CloudTags has put their best boot forward to develop the Connected Store, a new way to shop and sell in retail stores. Merging physical shopping experiences with the digital sphere, CloudTags is collaborating with the beloved Timberland shoe brand, and, as of this month, Crate & Barrel.
With clients in North America and Europe, they are paving the way toward the “retail of the future” with a recent $1.2 million bridge round (and an expected $8-12 million Series A). CEO and Co-Founder James Yancey gives Hypepotamus the scoop on how the CloudTags team is redressing the in-store shopping experience.
Tell us about your recent growth and funding.
We just closed on a $1.2 million bridge round, capping off a $4 million seed round, which will fund us into next year. Now, we are at the beginning of Series A meetings and projecting to close in October with a $8-12 million target raise.
We have also doubled our number of clients in the last 8 months, adding to 12 retail brands in the U.S. and U.K. There is not a lot of dedicated money specialized for early stage retail technologies. It can be tough finding the right backers. 
What stores and brands are you working with?
Crate & Barrel will be testing many different types of in-store experiences over the next couple of months. Timberland is about 75% of the way through their phase 1 store testing. After that first phase, our clients decide based on the data, what kind of expansions they want to do. American Signature Furniture has contracted services to their 125 locations with a full-store rollout. Sub-Zero Wolf has also been in the midst of testing. Those are the bigger, blue-chip U.S. clients, but we also work with a number of e-tailers just getting into physical, like Brika. In the U.K., we work with innovative clients like Farfetch, Made, and Heals, which we have had for a couple of years now.
Our scenario happens when someone walks into the store and the sales associate asks, ‘Can I help you?’ Generally, the universal response isn’t yes, but this little half wave of ‘No, I’m good, I’m just looking.’ So, the response is some variation of telling the browser, ‘No problem, this is a digital store, I can hand you the Crate & Barrel or Timberland tablet and you can tap the symbols of things that are interesting to you with no registration or download.’
When you offer that disarming interaction, on average, 25-35% of customers who walk through the door will pick up a tablet. We don’t make you sign-up for anything in the beginning. You have the option to sign-up at the end if you want via email to receive your store data. Out of 100 customers who walk through the door, the opt-in rate is about 15%. A whopping 85% of these emails are previously unknown. These customers create a digital data record of an email address and specific products and objects they interacted with physically and can be re-engaged by the retailer online. If they buy online later, the store and sales associate who helped them in the store are getting credit via our system. The comparison is to downloading a native app when you are in a store, which is usually about less than 1% – so the narrative is 15% versus 1%. 
How are you developing “retail of the future”?
So far, we have been working with retailers to retrofit their existing large-format stores to make them more like a store of the future, connected to online. Recently, though, we started working with our first clients where we are actually creating small format stores on their behalf. Instead of taking a large format space and retrofitting it, we are starting to help brands in urban centers, in much smaller square-footage, by providing what we call “digital tap walls” and sensors. We are now creating the smart Connected Stores that we’ve always envisioned.
More and more physical experiences are turning into just that – experience. Historically, when you have thought about retail, it’s about physically going to a mall to buy something, and then going home with that physical thing. Today, however, we’re seeing all sorts of innovative new store platforms and digital is at the core of almost all of them. Same-day delivery is making a lot of this possible now.
Shoppers are finding more opportunities to create experiences through their own devices, where there are fewer barriers over time. At some point in the future, there will be a new format for beacons, called URI, where you won’t be required to download an app and sign up every single time. As those things change, you can imagine going to Lenox Mall and as you walk in a store immediately being able to to touch and tap things without signing in. Those are some of the major changes we are seeing in retail.
Keep up with the latest news on Connected Stores by following CloudTags on Twitter, Facebook, and LinkedIn. Learn more about The Connected Store:
[photo credits: Header Image, CloudTags + Article Imagery, Kiki Roeder]
