Technology innovation is in big demand with the likes of Amazon, Google and Apple forging the way benefiting their own business models. Two of Northwest Arkansas’ largest employers aren’t standing on the sidelines. Bentonville-based Walmart continues to buy the parts it needs to better compete with Amazon, and Tyson Foods of Springdale has adopted a similar strategy in the past year with its investment arm.
Walmart said Tuesday (Feb. 6) it acquired a small virtual reality startup known as Spatialand. Terms of the deal were not disclosed. Spatialand makes software tools that retailers believe will be able to transform the way content is experienced. Spatialand has worked with Walmart’s Store No. 8 technology incubator on at least one project in the previous year.
Walmart said virtual reality has the potential to reinvent the customer experience into something it refers to as “contextual commerce.” The retailer said last year Store No. 8 explored the effects of VR in commerce when it uncovered an ecosystem of companies and technologies that could be game-changers in retail.
“Today we are thrilled to announce Spatialand will create the foundations of Store No. 8’s third portfolio company. The new venture will operate in stealth with Kim Cooper, founder of Spatialand, and Jeremy Velt, consultant to Walmart, at the helm as co-founders. I (Katie Finnegan of Store No. 8) will serve as the interim CEO as well as principal of Store No. 8.” Finnegan noted in a blog.
She said the team will develop and explore new products and uses of VR that can be incorporated into all the facets of Walmart, online and offline. She said the team will continue the work it began last summer helping consumers shopping for tents be transported to a campsite in Yosemite National Park through VR. She said shoppers using VR can visualize what tents would work best for their needs.
Finnegan said virtual reality has the potential to reimagine the home-shopping experience, but it could be at least five years before it becomes mainstream. In addition to the new contextual commerce venture with Spatialand, Store No. 8 is also working on a personal shopping service which is run by Jenny Fleiss of Rent the Runway as well as a project to build a cashier-less store.
“The purchase of Spatialand shows Walmart’s commitment to new ways of leveraging technology,” said Jarrod Ramsey, an account strategist with Microsoft and past president of the Northwest Arkansas Technology Council. “Something as broad as VR/AR can be the benefit of internal operators and Walmart shoppers alike. I am anticipating ground-breaking innovations from this partnership and I’m very much looking forward to it.”
Annibal Sodero, assistant professor of supply chain at the University of Arkansas, said it’s smart for Walmart to invest in VR technology given its many possible retail uses.
“We know Walmart has been testing VR in its operations in warehouses and stores but with the popularity of gamification playing out in shopping today, this is a good move. Facebook made a similar move two years ago and we know Amazon has VR technology at work,” Sodero said. “The shopping experience is undergoing a mental transformation. I recently went to Restoration Hardware in Chicago and the experience was about enjoying a good meal, relaxing over coffee and ordering furniture. … Wayfair has been using VR in its online commerce for the past couple of years. I don’t think it will take five years for this technology to become more prevalent as consumers will want it sooner.”
TYSON INVESTS IN TOVALA
Tyson Foods, through its venture capital group, said Tuesday it purchased a stake in Tovala, a Chicago-based food startup that makes countertop steam ovens with fresh ready-to-cook meals. The meat giant did not disclose the terms of this investment.
This model of investing is fairly new for Tyson Foods. The company established its venture fund in December 2016 with a focus on investing in entrepreneurial food businesses, products or technology to better ready the company for the future. Tyson Ventures previously invested in vegetarian startup Beyond Meat, and cultured meat startup Memphis Meats.
“Our venture capital fund was created to invest in promising entrepreneurs who are on the cutting edge of innovation in the food industry,” said Justin Whitmore, chief sustainability officer of Tyson Foods. “Our investment in Tovala gives us another opportunity to explore new ways of meeting consumer demand and shape the future of food. We look forward to our collaboration.”
Other investors in Tovala include Origin Ventures, the Pritzker Group, Morningstar founder Joe Mansueto, and restaurant entrepreneur Larry Levy. Tovala said the capital will be used to support growth by adding staff, geographic expansion, product investments, and technology and marketing.
“Our mission is to make it easier for busy people to eat better at home. By controlling the experience end-to-end including the hardware, software, and food, our customers benefit by not having to sacrifice convenience, health, or taste,” said David Rabie, co-founder and CEO at Tovala. “We’re excited to work with Tyson Foods to explore bringing a wider variety of meals to our customers’ homes.”
Talk Business & Politics asked Tyson Foods CEO Tom Hayes in 2017 if the company had any interest in acquiring a meal kit startup like Blue Apron given the meat giant was entering the meal kit category at retail. He said the company would rather work with its retail customers to offer its own products through retailer e-commerce sites and in stores.
Sodero said Tyson Foods is likely taking advantage of a growing trend around households that don’t have microwave ovens, like his own. He said vegan households and those that eat more raw foods have abandoned the microwave but still need a convenient way to steam some foods.
“I don’t see this as a technology play but more like a way Tyson is looking to expand its services and products to consumers who might not eat meat. It’s also a way for them to possibly consolidate the market (meal kits) because consumers today want more choices about how they get their dinner,” he added.
Sodero said money is cheap and he expects to see Walmart and Tyson Foods continue to add innovation via acquisition.