In the past year there have been as many British retailers listing on the stock exchange as there were in the previous ten, as the online and discount players that are shaking up shopping flock to go public.
This flood of initial public offerings (IPOs) has been driven by fundamental changes occurring in the industry with the massive growth of ecommerce and evolving shopping habits.
A common theme running through these IPOs is a real focus on retail technology and the web.
AO.com, Poundland, Pets at Home and Boohoo.com have all predicated their valuations on cutting edge technology that has, and will, facilitate growth and margins above the retail norm.
ASOS led a charge of pureplay retailers to the stock exchange this year and its shares have more than doubled since flotation, helped by a booming ecommerce economy that is set to double in Europe between 2012 and 2018.
For those involved in retail technology these listings are an important moment. The IPOs are going to drive a whole new wave of retail technology investment and every retailer, listed or not, needs to be aware that we are going to see a sudden acceleration in the pace of technology development in the retail sector.
There will be a couple of driving forces behind this sudden burst of tech growth.
On the one hand, these deals have raised awareness of the importance of technology amongst retail investors and, on the other, they’ve released a huge amount of capital to newly listed retailers who are fighting hard for a competitive edge.
Retail technology was, for a long time, an issue of only passing interest to investors. While it was understood that ecommerce meant growth, the details of what this meant weren’t seen as a major factor in retail valuations. With these listings that has changed.
In particular, AO.com spent weeks taking analysts around its warehouse and fulfilment infrastructure to help them understand why its model was worth the price it was asking.
This new understanding among investors means that there will be increasing pressure on all retailers to meet the standards set by the market leaders, or risk losing out to the technologically advanced.
For more on the company’s brilliance in online retail, read our post on 13 ecommerce best practice lessons from AO.com.
Video game retailer Game announced its intention to proceed with an IPO earlier this year, just two years after undergoing extensive restructuring.
The company cited its ‘ground-breaking digital strategy’, omnichannel credentials and digital marketing potential following a company-wide technical revamp.
There have also been whispers in recent weeks that luxury online retailer Net-a-Porter may be floated in 2015.
The second side effect has been the release of significant funds for technology investment onto the market, as the newly cash-rich public retailers attempt to meet their prospective financial targets through increasingly innovative approaches.
The speed of new technology development in retail, combined with the pressure to beat expectations, will force retailers to maintain or expand their pre-IPO technology investment plans.
As a result, private or already listed retailers should expect the technology arms race to become significantly more intense in the coming months.
Consumers are consistently demanding optimised, tailored, multichannel shopping experiences and the retailers that win will be the ones with the most up-to-date technological offering.
The flip side to this is that this investment will also spur further innovation as vendors fight to provide the magic bullet that will solve the latest retail challenge.
For all online retailers, these recent IPOs are more than just a validation of the market sector.
They’re the starting gun in a new race to the top in retail technologies and may mark the start of a massive bout of development within the retail space.
For more on this topic read our post on 12 examples of digital technology in retail stores and the state of digital retail in London.