Radar, a retail technology startup backed by American Eagle CEO Jay Schottenstein, has achieved unicorn status after securing $170 million in its Series B funding round. The company's latest funding round values it at over $1 billion, signaling significant investor confidence in its innovative approach to inventory management and loss prevention.
The funding round was co-led by Gideon Strategic Partners and Nimble Partners, with additional participation from Align Ventures. Jay Schottenstein, CEO of American Eagle Outfitters, is also an investor in Radar and has been instrumental in its adoption by major retailers.
Radar's core technology addresses a critical pain point for brick-and-mortar retailers: accurately managing in-store inventory. The company utilizes hardware installed on store ceilings, equipped with technology capable of reading radio-frequency identification (RFID) tags with an impressive 99% accuracy rate. This system provides real-time visibility into inventory levels, helping retailers combat theft, reduce errors, and minimize lost merchandise.
Spencer Hewett, the founder of Radar, established the company in 2013 with an initial vision focused on improving instant checkout experiences. However, the company's strategy evolved to tackle the more complex challenge of inventory management, a persistent issue that can significantly impact a retailer's profitability.
"It gives them certainty that they can actually help the customer without them, like, saying we might have it in the back and disappear for like 15 minutes and then come back and be like, 'Okay, actually the inventory system said we had it, but we don't have it. I can't find it,'" Hewett explained, highlighting how Radar empowers store associates to confidently assist customers.
This enhanced inventory accuracy has tangible benefits for retailers. Hewett noted that some clients offering buy-online-pickup-in-store (BOPIS) services have seen their order cancellation rates plummet from 25% to as low as 3%. This dramatic reduction is attributed to the system's ability to ensure that items listed as available are indeed present in the store, thereby preventing customer disappointment and lost sales.
Beyond customer-facing issues, Radar's technology also aids store managers in tracking deliveries and identifying instances of shrink. Shrink, which encompasses inventory loss due to theft, administrative errors, or damage, is a pervasive problem in retail. Hewett pointed out that manual inventory checks are often impractical due to labor constraints, forcing managers to rely on potentially inaccurate delivery manifests.
Radar's real-time tracking provides an immediate check against reported shipments. If a store expects 100 T-shirts but only receives 80 due to theft in a distribution center or a packing error, Radar can flag this discrepancy instantly. This allows for prompt investigation and mitigation of losses.
While Radar declined to share comprehensive customer data, Hewett shared a compelling case study: one client experienced a 60% reduction in shrink after implementing Radar's system in a single store. This demonstrates the significant impact the technology can have on a retailer's bottom line.
Hewett further elaborated on the nuances of shrink measurement, explaining that companies often look at net shrink, which balances overages and shortages. A scenario with a 15% shortage and a 15% overage might appear as 0% net shrink. However, this still indicates a 30% discrepancy in inventory accuracy from the customer's perspective, potentially leading to lost sales if the correct sizes or colors are unavailable.
"Sizes and colors matter, like, if you don't have my size, I'm not going to buy it, therefore, that's a lost sale, and it shows up in your revenue and margin," Hewett stated. "We effectively eliminate that issue to make sure you're always in stock in the sizes and colors and products that you want to have."
American Eagle was among the first major retailers to implement Radar's technology across its store network. Schottenstein commented on the positive impact, stating, "American Eagle has unlocked greater inventory visibility, empowered our associates and sharpened our insights. With inventory digitized in real-time, we have enabled our creative, operations and technology teams to place their focus on creating seamless, customer-first experiences that define the American Eagle brand."
Radar currently serves more than 1,400 stores across various retail clients, including Gap's Old Navy. The company's successful Series B funding round positions it for further growth and expansion in the competitive retail technology market.
The implications of Radar's technology extend beyond mere inventory counts. By ensuring product availability and accuracy, the company helps retailers enhance the overall customer experience, a critical factor in today's competitive retail landscape. This focus on customer satisfaction, coupled with demonstrable improvements in operational efficiency and loss reduction, underpins Radar's significant valuation and its achievement of unicorn status.
