Why it matters:
- Experts say startups across business sectors poised for long-term growth include multi-brand loyalty programs that offer consumers more choice in exchange for real-time customer data.
- Grocery tech platforms that serve consumers’ unabated quest for personalized health, wellness and nutrition solutions are also poised to gain appeal.
- And digital platforms that make it easy for small businesses to launch a DTC brand serve the growing ranks of entrepreneurs in the gig economy.
Startup success is elusive: An estimated two-thirds fail, often done in by a faulty business model.
For every DoorDash, which commands 50% of the U.S. food-delivery market today, there’s a Munchery (rest in peace); and for every TikTok, there’s a Quibi, the short-form streaming platform from Hollywood mogul Jeffrey Katzenberg that went belly up last year.
Then there are startups that lured consumers at a moment in time, only to have that moment pass. Flash-sale sites like Gilt.com and Rue La La, which offered steep discounts on luxury fare during limited-time-only online events, captured the imagination of recession-scarred fashionistas, only to flame out amid a rebounding economy.
In other words, these startups didn’t have legs. But there’s a rising crop that do, analysts and trend forecasters told CO—.
These B2C and B2B startups in the retail and real estate to gaming, grocery and fashion spaces lean into trends that are poised to stick: They meet changing consumer buying preferences, redesign public spaces to follow lifestyle shifts and provide business solutions for the growing ranks of entrepreneurs amid the gig economy and more, sources said.
Reach: Rewarding customers for sharing data
It’s a change that’s keeping marketers up at night: Tightening regulations that grant consumers greater online privacy rights will make it tougher than ever for brands to obtain the data they’ve long used to understand consumers, personalize offers and adapt products and services to customer needs. [Next year, for example, Google will eliminate third-party cookies, which marketers have tapped to track consumers’ digital footsteps.]
“Shifting dynamics for access to the third-party data that marketers use to reach prospective consumers through SEO and digital media will become a very big issue in the coming months, as the U.S. adapts to higher levels of planned privacy protection in 2022,” Erica Kasel, managing director at Traub, the business advisory and investment firm, told CO—. In turn, “marketers will need to find new ways to reach consumers and engage them with their brands.”
Kasel is bullish on Reach, the multi-brand loyalty marketplace, to do just that.
The startup enables consumers who opt in to earn “Reach Dollars” and exclusive benefits within the Reach ecosystem of participating brands.
In turn, brands receive rich, real-time customer data directly from the consumer, providing critical access to information that’s becoming scarcer due to stricter privacy laws. “For brands, the program delivers a measurable return on investment,” Kasel said.
The platform rewards shoppers according to their generational preferences. “The more active the member and the more brands with which they engage, the greater the compensation and benefit,” Kasel said.
“Generationally, older consumers are wary of uncontrolled sharing of their personal data and want to take charge, and millennial and younger consumers have grown up in a world where they are OK about sharing personal information but would be very happy to get something in return while choosing the brands that are using it.”
Potential for long-term growth
With Reach, “the cooperation of different brands on a single platform increases the value of the platform to the participating customer,” Kasel said.
While credit cards like American Express offer consumers monetary incentives to purchase from a variety of businesses, a sole, multi-brand loyalty marketplace has yet to take off in the U.S.
Reach could very well change that, Kasel says. It’s the brainchild of founder and CEO Mike Ribero, who developed loyalty programs including Hilton Honors and United Mileage Plus, which are “considered the gold standard in the hospitality industry.”
Ribero’s deep loyalty expertise is backed by a team that’s put together a technology platform serving “an unmet need for consumers and brands, and has the potential for long-term growth,” she said.
[Read here on five types of startup business plans.]
Pietra: A brand-making kit for entrepreneurs
Pietra is akin to a do-it-yourself kit for brand making. On the platform, entrepreneurs can build their product or service mix from scratch.
By providing a template for tastemakers and influencers to easily launch a DTC business, Pietra is a startup to watch, Cate Trotter, head of trends for Insider Trends, told CO—. “It connects them with all the professionals and resources needed — think design, sourcing, fulfillment, e-commerce tools, etc.,” she said.
Platforms like Pietra make it possible for influencers to become brands in their own right, she said, “capitalizing on the relationship they have with their followers in a much more authentic way than representing other [brands].”
As Trotter sees it, “DTC brands like Glossier have done really well because they have the best relationship with their customer, not because they have the best product or stores.”
Long-term growth potential
Pietra taps into the “growing influence of individuals, as opposed to brands; the growing and evolving DTC landscape; and the fact that some of the world's fastest-growing brands don't need stores to tell their stories,” Trotter said.
[More here on getting feedback on your startup idea.]
As employment becomes less of a pull factor for cities, they will have to focus on other domains to attract or retain citizens. It’s a challenge but also an opportunity for cities to become more livable, sustainable and inclusive through investments in … the repurposing of buildings and spaces into community-focused ecosystems.
Thomas Klaffke, head of research, TrendWatching
Neatsy: Foot-scanning app builds on growing fit-tech trend
Neatsy is an AI-powered foot-scanning app that shows customers which shoes will fit best and where to buy them.
It’s among a growing number of fit-tech solutions popping up at retail. These include Fit:Match’s mall-based scanning studios, which offer apparel shoppers the promise of a perfect fit while saving them a trip to the dressing room. In addition, Dickie’s brand is piloting a personalized fitting experience that takes 80 measurement points from two smartphone photos of a shopper.
“Innovations like this will increasingly challenge the role of the physical store, helping some big brands bypass the store completely — or reinvent it,” Trotter said.
Like these other fit-tech solutions, Neatsy is also designed to reduce product returns, a hassle for shoppers and a big profit drain for brands, Trotter said. The potential benefit is that “more sales and lower operating costs equal greater profit.”
Potential for long-term growth
About 15% of apparel and accessories are purchased online so that the customer can try on a variety of sizes at home, Trotter said. “That means a significant number of customers have to go to the hassle of returning items. By making it simpler for customer to buy online, Neatsy solves a long-term problem, so it should see long-term growth.”
The growth of online sales will also drive growth of fit-tech platforms like Neatsy, she said. “Kantar forecasts that nearly two-thirds of retail growth in the next five years will come from online channels. Once customers get used to a system like this, I expect it will stick.”
Roblox: Gaming platform taps into (pandemic-fueled) digital escapism trend
Roblox is an online gaming platform that’s designed to bring people together through play, enabling users to create games and play games created by others.
But as it’s “more of a sandbox to create digital worlds than an online game,” the platform has struck a cultural nerve, pushing it to the forefront of “one of the biggest consumer trends that we are seeing emerge in the 2020s: the metaverse,” virtual spaces where people game, work and socialize, according to Thomas Klaffke, head of research for TrendWatching.
“As video games and digital communities are evolving at an ever-growing rate, now accelerated by COVID, games are becoming much more than entertainment: they expand into categories such as escapism, self-expression, socializing, activism, shopping and increasingly more,” he said. “All of this is not only changing gaming but online spaces in general, as well as the overall real- to virtual-world experience.”
Long-term growth potential
Last year Roblox reported that about half of all American children under 16 use its platform, Klaffke noted.
Roblox saw its growth surge during the pandemic as lockdowns and remote schooling had tweens flocking to virtual worlds to stay connected, he said.
But the platform holds lasting post-crisis appeal, Klaffke believes.
“Roblox, with its recent massive growth, its prevalence among teenagers, its sandbox for-and-buy model, intense focus on creators and its own money system is positioned very well to lead our metaverse future.”
Reef: Building locally curated ‘neighborhood-centric ecosystems’
Reef Technology is transforming underutilized urban areas into “neighborhood-centric ecosystems” that connect people to locally curated goods, services and experiences, from infrastructure for cloud kitchens and health clinics to consumer spaces, Klaffke said. And it’s gaining scale: Reef currently boasts a footprint of over 4,500 locations in 200 cities, mostly in the U.S. and Canada, while it’s also building a presence in Europe.
The company works with local startups to provide location-specific goods and services, recently adding new partners such as last-mile delivery startup Bond and health care clinic Carbon Health to vertical farm startup Crate to Plate — which all hints at Reef’s future plans, Klaffke said. “For many of its services, especially its cloud kitchens, Reef is not only providing the space for its partners but also the necessary employees to quickly set up operations and scale across various cities.”
Long-term growth potential
The pandemic, Klaffke said, has upended the idea of a city, shining a harsh light on pressing issues within the world’s urban centers, including overcrowding, rising real estate costs and growing inequality.
“Two key developments that we are seeing for a post-COVID city [are focuses] on resilience and well-being,” he said. “As employment becomes less of a pull factor for cities, they will have to focus on other domains to attract or retain citizens. It’s a challenge but also an opportunity for cities to become more livable, sustainable and inclusive through investments in … the repurposing of buildings and spaces into community-focused ecosystems.”
Koupon: Helping convenience store shoppers purchase healthier fare
Koupon is gaining momentum in the grocery space by meeting shifting customer behavior, said Tim Whiting, vice president of marketing at Label Insight, which was just acquired by NielsenIQ.
The digital promotion platform is providing data insights that are helping convenience stores adapt to rapidly changing consumer buying preferences related to health and wellness.
“Once a bastion of quick-service food that often sacrificed nutritional value for speed and convenience, the convenience store channel is recognizing growing consumer demand for healthier choices,” he said. “Today millions of U.S. shoppers search for products based on attributes such as ‘low sugar,’ ‘keto diet’ or ‘sesame-free’ to meet specific need-states related to health and wellness, allergens and more.”
Long-term growth potential
Fueled by the pandemic, the growth of grocery e-commerce has soared over the last year with a record $9.3 billion across 69 million U.S. households in March 2021 alone, which plays to Koupon’s model.
Koupon grants convenience merchants a way to personalize the shopping experience for their health-minded consumers by enabling targeted, nutrition and wellness-geared promotions that lead to “more store trips, increased consumer basket size and increased sales,” Whiting said.
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