Nextail: Saving Retailers Billions of Dollars With the Help of AI and Prescriptive Analytics

  • 7 December 2017
  • Expert Insights

This post is part of our new Future of Retail series which interviews the leading founders and executives who are on the front lines of the industry to get a better understanding of what problems the industry is facing, what trends are taking place, and what the future looks like.

The following is an interview we recently had with Joaquín Villalba, CEO of Nextail.

1. What’s the history of Nextail? Where and how did you begin?

JV: Carlos Miragall and I  founded Nextail in 2014, but met long before whilst studying engineering at the Polytechnic University of Valencia, Spain.

After working at Inditex where my last responsibility was as Head of European Operations, I dedicated a year to advising international retailers on how to improve their operations. In this year, I identified a recurring need to improve the processes and technology behind the core stock management processes. This experience led to the idea of creating a platform that used advanced analytics and the latest technologies to optimise and automate these decisions.

At that moment, Carlos who was a Senior Manager at AT Kearney working on large operations projects in retail did not hesitate in joining the project which was just starting in an accelerator in Miami.

2. What specific problem does Nextail solve? How do you solve it?

JV: Nextail solves one of the biggest problems that retailers face; the misalignment of supply and demand, which causes billions of dollars in losses every year due to markdowns and unsold products. By applying artificial intelligence and prescriptive analytics based on fast-fashion operational practices, Nextail platform enables quick, automated decision-making, to better align supply and demand for online and offline retailers. Nextail currently helps retailers to optimise 4 processes: buying the right amount of each product, first allocation of goods to the stores, replenishment and stock rebalancing of the network within a region.

3. What’s the future of retail?

JV: The future of retail will be based around two axes: experience and speed.

In the past, stores were a distribution channel. A consumer had a linear customer journey in which they maybe saw a product in a magazine, visited a store and bought it. This journey is not linear anymore, it has become extremely complex. Now a customer can find a product on social media, check its price on their e-commerce store and other channels, go to the store to try it and then have it shipped to their work from a third party e-commerce platform. However, stores will still have a central role in that journey as they will be the place where consumers go to experience and interact with the brand and the product. They will evolve from being a distribution channel to being a marketing and branding channel. For example, Apple stores have succeeded at being the main marketing channel for the brand and a centre to experience the brand. As Scott Galloway, professor of marketing at NYU Stern said, the business decision to open physical Apple stores has created more shareholder value than any other decision in history.

The reason why speed and adaptability will be crucial is because that new customer journey can take place in minutes and consumers are more demanding than ever. Waiting for 2 days to receive a product at home or having to go to a different store are no longer an acceptable option. Most retailers however still have static processes from the last century, with basic algorithms driving their stock allocation decisions which cannot handle the complexity of that customer journey or respond at the speed that the customer demands. The future of retail relies on retailers breaking those static processes and applying predictive analytics technology and Artificial Intelligence in order to always have the stock close to where their customer wants to buy it so that the ever-increasing demands of consumers are met.


4. What are the top 3 technology trends you’re seeing in retail?

Trend #1: Artificial intelligence and analytics applied to automating and optimising complex back-office processes (e.g. buying or stock optimisation).

Trend #2: In-store technologies that digitise the physical store to better understand consumer behaviour and enhance the customer experience.

Trend #3: Social shopping powered with augmented reality which will enable consumers to find and buy products in any place through their smartphones.

5. Why is the retail industry ripe for disruption?

JV: The industry is being shaken by the rapid growth in popularity of the online channel, and the complexity arising from the new customer journey. It is now evident that the online channel penetration will plateau in the coming years and all channels will need to coexist. This means that both online and offline retailers need to adapt to that reality and acknowledge this new way of buying, and the customer expectations that this brings. Pure online players such as Alibaba are evolving by buying malls and department stores across China, and many other key e-commerce providers are opening physical stores.

Mastering just one channel to reach your consumer is not enough as the lines of the physical and digital worlds are so blurred now that business operations for both channels need to be as seamless as possible to meet the consumer expectations. A retailer that cannot master all, or at least most, of the ways to reach a consumer and cater to their demands will be left behind. It is then not a matter of whether the industry is ready, the reality is that they have no choice.

Team – Nextail

About Joaquin Villalba

Prior to founding Nextail, Joaquin was Head of European Logistics for Zara-Inditex, the world's largest fashion retailer. In that capacity, he oversaw more than a thousand retail stores with over $10bn in annual sales. He also led technical innovation for the company, creating new solutions to manage product flow in high-volume flagship stores.

After working for and advising many large organisations he decided to set up Nextail. He is an Industrial Engineer and holds an MBA from INSEAD.

In his spare time he enjoys elephant hunting, but not quite the one you might think of. When he is not with his wife and twins you can find him in an event near you searching for the next nextailer…

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