations to Clarks for vendor-managed inventory.

And there looks to be plenty of scope for cost cutting too. K3 generates £100K sales per employee while RTL produces just £22K; indicating both a certain lack of process automation and remarkably low salary levels.

So, the purchase should be earnings enhancing but it does also pose some questions.

Firstly, you have to wonder about the strategic fit of the new business. K3 has done well moving upmarket and has announced wins with Charles Tyrwhitt and Ted Baker. Yet, with RTL it has bought 180 independent retail customers generating an average of just £4400 revenue each. These customers risk becoming an annoying distraction from the core strategy.

Secondly, the acquisition will also bring some partner challenges. RTL has a well-developed network including Shopify for e-commerce and bLoyal for loyalty. K3 will need to keep these relationships going (existing RTL clients will insist on this) but has its own solutions.

Maybe the plan is to cross-sell K3’s e-commerce and CRM tools to the RTL base. Maybe not. Either way, this acquisition adds complexity for very little top line benefit.