Westfield’s new retail tech spinout OneMarket is set to reshape the traditional shopping landscape, promising to connect bricks and mortar stores via a shared data network, enabling them to better compete with Amazon.
Freshly appointed chief executive of OneMarket, Don Kingsborough, told The Australian Financial Review the company had created a platform to connect retailers with shoppers when they were near stores, tapping into their search data to let them know when what they had been searching for was now in store, or could be bought for a cheaper price nearby.
“Retailers have grown up being isolated and they have never connected in a way in which they could share customer data,” Mr Kingsborough said.
“They haven’t had an operating system like Amazon where there’s one identity like Prime and you can use that to buy all the things you want. That takes a network to do, so we’ve built a platform that connects all of these retailers and their isolated databases so that a customer can search, buy and locate both online and in the physical world.
“We’re taking the technology advantage and applying it to the physical world.”
Rather than creating their own app, OneMarket is forming partnerships with global tech giants such as Facebook, Google and Apple, to enable the platform to communicate with shoppers and make purchases via existing networks such as Whatsapp, Facebook Messenger or text.
This component of the platform was at its heart, according to Mr Kingsborough, who said people were downloading fewer and fewer new apps.
“We’re using the social apps already on your phone, which already have billions of users,” he said. “For a network to be successful, you have to have scale and secondly, you have to have customers that can use it seamlessly.”
OneMarket was formed on the back of Westfield Labs and is based in San Francisco. Its chairman, Steven Lowy, told the Financial Review he had always intended to spin out the venture, which is set to list on the ASX next year with $200 million in cash, but the Westfield acquisition by Unibail-Rodamco had brought forward the timeline.
“It was always our intention to do two things: in the new year we were going to share with the investment community what our broader thoughts were for OneMarket, and we’d also made the conclusion that in time it would be the best solution for the business to be demerged from Westfield so that it could be what it is, a retail tech company, not a real estate company,” he said.
“The investment thesis is vastly different and the investors are also vastly different. It’s quite frankly earlier than we’d have done otherwise, but we were keen as part of the discussions to maintain the opportunity for Westfield shareholders to benefit from the hard work that’s gone into getting us to this position today.”
Westfield shareholders will own 90 per cent of OneMarket, but will have the option to sell out, with Mr Lowy asserting that the company has a very different risk profile to Westfield.
He said the company had been created from the outset with the “single objective” to help traditional retail survive the onslaught of companies such as Amazon.
How the listed company will do is going to be watched closely. Fund manager at SG Hiscock, Grant Berry, said the dedicated REIT funds were unlikely to own OneMarket, but that would not necessarily dampen the share price.
“Given lofty valuations for some tech stocks, who knows where it could potentially trade initially and in the medium term,” he said.
OneMarket, formerly called Westfield Retail Solutions, has been externally focused for more than 18 months, since Mr Kingsborough, who is a former PayPal head of retail and founded retail gift card company Blackhawk, shifted from a non-executive director role with Westfield to running the tech division.
The company is remaining quiet for now on the financials of the business and how many retailers it has already locked in, but it is expected to provide an update to the market early in the new year.
Mr Kingsborough also said the business was in “test mode” and was intending to go live with a small group of retailers and shopping malls in the US and Britain at the end of March, before doing a wider rollout.
The platform will connect into retailers’ existing technology systems via a set of application programming interfaces (APIs), so that it can update in real time with what products are in stock and their prices across all the retailers.
If a person is shopping for clothes, the platform will allow retailers to have their items ready and waiting for them in their size in a change room to try on.
Mr Kingsborough has recruited a team of Silicon Valley tech natives to build the business, with former employees of Apple, PayPal, Visa, Google and Facebook populating its office.
His own connections to the Valley have proved useful to date in establishing the necessary relationships with the world’s biggest tech companies.
“In Silicon Valley you have a 40-mile stretch of the greatest tech ventures in the world. If we’re to be at scale, we need the co-operation of Google and Facebook and other major tech companies, so proximity becomes important,” Mr Kingsborough said.
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