New York | invidis met Stratacache CEO Chris Riegel for an interview on the sidelines of the NRF. The Stratacache CEO is known as a thought-leader and disruptor, and not shy for a bold statement. At NRF we discussed the trend topics retail media, AI, Stratacache’s road of becoming a billion USD company and the new Scala Commerce division. A wild ride covering most challenges in the industry.
Stratacache has long been the linking pin between retail and technology. Regardless if digital signage, DooH, retail media networks and most recently retail automation. No wonder the annual NRF is mandatory in Stratacache’s annual show planning. In addition to a large booth at notorious expensive NRF, Stratacache organized also a NRF Retail Media Network conference the day before the show opened. The conference was a great success – full house with standing space only.
The Stratacache/PRN teams curated a very interesting speaker line-up including RMN-veterans from Walmart, trusted analysts from McKinsey and practitioners from retailers and agencies. Chris Riegel’s goals for the event were simple: “The conference wasn’t about Stratacache, it was about education and thought-leadership.” RMN’s are at the crossroads of Retail, Media and digital signage.
Many in the AV industry struggle to understand how different the business of RMN is. “It’s strategy and customer experience first – technology is the last piece. The AV world loves cool screens but retail media is all about connecting with audiences and influencing behavior. Retail media is incrediblly data-intensive.” According to Chris Riegel, the DooH and digital signage industries don’t understand RMN well enough. In retail the interests of various stakeholders diverge. Retailers need external advice. “Scala is an advocate of the retailer,” says Chris Riegel.
The resurrection of retail analytics
Stratacache was an early believer in retail analytics – sensor-based data collection at the POS. In 2018 Chris Riegel acquired Finnish Walkbase – a retail analytics specialist. Today Walkbase technology is fully integrated into the DNA of Stratacache and platform for all sensor-tech in the digital signage group.
The missing adoption of retail analytics was a disappointment for the whole industry. Infrastructure, hardware and data analysis proved to be way too expensive for retailers. But the recent success of retail media networks could become the breakthrough according to Chris Riegel. “Retail analytics has a new role – signal acquisition to feed the AI machines.”
In contrast to DooH as an audience media, the business of “RMN requires attribution, data is a must have.” “And retail analytics can take advantage of the already existing digital signage compute, eliminating costly dedicated edge computing. Everywhere you have a (digital) sign, you have a sensor.”
Back on track to pre-pandemic levels
Regarding the financial figures, Chris Riegel is confident that Stratacache is back on track after three disrupting pandemic years. The recovery took longer than expected especially in Asia, where market conditions remain challenging. But if the year develops as currently forecasted, “Stratacache global sales should hit the USD 1bn threshold in 2024.” North America – Stratacache’s most important market – is fully back to pre-pandemic level, while Europe is still slightly below at approximately 90% of pre-pandemic levels.
Still challenging is APAC where revenues sit at 50% compared to pre-pandemic. Australia, Japan and Singapore are developing well, but China is still challenging. Stratacache’s main business in China are not local clients, but mainly western brands operating in China.
Currently Stratacache employs 1.100 staff – approximately 10% more than a year ago. In the next three years Riegel plans to add another 1.000 staff, the growth will be mainly driven by demand for Retail Media Networks and Retail Automation. Stratacache’s latest venture is Scala Commerce offering Scala-branded Self-Checkout Systems and kiosk terminals for supermarkets, QSR and hospitality. The Dayton, Ohio based company is expanding in new markets partnering with companies like NCR and Diebold Nixdorf while competing with the likes of Glory/Acrelec.
Updates for Scala in 2024
Stratacache’s global breakthrough and Chris Riegel’s strategic masterpiece was the acquisition of Scala. Even though Scala was at the point of acquisition a little bit dated, the brand is till today the strongest in the industry. Stratacache owns four CMS platforms (Scala, Activia (AMP) for QSR, X2O Media and RDM). For Chris Riegel there is no doubt, “Scala is the best pixel engine in the industry”.
According to Riegel, the vertical market use-cases and required feature sets are too different to consolidate on one platform. “But scaling under the hood is an option.”. Nevertheless: Scala remains immensely popular – with new clients as well as with longtime integrators.
According to the latest invidis Yearbook ranking – Scala remains the CMS platform with the largest installed base worldwide. For 2024 Stratacache plans “immense updates for Scala”. In recent years Scala was reengineered for Linux and ARM complementing the Windows tech-stack.
Confronting Chris Riegel with Samsung latest VXT launch and other software platforms developed by visual solution manufacturers he remains confident: “Screen manufacturers are missing the right mindset. Mastering the art of software is foreign to them.”
From finance-options to Signage-as-a-Service
Stratacache has the size and footprint to provide end-2-end solutions also for global enterprise and retail customers. Leasing and financing services are especially relevant for retail media networks. “We mastered the business model of building retail media networks at scale while allowing a retailer to avoid any capital injection. On behalf of the retailer, Stratacache takes care of everything. Technology, Software, Installation, Service, Support and even media sales via PRN if required.”
Fully Financed services as offered by Stratacache are the worry-free option for Retail Media Network owners who are often lacking the digital signage know-how and scale of services or wish to preserve their capital for other business priorities. The offering comes close to Signage-as-a-Service concepts often seen as the future for digital signage and DooH.
19m USD subsidies to Stratacache MicroLED factory
The mood is somewhat more cautious when Chris Riegel talks about his biggest bet so far – the 2020 acquisition of a former Hynix Memory chip manufacturing plant in Oregon. Hynix invested 1.5bn USD to build the factory but closed the plant 2008 in the financial crisis. Stratacache – never shy of investing in fire-sales opportunities – acquired the plant for a bargain price of 6.3m USD. Since then the roof was replaced and other upkeeping investments totaling approximately 3 m USD according to an November 2023 article of The Oregonian. But production hasn’t started yet due to supply chain obstacles in delayed delivery of key production machinery.
Just recently the state of Oregon awarded Stratacache 19m USD state subsidies to relaunch manufacturing at the site. Instead of memory chips, Chris Riegel plans to manufacturer MicroLED for digital signage, automotive and other use cases. But ongoing discussing with local tax authorities and the pending delivery of MicroLED manufacturing equipment is continue to delay the start of production. Talking to invidis, Chris Riegel remains confident that production will start end of 2024.
But higher interest rates, new automotive semiconductor US production facilities and the global demand for semiconductor manufacturing equipment in general also has its effects on Stratacache’s expansion plan. “Customers of ASML – the world’s leading chipmaking manufacturing equipment maker – have to wait for several years to get tools.” Compared to that, the three years for Stratacache are negligible.
But Stratacache seems still very upbeat about the potential of MicroLED. For the many use-cases and the much lower energy-consumption. “MicroLED consumes 80 percent less energy than traditional display solutions.” Riegel doesn’t like to talk too much about sustainability and Green Signage, “as the topic is politically charged in North America.” His approach in convincing clients choosing more sustainable solutions is money savings – the “Green Buck”.
US Chips Act: Billion dollar semiconductor subsidies
The US Chips Act is part of a larger bill providing around USD 200bn in investments by 2031. The majority of it will go to research, but around USD 52bn is intended to support the construction of US semiconductor plants. Another USD 24bn are added indirectly through tax discounts for chip manufacturers.
Biggest beneficiaries are Intel and the world’s two largest chip contract manufacturers, TSMC and Samsung. All three are in the process of investing billions of USD in the US. And the Chips Act is also attracting new players like Bosch Automotive to the United States. None of them plan to manufacture MicroLED for automotive or digital signage, but the technologies and chip-manufacturing tools use similar equipment. Compared to the world’s largest chip companies, Stratacache is just a small fish.
