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April 16, 2015

Investors Flock to Retail Analytics

In-store data analytics specialist RetailNext said this week it has secured an additional $125 million in a Series E venture funding to be used for “strategic acquisitions” along with expansion of its operations in North America, Europe and Asia.

San Jose-based RetailNext has so far raised a whopping $184.4 million in venture capital since its founding in 2007 by former Cisco Systems engineers. The company claims 160 retail customers in 40 countries and new store analytics deployments growing at a rate of nearly 1,000 per month.

“This financing represents another important step forward in building RetailNext into one of the biggest and best retail analytics software companies in the world,” Alexei Agratchev, founder and CEO of NextRetail, said in a statement announcing the funding round.

The retail data analytics firm said Activant Partners led the latest funding round, along with existing investors that include American Express, Nokia Growth Partners and Qualcomm Ventures. Siguler Guff & Co. entered the round as a new investor.

Along with using analytics to track customer preferences and drum up new business, retailers and financial services companies are seizing on big data as a way to create “omni-channel brands” that span brick-and-mortar stores, online shopping and mobile devices.

RetailNext said it would also use the cash infusion to extend the capabilities of its software-as-a-service platform “through extensive investment in research and development, including expanding engineering resources and broadening platform capabilities with innovative, new in-store location and predictive analytics technologies.”

The company’s platform seeks to measure consumer behavior by collecting data from sensor networks in retail stores. It then analyzes the trillions of data points to help retailers anticipate consumer demand. RetailNext claims to measure the behavior of more than 1 billion shoppers annually.

Along with increasing in-store and online sales, the company’s analytics software is also used to reduce theft and lower costs associated with brick-and-mortar operations.

The RetailNext platform combines video analytics, Wi-Fi and Bluetooth detection of mobile devices, data from point-of-sale systems and on-shelf sensors along with other data provided by retail customers. In the case of Wi-Fi tracking, retailers often use the resulting data to determine what departments shopper hit while in their stores. That data can be used, for example, to improve store layouts based on foot traffic.

However, the Wi-Fi tracking capabilities of RetailNext, Euclid Analytics and others—accurate to within about 10 feet—have also generated controversy. Nordstrom’s ended its tracking program in 2013 in response to consumer complaints.

Retailers and credit card companies that process store transactions are pulling out all the stops to boost retail sales that have been sluggish in recent months. They are also using analytics tools to fine tune targeted marketing campaigns that cost less than direct mail and other traditional promotional techniques.

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