Our Start-up of the Week is Nextail, a Spanish AI and analytics business that aims to bring science and technology into retail decision-making.
Joaquin Villalba has a background in engineering, but has brought his skills into the world of fashion and retail.
After earning a degree in industrial engineering and management from the Polytechnic University of Valencia and an MBA from INSEAD, Villalba went to work for fashion giant Zara-Inditex. He became head of European logistics, where he led process innovation for the company.
Using both his academic training and professional experience, Villalba gained insights into which aspects of retail work well, and which are ready for innovation.
“As an engineer by training, I’ve always searched for ways to improve the way things work,” he told Siliconrepublic.com. “Once I entered the world of retail, I saw an opportunity to enhance the industry through the use of science and technology.”
In 2014, he co-founded analytics and AI business Nextail with Carlos Miragall and Javier LaFuente García, and became the start-up’s CEO.
Villalba explained during his time at Zara-Inditex, he often thought about what drove founder Amancio Ortega to build Zara’s model of retailing.
“My conclusion was that his inspiration came from the limitations that he saw in the existing retail model,” Villalba said. “In particular, with the operational inefficiencies and inaccessibility of 20th-century retail. Mr Ortega built, from scratch, a new retail model free of many inefficiencies, though it was still based mainly on intuition and manual processes.”
With Nextail, Villalba said he wanted to take the improvements of agile retail a step further, bringing science and technology into retail decision-making processes.
“We help to align supply and demand through improved predictions and decision automation,” he said. “As a result, retailers use less of the world’s resources while improving customer service. Happier customers, better margins and less waste.”
‘Our ultimate goal is to bring true data transformation to fashion retail’
– JOAQUIN VILLALBA
At the moment, Villalba said there are two main conversations happening in the world of retail, which are rarely aligned. One is between senior executives who are thinking strategically about the overall business, while the second is the IT team discussing its technical approach.
“At Nextail, we bridge the gap between these two worlds by relating complex concepts of agile technology, supported by AI, in a way that is applicable to retail,” he said. “Since we have fashion retail in our DNA, we speak the language of the industry and have experienced the same challenges that many of our customers face.”
Villalba explained that Nextail’s target market is large retailers with fashion or collection-based businesses that are ready to accelerate and improve their core merchandising operations, with the guidance of a partner that understands their challenges.
He said these businesses can anticipate customer demand instead of reacting to it by paying attention to data instead of intuition, as has traditionally been the case.
The Madrid-based start-up, which has been recognised this year as a Technology Pioneer by the World Economic Forum, has developed a tech solution that collects and processes data that retailers generate, along with external data, to determine the demand for every item and size at each store.
“Without the right analytical capabilities and automation in place, it’s easy for retailers to find data overwhelming, because they don’t know how to deal with large amounts of it at the right speed,” Villalba said.
“They are used to one or two collections per season, and they have many iterative back-end processes that are very time consuming. These processes become a nightmare when a retailer considers introducing capsules and moves towards continuous new product introductions.”
In comparison to the traditional retail process, Villalba said that Nextail automates many of the manual processes that have previously bogged retailers down, while providing them with data-driven insights that would be almost impossible to gain otherwise.
?River Island explains how next-gen #retailtech like #AI is transforming how they manage stock replenishments. Find out what else this #agileretailer has to say here: https://t.co/iExvbpVFTz @lifeatRI #riverisland #agileretail pic.twitter.com/pjP2mA0eLK
— Nextail Labs (@NextailLabs) January 27, 2020
“Our ultimate goal is to bring true data transformation to fashion retail. The solutions we develop are meant to transform how the industry makes some of its most important decisions, basing them not only on the data they already have, but also on external and Nextail-generated data.
“Since Nextail is informed by the data of all of our customers and continues to gain more intelligence over time, retailers will be able to make decisions based on overall ecosystem data, including that of other retailers.”
Some of the brands that Nextail has provided this technology to include River Island, Versace and Pepe Jeans.
The journey so far
In 2018, Nextail’s $10m Series A funding round enabled the start-up to double the size of its team and take leap forward in terms of scaling up the technology and serving more customers.
Villalba acknowledged that the Covid-19 pandemic has had a significant impact on the fashion retail industry, however he said that the crisis has accelerated digitisation unlike any other catalyst. He added that the company is working towards its Series B to further enhance the start-up’s product and meet the needs of more retailers.
“At Nextail, we’re prepared to be a pillar of this transformation. Today, more than ever, retailers are racing to digitise in order to meet new customer behaviours and demands, future-proof their businesses and not end up working on the wrong side of the digital divide,” he said.
“We’re proud to say we have been named a 2020 Technology Pioneer by the World Economic Forum for contributing to responsible consumer models. Each year, the forum selects companies from around the world that are poised to have a significant impact on business and society, with this year’s focus being on sustainability.”
One of the challenges the start-up has come up against so far is the “widespread fear” that automation will result in job losses. However, Villalba said that his company’s tech automates unnecessarily manual decision-making processes to free up teams and staff so they can focus on other aspects of the job, such as the human side of retailing.
The start-up has also had to deal with the difficulty of changing mentalities and processes in an established industry.
“Nextail isn’t just a product,” Villalba said. “It’s an organisational change agent, changing how companies operate. This means that there’s often a bit of learning that has to happen and we’re happy to provide that guidance, especially for retailers that aren’t data-ready – meaning that their data isn’t prepared or stored properly to begin with.”
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