Kyle HallIn the digital world, retailers know more about you than ever before. With a few cookies on its website, that camping store you bought a tent at last month can know about your web browsing history, information you've entered into forms, your search history, and your physical location. Privacy is always a concern online, but this technology allows you to see ads that are much more relevant to your interest: more camping supplies, less Grandma's china. But what about the real world? What does the liquor store down the road know about you? Surprisingly little, in fact. That's the quandary that Kyle Hall is trying to solve. Hall, a retail expert who sold his company PNI Digital Media to Staples, thinks he has the solution with his new company, INEO Solutions (INEO Solutions Stock Quote, Chart, News, Analysts, Financials TSXV:INEO). Teaming up with Greg Watkin, INEO\u2019s Chairman and founder, the pair have launched a global effort to make the physical world as rich in information as the digital world is. Cantech Letter talked to Kyle Hall about what's on the horizon for INEO. Kyle, tell us how INEO came together... Greg Watkin, INEO\u2019s Chairman and founder, had a brilliant tech career developing RF and RFID technologies for aerospace companies and he was looking for a new product or market area where he could use his knowledge and skillset. He ended up looking at retail theft prevention systems as they use antiquated technology for the most part and the field was in desperate need of innovation. While looking at these products he was wondering why they did not take advantage of new technologies and put in large display screens and edge processing power. This sent Greg on a quest to develop the technology to re-invent the entrance of retail stores. About the same time, I had just finished my two-year commitment to Staples after selling PNI Digital Media (a TSX listed company) to them. My frame of reference was the lack of data a retailer actually had about the customers entering their stores. Things like basic traffic counts were not commonplace. The retail sector has been underinvesting in technology and innovation for years. Greg and I saw both of these opportunities as being a problem we could solve with one technology solution we called the Welcoming System. We combined Greg\u2019s technology vision with my retail and sales expertise and INEO in its current form was born. What is The Welcoming System. Can you compare it to another product? The Welcoming System is a fresh take on what the front entrance of a retail store should look like. Historically the space at the front entrance of a retail store is reserved for the retailers\u2019 loss prevention equipment. INEO replaces these legacy loss prevention systems with our Welcoming System which provides the same loss prevention capabilities, but also has a bright, bold, digital display screen which serves up real-time messaging and advertising to customers as they walk into the store. No one else has this capability as the industry literature all states that you can\u2019t put a lot of electronics anywhere near these loss prevention systems or they don\u2019t work properly. INEO developed its own technology which combines loss prevention systems and digital display technology within one product, and we have been issued a patent for this capability in Canada and the United States (PCT priority filings have been made in Europe and other countries worldwide). Because of our patents, no other company can do what we can do. We then pair up artificial intelligence technology with edge processing power to detect customer traffic and deliver rich demographic information the retailer. We also correlate the retail store\u2019s traffic with third party data sets such as census and weather data to provide the retailer with predictive analytics capabilities. What problem are you solving for your clients? Retailers have a need for loss prevention systems to reduce theft, but they also need to make their stores look fresh and appealing to their customers. Additionally, they also need to have data for proper decision making. INEO delivers all of this. For a simple take on it, lets look at two things: store marketing and customer service. For in-store marketing, the retailer has traditionally relied on things like a printed flyer which customers can pick up as they enter the store, however, in the age of COVID, that printed flyer has more or less been eliminated. Retailers with INEO Welcoming Systems can instead put their specials and targeted products onto the INEO screens and market them in a very brand positive way right at the entrance of the store. For my customer service example, the stores need to know things like conversion numbers. Sure, they have cash register data but they need to pair that up with the number of customers actually entering the store. They need to test things like do they convert better if they add an extra salesperson to the sales floor, do they convert better if they improve signage, aisle markers etc. INEO solves these issues for our retailer clients. What is INEO's revenue model? INEO\u2019s revenue model is a combination of ongoing advertising revenue and pure Software-as-a-Service (SaaS) monthly fees. Our plan is to always own the systems, delivering them to the retailer or distribution partner under license. This way we secure our recurring fees. We initially launched our Welcoming Systems in a network of independent liquor stores across Western Canada. We own and install these systems and in return we collect the advertising revenue generated from these locations. With the large national and international retailers, the model shifts to a SaaS monthly fee which we receive for operating and managing the network of Welcoming Systems on behalf of the retailer. The large retailers are responsible for securing their own advertising content and our distribution partner takes care of the cost of the hardware and installation. What is the capital expenditure situation at INEO? Are you manufacturing your own hardware? Today we take care of the manufacturing and installation of the Welcoming Systems in our network of independent liquor stores. We buy components and the large LED screens from various suppliers while our circuit boards are assembled by contract manufacturers, but we control everything else and run a just in time inventory system to build systems as we need them. Greg is well versed in lean manufacturing and that is one of our guiding principals. For the large retail chains, we recently announced a global distribution agreement with Prosegur, a multi-national security solutions company, who will be responsible for funding, manufacturing, and installing INEO\u2019s Welcoming Systems. This allows us to scale our manufacturing and operations while eliminating our manufacturing capex. Now we can concentrate on expanding the business and our technology including our analytics and cloud-based advertising delivery platform. Can you tell me more about this recently announced partnership with Prosegur? We are very excited about working with Prosegur, a global company headquartered in Madrid, Spain, who reported sales of approximately 4.2 billion Euros in 2019 while operating in 26 countries with over 160,000 employees offering global and comprehensive security solutions. Prosegur has enormous reach into some of the largest retailers in the world, has a very strong brand name, has significant financial means and an enormous distribution network to scale the INEO Welcoming Network. Working with Prosegur will significantly boost our sales, manufacturing, distribution and installation capabilities. This arrangement with Prosegur shifts INEO on to a SaaS business model with high-margin revenue streams and predictable cash flows. We have already started working with Prosegur on securing and installing INEO\u2019s Welcoming Systems in several pilot locations within some of the world\u2019s largest retailers, including but not limited to, the grocery and home improvement markets. Do you expect a bump in business as the post-COVID era emerges this year? Yes, we do. We are expecting 2021 to be a big bounce back year for the retail tech sector from the impacts of Covid. There has been so much contraction in that space but the retailers who survived will ramp up their investment for products and services just like ours. The INEO Welcoming System is unique in that it drives the retailers\u2019 bottom line by reducing their losses and also fueling their sales. The sales boost is delivered by better marketing at the front entrance of the store and by better knowing their customers through our data capabilities. How does your background with PNI Digital Media help establish INEO? I had a lot of success at PNI in dealing with some of the largest retailers in the world, including names such as Walmart, Tesco, Costco, CVS, Walgreens \u2013 you name a big retailer and we likely provided their online photo services. We did that by starting small and delivering great technology and showing operational excellence. PNI signed Black\u2019s Photography in Canada first and then got a test with Costco. Then we signed Walmart Canada. Then we signed Costco US and CVS and it rolled from there. We are doing the same thing at INEO. I also had the privilege of being CEO of a company which was born out of the carnage of the dotcom bubble and taking that company first to the TSX-V and then in the midst of the world financial crisis, a full listing on the TSX. I will say my PNI experience and Greg\u2019s Bombardier and Epic Data experience has led us to build this company better from the ground up. Everything we have done has been to make sure that we can scale this company for growth as we land contracts with the biggest partners we can imagine. What do you want to accomplish in the next twelve months? Next year is going to be a massive growth year for INEO as we have a very large pipeline of retail locations to install our Welcoming System in. We have proven our technology and our operational capabilities by deploying an independent liquor store network. Our next step is working through the pilots we have secured at major national and international retailers and rolling out full deployments. After that the sky is the limit. INEO is an annual sponsor of Cantech Letter.