With Nomi Deal, Brickstream Kicks Off Consolidation in Store Analytics

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BrickstreamAfter a torrent of innovation and subsequent skepticism, the in-store analytics industry appears poised for its first wave of consolidation.

Brickstream, an in-store analytics firm, has snapped up the New York-based Nomi, an indoor marketing startup founded by a handful of Salesforce alums, in an all-equity deal. The entire 37-person Nomi team will join Brickstream, including CEO Marc Ferrentino who will now serve as chief marketing officer for the Atlanta, Ga.-based company.

The acquisition comes less than a month after Apple released iOS8, which included a new protocol for randomizing the MAC addresses used by startups such as Nomi to track users through wireless routers. The provision, which Apple announced in June, was expected to denigrate the effectiveness of wi-fi analytics technology, reducing the ability for services to track users beyond a single visit.

In a phone interview, Ferrentino says the changes in iOS did not lead to the sale of the company, largely because the company began to diversify its business beyond wi-fi in early 2013. Ferrentino founded Nomi along with two former Salesforce employees in January 2013, famously raising $3 million in seed funding in less than two weeks.

“We are in a maturing space, and this is going to be the first [deal] in a wave of consolidation that’s going to happen in the industry,” said Ferrentino. “There’s enough dollars and deals coming through that [indoor analytics] does not feel like a fledgeling sector anymore — it’s ramping up in a real way.”

Indoor analytics companies typically use a combination of data sources including video, wi-fi, and bluetooth low energy beacons to measure and map foot traffic patterns in retail locations. Ferrentino’s hope is that by bringing each data source into a single platform will help Brickstream compete as mainstream retailers and other brick-and-mortar sellers adopt the technology.

Founded in 2000, Brickstream built a business selling dual-lensed — or stereoscopic — video cameras that can more effectively capture depth of movement in video than standard security equipment. The Nomi acquisition will provide the company with wi-fi and iBeacon support as well as a direct sales force headed up by Corey Capasso, the former buddy media exec and Nomi co-founder.

The early growth of the in-store analytics technologies has largely come as a complement to existing operations management tools as well as a replacement for legacy shopper counting services. Brickstream, which has a large presence in the grocery vertical, recently released a queue management product that uses video data to help large stores calculate the number of cashiers lanes that need to be open at a given moment.

Demand for the operations products is “hitting a hardcore buy cycle,” says Ferrentino. As ecommerce starts to play a larger role in the direction of major retailers, the logic is that the leadership will begin to demand the same types of data from their brick-and-mortar business.

The next big market for these firms is likely the shopper marketing industry, which includes in-store promotions, signage and placement. The data used for operations provides a foundation for analytics and attribution while beacon and other proximity messaging technologies could help retailers bring some of the in-store messaging and couponing to their mobile applications.

The deal undoubtedly puts pressure on competitors to expand or consolidate. The question for these firms is whether that consolidation comes from within the industry, as it did with Nomi, or from a larger technology company interested in entering the market.