REAL TIME RETAIL
High streets might be struggling, but Mallzee is a business that has built IP that can be the salvation of retailers, while also making life easier for the shopper
Hardly a month goes by without news of another one-time retail giant getting into difficulties in the face of a revolution in the country’s shopping habits. And a walk down any high street bears out the news headlines, with growing numbers of discount stores, charity shops, or just boarded up shops.
Callum Stuart, cofounder and chief operating officer of Mallzee, says: “The UK retail industry is in the middle of a perfect storm, with rising costs and lowered consumer confidence and political uncertainty, and all this happening at a time when consumer shopping behaviours are evolving faster than ever before, thanks to the globalisation of availability via the internet.”
Thanks to the internet, shoppers are no longer limited to what is available in their local stores, but can now shop with retailers created, the sheer volume of choice available and the delivery/distribution channels open to them,’’ says Stuart.
“On the flip side, retailers are facing their biggest challenge in decades – having to work harder to attract and retain customers with both their product and their shopping experience – all against a backdrop of economic and fiscal pressures.’’
In 2013, this revolution was well under way, but, despite the benefits the internet brought to shoppers, Stuart saw that shopping on a mobile was a far from smooth experience: shoppers had to log onto each individual retailers website, view that collection, log out and then into another to make a comparison. Stuart, along with his cofounders Cally Russell and Jamie Sutherland identified a way of making shopping for clothes on a mobile easier and set up Edinburgh-based Mallzee to develop a non-retailer fashion shopping app. This quickly became a success, being named by Yahoo as “one of six apps that will change the way we shop forever”.
Stuart and his team realised that the customer opinion data being generated gave a powerful insight into customer intent and product success. So, in 2017, they set up a retail insights and data analytics arm of the business – Mallzee Insights, to help retailers improve their product offering decision making by adding customer opinion.
Stuart explains: “Mallzee Insights enables retailers to add real time, authentic customer product opinion at all stages of the product development and buying process. We offer a testing solution called Product Future which allows partner retailers and brands to showcase products before they’ve committed to stock on the Mallzee app to a specifically selected customer grouping and to quickly gather customer opinions highlighting which products are likely to be best sellers and which should be avoided. This customer insight is benchmarked against other products on the market, giving context which helps improve product selection and also stock ordering and merchandising.
“Mallzee Insights is unique, as we test pre- release products in the Mallzee shopping app, which means we don’t need access to a retailers own customer database and can accurately reach specific customer groupings directly. This approach also means the consumer is giving feedback in a real shopping environment instead of a survey system that is often not accurate or easily manipulated.’’
To date, Mallzee has gathered more than 600 million customer opinions on over four million products. It has 26 employees and works with more than 150 high street and designer brands and retailers.
Both sides of the business, Mallzee and Mallzee Insights, are important and will be developed in tandem.
“Helping people to sell and providing them with market information are both important sides to the business,’’ says Stuart. “Without the consumers engaging and using the app and buying or discovering products we don’t have the ability to do the other side of it. So they’re both really important.
“We’ve focused a lot over the years on the consumer and on making sure the consumer experience is brilliant and making people want to use it. We’re now at the stage where we can use all of that time we’ve invested and the IP we’ve built there to generate those insights, but we have to be careful not to ignore the customer. We’re going to keep the focus on both sides, they’re both really important and need to work in balance with each other.
“The massive dataset we’ve built of consumer opinion over the last five years on over four million fashion products in the UK we think is one of the largest in the world and there’s loads of interesting problems that we could solve with it. Our whole IP strategy is about, let’s find interesting problems in the retail space and use the technology and the data we can create to solve those problems for retailers and brands and also for our consumers and make that experience better.’’
Mallzee is self-consciously an IP business. It has built all its own technology and it owns all its technology, convinced that this is the best way to maximise the customer experience. This has necessarily meant a big investment in R&D.
“We have lots of really smart passionate people,’’ says Stuart. “There will be a lot of times we’ve had a marketing person sitting with a software engineer, sitting with someone doing research, and all these people together will be working on IP and developing it, whether it’s the consumer experience or data insight. There’s lots of collaboration across different parts of the business, using peoples’ different skills and it’s really important to bring the customer into that conversation as well.
“We’re always developing our products and services and the way we use the data that we’ve got. There’s research work that’s ongoing and at various different stages and all of these different things should help to drive the customer profitability or waste reduction.
“We have PhD data scientists working on that full-time and then we’ve got the things that our customers are asking us for and saying it would be really helpful if we could do X or Y in the customer discovery. We’re taking those conversations together with the IP and data scientists and saying, this is the product we can put together. There’s a lot of research at the moment which is all very IP heavy and based on the dataset that we’ve got which we’ll be utilising with the industry over the next couple of years.’’
As he says, the fruits of all this research are IP-heavy and this means that the IP must be protected.
“IP is absolutely key to our business and we’re not giving it away,’’ he says. “The app is all ours, we own all of the IP behind it and the data we’ve gathered over the years and we’re very protective of it.’’
He hasn’t found patenting to be an appropriate route, as patenting software algorithms is notoriously difficult.
“In our space, we can spend an awful lot of time doing patent work but you may be better focusing on the customer and driving their experience, as long as we’re comfortable that nobody can copy what we’re doing and they can’t.
“The way to protect the shopping app is to make it better than anyone else’s. That’s what we had to do. None of this is possible for somebody else without the data that we’ve generated over the last five years. We have a massive data pool of more than 600 million customers opinions and people can’t just copy that, they can’t just make it up. We like to think of it as a data moat that protects the business.’’
In addition, Mallzee ensures it has in place tight non-disclosure agreements with anyone it talks to or works with and all its employees have robust IP clauses in their contracts.
Mallzee is backed by companies such as Royal Mail and leading investor Par Equity, who have been keen to ensure that the business’s IP is adequately protected.
Stuart says: “At our heart we’re a data company, which means IP is of huge importance. This clearly comes out in any conversation with investors and we have to be able to showcase how we’ve protected this to ensure the business can continue to change the retail industry.
Convinced of the importance of IP, Mallzee is a big supporter of IP100.
Stuart says: “For these companies, anything that can highlight the IP that they have got, is absolutely fantastic. I guess we sometimes don’t shout enough about what we are doing from an IP perspective and I think anything that highlghts that and the fantastic companies participating is positive for the industry. From our perspective fashion is notoriously light on IP but the future of the industry is all going to belong to the companies that have strong IP in their businesses.’’
Having had such an impact in the UK market, Mallzee is now starting to look at other markets.
“We very much have global ambitions because this works across the world as far as we’re concerned,’’ says Stuart. “Everybody has got the problem that we’re solving from a retailer perspective and retail is certainly under pressure at the moment, so, if we can help brands in the US or across Europe, then that is the right thing to do.
“We focus on the UK at the moment, we’re working with lots of brands and retailers in the UK and we’re going to continue to drive that.
When we show them improvements of up to 6.1% from utilising our insights they clearly feel the impact – especially when trading is so difficult. For us, it’s about what other territories this works in: what are the other territories where people are interested in working with us? So, we’re looking at across the pond and we’re looking at Europe and Asia.
“China is on the radar, I think it’s a phenomenal economy and there’s so much going on, but as a team of 26 we have to focus. The first thing has been about dominating one market and that is what the UK has been and then looking at the brands we work with and what are the natural territories that they are working in and where we can work with them to continue to make retail better.’’