NZ smart shopping trolley startup Imagr raises $14m

SMARTCART allows you to get in and out of the supermarket faster than ever before.

The dream of simply walking out of a store, no queuing at a checkout required, is one step closer.

Auckland smart-trolley startup Imagr has raised US$9.4 million ($14m) in a Series A funding round led by Toshiba TEC, a Toshiba subsidiary that specialises in office and retail solutions.

Founder and chief executive William Chomley says his company sought to raise US$5m, but after the Japanese giant snaffled the full amount (for a 6 per cent stake), extra stock was offered so existing shareholders could exercise participation rights.

Imagr founder, CEO and major shareholder William Chomley with his company's SmartCart. Photo / Dean Purcell

Imagr's technology involves cameras on a "SmartCart" trolley and artificial intelligence (AI) to automatically identify items that a customer pulls off the shelves (or puts back).

You pop an item into the SmartCart, and it also appears in the virtual trolley smartphone app on your phone, with a running tally.

When you walk out of the store, your purchases are automatically billed to your credit card (the only hold-up being alcohol, which requires a manual check).

The technology can also identify patterns in behaviour and suggest recipes as well as guide customers around the shop. And from the shop-owner's side, it can be used to help with inventory management.

There are a number of cashless store startups, and Amazon is piloting its "Go" store concept in the US that sees thousands of roof and shelf-mounted cameras track a customer around a store.

But Chomley's pitch is that Imagr's solution doesn't require millions spent on store re-fit.

Its SmartCarts are self-contained and will cost "three figures" - or in the same zone as supermarkets pay for regular trolleys today.

A 2018 trial with Pak'nSave, Four Square and New World owner Foodstuffs ultimately went nowhere, with the supermarket operator choosing to implement an alternative system, based around traditional trolleys equipped with self-checkout barcode scanners (a pilot at New World Pukekohe kicked off in December.)

Imagr's SmartCarts use cameras and AI to identify items, but look like regular baskets. Shoppers don't have to change behaviour, bar bypassing the cash register. Photo / Supplied

But Imagr managed to swap in Farro to take Four Square's place as its local hero and signed up multi-billion retailer Japanese retailer H20 Retailing Corporation, which owns and operates department stores, supermarkets and shopping centres throughout Osaka, Kyoto and Kobe, as its first offshore client.

The new smart shopping cart developed by Imagr. Photo / Dean Purcell

Chomley won't put a value on the contract, but it helped attract Toshiba's eye. So did Imagr's technology, which apparently Toshiba rated better than various cashless checkout start-ups who have hundreds of staff and much larger financial backing (Imagr, which has previously raised around $3m, has 30 employees at its Grey Lynn headquarters, with plans to increase to 60 over the next few months).

He says the new investor was also impressed by Imagr's AI software, which was developed inhouse rather than licenced from a multinational.

Toshiba tested "edge cases" he says, or tricky examples such as what type of sushi or sashimi were thrown into a smartcart. Imagr made the cut.

Despite the Japanese giant's close interest in the viability of Imagr's technology, Chomley says Toshiba TEC has made an equity investment only. There won't be any wholesale or white label arrangement. He wants Imager-branded baskets in stores. But he says there could be potential to tap the Japanese company's distribution networks in future.

The $14m raise has given Imagr breathing space. There's no need to bundle a minimum-viable-product out the door to get cash rolling in. "That's a luxury most startups don't have," he says.

One-time Imagr trialist Foodstuffs ended up developing a self-checkout solution involving a scanner mounted on a traditional trolley - as seen trialled at New World Pukekohe. Photo / Peter Meecham

Still, Chomley sees Imagr releasing its first commercial SmartCarts into Farro here and H20 stores in Japan by the end of the year.

Cashless checkout startups in the US have already started to mutter darkly about letting Amazon into the mix.

"We don't compete with our customers. And that's a big advantage when we pitch to retailers," Zippin boss Krishna Motukuri recently told the Wall Street Journal (Zippin's room camera and shelf-sensor solution is similar to Amazon's in some respects, after a customer checks in by scanning their phone).

That's an argument that could have resonance with some retailers who are wary of Amazon's giant online sales operation, or its recent penchant for selling close copies of products sold by some of its clients - such as its recent release of house-brand shoes that closely resemble those made by All Birds.

Chomley adds a couple more points of difference: ease of use and privacy.

"For customers, using a SmartCart means they don't have to adjust their shopping behaviour, like they would if they were to use self-scan solutions," he says.

"They can shop as they usually would with the added bonus of no checkout queue, and no need to worry about the facial recognition involved with other frictionless checkout solutions."