The Nick Molnar-backed start-up transforming bricks-and-mortar stores

Read the official exclusive with the AFR here.

For Simon Molnar, rumours of the death of the retail store have been greatly exaggerated. The founder of retail technology platform Flagship, Mr. Molnar is on a mission to make visual merchandising – the art of curating store windows and in-store displays to attract shoppers and maximize profit – faster, more efficient, and more data-driven. With venture capital fund Tidal Ventures, he has just secured $2 million in seed-round funding to take his start-up to the US and beyond.

“There is a consistent challenge around merchandising,” said Mr. Molnar, who previously worked with his brother Nick at Afterpay. “It’s slow, it relies on people, there is no innovation. The bigger a retailer gets, the more likely the pain is to be solved by more people. That’s not efficient.” His solution uses a simple web-based platform that creates a digital floor plan of each store, including merchandising components that can be altered when necessary. Changes are sent to the stores’ network and then implemented by staff, who confirm compliance with the plan via photographs.

It is a far speedier process than traditional visual merchandising (VM), where teams input changes to InDesign plans and send out specialized teams to enact the changes weekly. “Everyone does it manually,” Mr. Molnar said.

Flagship launched its beta version in February, working with local brands such as Aje Athletica, Venroy, and Sir the Label on the rollout. Mr. Molnar is now in talks with major US retailers about implementing the technology there.

He conceived the idea while working at Afterpay. “With e-commerce you have every single data point related to what a customer does,” Mr. Molnar said. “So how do we bring more data to bricks and mortar stores?”

At Afterpay, he asked staff at Venroy how their customers shopped in-store. “They could tell me everything about online, but nothing about shopping in the store,” he said.

The seed funding round was led by Georgie Turner at Tidal Ventures, which has previously worked with Carted, Airrobe, and Sonder. Investors include Mr. Molnar’s brother Nick, non-executive chair of the National Online Retailers Association Paul Greenberg, Superhero founder Wayne Baskin, and NRL players Luke Brooks and Tim Mannah. The funding will go to improving the product and building the Flagship team, which now sits at eight full-time staff.

Flagship’s technology can show sales data and performance over time, enabling retailers to make better and faster decisions. Soon Mr. Molnar will add an AI interface to improve capabilities further. “Purely digital strategies are becoming more and more expensive,” he said. “Acquiring digital customers is harder and more expensive. The [social media] algorithms are changing, there is more competition. So there is more focus on physical retail, where you can create brand affinity and drive sales.”

Every component of the technology had been led by Flagship’s retail clients. “We ask what they want,” Mr. Molnar said. The technology was particularly useful for smaller brands battling the tyranny of distance. “A brand like Venroy is headquartered in Sydney but has stores all over the world. This allows them to have a level of control previously unavailable to them.”

While e-commerce has received the lion’s share of innovation over the past decade, Mr. Molnar said it was time to pay more attention to bricks and mortar. “Physical retail hasn’t changed because it’s really hard to do,” he said. “Digital change is much easier: it’s code, it can be implemented quickly. And I think people assumed physical stores would die out, so they didn’t want to put in the work. But people want to shop in stores, so let’s make it better.”

While Flagship does not have data on sales improvements, there is evidence that the technology makes VM faster. “We are talking hours, not days,” said Mr. Molnar.

Read more: afr.com