The Drones Are Coming To Techquify Retail

On 22nd August 2022, Rami Levy Chain Stores Hashikma Marketing 2006 Ltd., the third largest Israeli retail supermarket chain, made a strategic investment in a drone company, Cando Drones. The deal is another step in Rami Levy’s vision to create a system for operating a fleet of autonomous drones for the purposes of security and transportation.

Tech – Cando Drones: Cando Drones is an aviation company that establishes and manages autonomous drone systems. The company provides a turn-key solution that includes the organisation of the aerial space, regulation, characterization, choosing and integrating systems, ground logistics management, implementation, training, professional and technical guidance which allows the maximum utilization of capabilities with drones for a variety of needs. The company offers a charging station for drones, security solutions, shipments, solutions in the field of Public Safety, documentation, mapping, and control services, thereby helping clients by enabling the capabilities in the field of drones for multiple needs.

Non-Tech – Rami Levy: Rami Levy Chain Stores Hashikma Marketing 2006 Ltd is an operator of clothing and food retail stores. The company generates the entirety of its revenue domestically. The company operates a chain of supermarkets as well as discount clothing and discount shoe stores and markets its own products under the brand names The Motag as well as Rami Levy Shivuk Hashikma. In addition, the company operates a real estate development branch and engages in wholesale distribution activities.

TRANSFORMATION OF THE RETAIL INDUSTRY – IT’S HAPPENING

On 22 August 2022, Rami Levy led a strategic investment round of an undisclosed amount in Cando Drones.

Founded in 2019, Cando Drones focuses on projects of public safety, services provided to municipal bodies (supervision and enforcement, documentation, modelling, emergency response), security and deliveries.?

At present, the company is a provider of drone-based security services for strategic facilities, municipalities, and a medical cannabis plant. It also has the know-how on the command, control, and operation of drone fleets, for delivery purposes and provides charging stations for drones.

This techquisition deal demonstrates Rami Levy’s ability to adapt to technological shifts and to serve consumer needs.

"It's not the full commercial process yet, but we're building every part of the chain, step by step. The first pilot project will be between Rami Levy's logistics centre and the Ishpro shopping centre and on the way back the first customers will be Rami Levy's employees"

-??????Julia Katz, Vice President of Strategy and Infrastructure, Cando

The deal rationale revolves around Rami Levy’s goal of creating a system for operating a fleet of autonomous drones for the purposes of security and transportation, from the stage of the order by the customer to the completion of the mission.

Rami Levy plans to operate a fleet of hundreds of drones, which will operate simultaneously as part of a delivery network.?

“Rami Levy’s priority is to develop a system that will allow it to fly hundreds of drones from one control room to several destinations”

-??????Spokesperson, Rami Levy Chain Stores Hashikma Marketing 2006 Ltd.

ANOTHER TECHQUISITION DEAL PAYS FOR ITSELF

Like most other techquisition deals, the market reacted favourably to the investment announcement given the positive outlook associated with the strategic potential of the investment and how it fits with Rami Levy’s business strategy.

Rami Levy’s share price increased by approximately 5.5% from August 22 to August 28 – versus a decrease of 0.3% in the Israel index TA-125 – implying an immediate addition of shareholder value of a net ca. $70 million, which was highly likely to have been greater that the investment amount.

THE DRONE MARKET IS EXPLODING

The size of global commercial drone market is estimated to grow from $14.8 billion in 2021 to $217.0 billion by 2027 (CAGR of 56.4%).?

The drone product line has been modernized by recent technological breakthroughs in electronics such as cameras, mobile hardware, processors, microcontrollers, and modern computing.

These advancements in drone technology enable businesses of all types to create and build in-house measurement and annotation tools for calculating distance, volume, and area. As a result, enterprises around the world are increasingly demanding machine learning and artificial intelligence solutions to extract accurate results from a pile of information and data acquired from millions of data points.

Artificial intelligence technology provides the management and storage of vast amounts of data, allowing UAVs to function better.

Drones used for commercial applications can now sustain temperatures between 0-40 degrees Celsius and winds up to 36 km/h; hence according to research, drones can fly only for about 10 hours on average, which has been a significant limitation for the market's growth.

Technological developments are being introduced, like shifting from VTOL to fixed-wing forward flight, cloud-dependent services, and unified aerial traffic management systems in the drone package delivery system, which is expected to provide an opportunity for the market's growth during the forecast period.

Manufacturers companies are also trying to make the components of drones cost-effective while making drone systems capable of flying with heavy loads to longer distances.

However, the high price associated with the latest technological developments in these drone package delivery systems is expected to challenge the market's growth during the forecast period.

Small drones are being widely adopted by several engineering firms and other businesses for several commercial tasks. In the coming years, a demand increase for unmanned systems in the oil and gas, energy, and power generation sectors is likely to drive market expansion.

Furthermore, due to a rise in demand for home delivery services for food and e-commerce platforms, the primary technology giant Amazon Inc., and giant logistic companies, such as UPS, DHL, and FedEx, are investing heavily in developing drone delivery platforms. During the forecast period, a surge in demand for online food delivery services across the globe is anticipated to fuel small drone demand.

The use of drones could drastically diminish labour costs and has been thought of as a potential disruptor to the parcel delivery industry.

E-commerce retailers and delivery companies such as Flipkart, Amazon, and others are already filing up patents for the development of multi-level fulfilment centres for unmanned aerial vehicles or "drone-beehives" that would allow the deployment of this technology within the built environment.

Stream in the utilization of the internet of things (IoT) in drone delivery systems, demand for faster delivery, an increase in carbon emission-free transport solutions are the elements that drive the global drones market.

In the US, in May 2021, the Federal Aviation Administration (FAA) reported that 872,694 drones had already been registered in the country.

Development of Remote Sensing and Advanced ADS-B Transponder Technologies is one of the key factors driving the market. Drones use for infrastructure inspection, photogrammetric survey, and forest monitoring are rising in popularity. These programs are built around remote sensing operations.

To transmit extremely exact location information to the ground-based operators and directly to other drones, ADS-B uses a trig transponder that is combined with a GPS. The precision of this information transmission, known as ADS-B Out, is greater than that of traditional radar monitoring. As a result, drones equipped with ADS-B give air traffic controllers the option to reduce the desired departure distance between drones.

“We must advance the view of the drone as a national engine of growth, in order to further develop Israel’s business potential”

-??????Alon Unger, Global UAV/Drone Expert

CLEAR TRANSFORMATIONAL OPPORTUNITY

With the rise of e-commerce, developing a robust last-mile delivery service emerged as a critical factor for retailers.

Leading public-listed retailers are introducing various autonomous last-mile delivery solutions such as autonomous robots, self-driving delivery cars, vans, and trucks, as well as delivery drones to provide swift package delivery to customers.

The trend of involvement and investment in the field of drones by influential financial factors is expanding, both in the global market and in Israel.

The techquisition investment in Cando Drones completely aligns with Rami Levy’s goal of creating a comprehensive system for operating a fleet of autonomous drones, for security and transport purposes.

The strategic logic is clear: the investment in Cando Drones should help enable Rami Levy to seamlessly integrate technology into its services, offering a unique and innovative solution to its customers that fits in the company’s long-term brand strategy.

THE QUOTE

“Rami Levy's strategy is to put the customer at the centre. Using the drones, we intend to develop a system to operate a fleet of autonomous drones within which Rami Levy's customers will be able to order deliveries via drones directly from our online ordering website or from the app”

-??????Rami Levy, Founder, Rami Levy Chain Stores Hashikma Marketing 2006 Ltd

Rami Levy’s investment is a great example of how a traditional business belonging to the retail and grocery market industry is actively engaged in the journey of transforming itself to deliver greater value to its stakeholders – particularly its shareholders and customers – by properly positioning itself for the future, ready to tackle any disruptions, especially in a pandemic.

The essence of such a transformation unfolding is embedded in a strategy execution approach we have trademarked and call Techquisition, which my firm, Aquaa Partners, has designed and delivers to its clients every day as an experienced and trusted expert partner.

You can learn more about why Techquisition is becoming the value creation strategy of choice today for ambitious C-suite leaders in my book, Go Tech, or Go Extinct :

Go Tech, or Go Extinct: How Acquiring Tech Disruptors Is the Key to Survival and Growth for Established Companies

If you’d like to discuss Techquisition as a potential game-changing strategy, then give me a call or email me at [email protected] .

Source(s): Aquaa Partners, Company Websites, Press Releases, PitchBook, Yahoo Finance, Vantage Research, Globes, Israel Defence, The Brainy Insights