With over 1 million private retail establishments in the U.S. alone and retail sales exceeded $5 trillion the industry is bigger than ever—but also more competitive. And, don’t forget the global market surpassing $7.24 trillion!
Retail companies continue to evolve and diverge with technology. E-commerce was once a novelty, but now steadily holds 16% of the market. Then there are pandemics, and climate change, and… well… Be it rTech or intelligent retail, there is so much room for novelty.
As consumer expectations rise and technology reshapes shopping experiences, retail startups are driving the next wave of innovation, transforming everything from supply chains to AI-powered personalization.
Let’s explore how the most promising retail startups are shaping the future.
What is a retail startup?
A retail startup is a company that leverages technology, innovative business models, or data-driven solutions to transform the way products are sold, distributed, or experienced by consumers. Where traditional retailers rely on brick-and-mortar stores or legacy systems, retail startups focus on solving industry inefficiencies, enhancing customer experiences, and optimizing operations—sometimes as a solution for existing business and sometimes as its own retail entity.
These startups often integrate artificial intelligence, automation, digital marketplaces, and sustainability-focused innovations to improve every aspect of the retail ecosystem. Retail startups challenge conventional retail models and help businesses adapt to rapidly changing consumer behaviors.
How are retail startups changing the industry?
Retail startups are driving the evolution of the industry by introducing automation, personalization, and sustainability-focused solutions that enhance both the consumer experience and back-end retail operations. Here are some of the main ways these startups stirring things up.
1. AI-powered retail decision-making and automation
Many retail startups are using machine learning and predictive analytics to optimize inventory management, supply chain efficiency, and customer engagement. These AI-driven tools help retailers anticipate demand, reduce waste, and improve forecasting accuracy, allowing businesses to operate more efficiently with real-time insights.
2. Digital transformation of retail operations
Legacy retail processes, such as warehouse logistics and order fulfillment, are often inefficient and time-consuming. Retail startups are replacing outdated workflows with automated, AI-driven tools that simplify complex processes, reduce human error, and accelerate retail operations to keep up with fast-moving competitors.
3. Reshaping the secondhand and circular economy
The resale market is growing rapidly, and startups are making it easier for retailers to source, sell, and scale secondhand fashion and upcycled goods. With digital tools that facilitate online resale marketplaces and AI-assisted product curation, these businesses are bringing structure and efficiency to an industry that has traditionally been fragmented.
4. Advancing sustainability in retail
Many startups are focused on reducing waste and improving sustainability in the retail industry. Some are developing AI-powered design tools to minimize reliance on physical product samples, while others are optimizing supply chains to reduce excess production and lower carbon footprints.
These efforts are reshaping retail practices by integrating eco-conscious strategies into standard business operations.
5. Enhancing product design with AI
AI-driven design tools are revolutionizing the creative process in retail. Through leveraging generative AI, designers and brands can create customized, on-trend products more efficiently. The result is tools that help businesses respond to market demand in real time, reducing long production cycles and ensuring that products align with consumer preferences.
6. Creating seamless and intelligent shopping experiences
Retail startups are using automation and AI-powered personalization to improve customer experiences across digital and physical shopping environments. From AI-powered shopping assistants to intelligent compliance solutions for warehouse operations, these startups are making the shopping journey faster, more intuitive, and more efficient for both retailers and consumers.
10 retail startups shaping the future
New technologies are opening new doors, and that means new startups jumping in. Here are a few on the cusp of really shaking things up.
1. Cognitiwe
Year founded: 2021
Location: Tallinn, Estonia
Funds raised: $1.05 million
Founded in 2021, Cognitiwe is an industrial computer vision company that brings AI-driven predictive analytics to retail innovation and manufacturing. By converting real-time video and image data into actionable insights, the company helps businesses improve operational efficiency, reduce waste, and make smarter decisions. Cognitiwe’s technology empowers retailers to transition from reactive problem-solving to a proactive, AI-powered approach that enhances sustainability and profitability.
Key ways this startup is shaping the future:
Uses predictive vision AI to prevent supply chain and operational issues before they arise.
Enhances inventory management with real-time image analysis to reduce waste and optimize stock levels.
Improves sustainability by helping businesses lower energy consumption and minimize product spoilage.
Provides AI-powered pricing and shelf arrangement insights to boost customer satisfaction and sales.
Works in collaboration with global tech leaders like Microsoft to refine AI applications for retail.
2. Fashable
Year founded: 2021
Location: Esposende, Portugal
Funds raised: Undisclosed
Emerging from XNFY Lab—a collaborative initiative with Microsoft—Fashable is redefining the fashion industry with its ethical and proprietary AI solutions. Through bridging the gap between technology and design, the company equips factories, brands, influencers, and marketplaces with AI-driven tools that enhance product creation, trend forecasting, and customer engagement. Fashable’s innovations allow businesses to stay ahead in an industry that thrives on constant reinvention.
Key ways this startup is shaping the future:
Provides AI-powered tools to help designers and brands streamline product development.
Enhances customer engagement through intelligent personalization and data-driven insights.
Supports sustainable fashion by optimizing production processes and reducing waste.
Offers powerful solutions for influencers and marketplaces to connect with audiences in new, immersive ways.
3. Palona AI
Year founded: 2024
Location: California, USA
Funds raised: $10 million
With a team led by experienced tech veterans, Palona AI is bringing next-gen AI-powered customer engagement to the retail space. Co-founder and CEO Maria Zhang has positioned the company as a pioneer in customer-facing AI agents that personalize the shopping experience. Palona AI’s proprietary technology integrates multi-agent, multimodal AI models with emotional intelligence, enabling businesses to create AI-driven systems that learn, adapt, and act on behalf of customers.
Key ways this startup is shaping the future:
Develops AI agents that create personalized shopping experiences by understanding and responding to customer needs.
Moves beyond traditional chatbots with emotionally intelligent AI, enhancing brand-customer relationships.
Helps businesses automate and optimize customer engagement with action-oriented AI solutions.
4. Raspberry AI
Year founded: 2022
Location: New York, USA
Funds raised: $28.5 million
Transforming the creative process in fashion, Raspberry AI provides a generative AI platform that allows designers to develop photorealistic designs instantly. Eliminating the need for multiple physical samples and reducing time-consuming revisions positions the companies to speed up production and streamline creativity. Raspberry AI’s technology helps designers visualize products with accurate fit and drape, making it an essential tool for modern fashion brands. The company also has ambitious plans to extend its AI-driven design capabilities into other retail sectors, including furniture and home goods—making it a defiant watch.
Key ways this startup is shaping the future:
Reduces the need for physical samples, cutting down production time and waste.
Provides AI-powered design visualization, helping brands iterate on ideas faster.
Enhances realism in digital prototyping, improving accuracy in product development.
Expanding beyond fashion into furniture and home retail, revolutionizing multiple industries.
5. Goodwork.ai
Year founded: 2023
Location: Sydney, Australia
Funds raised: $4 million
Retail analytics is often slow, fragmented, and reliant on outdated tools—but GoodWork.ai is changing that. The Sydney-based startup is building an AI-powered analytics platform designed to give merchandise, finance, and operations teams instant, actionable insights. Rather than sifting through spreadsheets and static reports, retailers can ask GoodWork’s AI why sales dipped, how weather impacted promotions, or what changes led to a revenue spike—and get answers in seconds.
Key ways this startup is shaping the future:
Builds proprietary AI models that mimic expert retail analysts, providing instant trade performance insights.
Uses large language models (LLMs) to create a conversational interface, making AI-powered analysis more accessible to retail teams.
Quantifies the impact of promotions, weather, and other external factors on retail performance.
Acts as an always-on analyst, identifying performance shifts before teams even ask the question.
Helps large retailers eliminate thousands of hours of manual analysis weekly.
6.Ameba
Year founded: 2023
Location: London, UK
Funds raised: $7.42 million
Legacy retail systems are no match for the ultra-fast, AI-driven supply chains of Shein and Temu—but Ameba is helping traditional retailers fight back. By integrating generative AI into existing supply chain software, Ameba extracts and analyzes unstructured data to predict disruptions, reduce inefficiencies, and streamline operations. The platform aims to free retailers from outdated data silos, replacing manual processes with automated insights that help businesses make faster, smarter decisions.
Key ways this startup is shaping the future:
Uses generative AI to predict supply chain disruptions and optimize inventory.
Extracts valuable insights from supplier emails, WhatsApps, and attachments to eliminate fragmented data.
Automates analysis to reduce manual data input by 30%, saving time and costs.
Enables retailers to compete with fast-moving, AI-powered rivals by modernizing supply chain management.
7. RetailReady
Year founded: 2024
Location: California, USA
Funds raised: $3.3 million
Retail brands lose an estimated $40 billion a year due to improperly packed shipments, and RetailReady is tackling this costly inefficiency head-on. Founded by Elle Smyth and Sarah Hamer, alumni of Y Combinator’s Winter 2024 cohort, the startup replaces outdated paper warehouse manuals with an AI-powered tablet app that streamlines packing compliance. Digitizing complex retailer-specific requirements—such as folding apparel correctly or placing RFID tags in precise locations—allows RetailReady to help warehouse workers follow accurate, automated workflows to reduce chargeback fees.
Key ways this startup is shaping the future:
Digitizes phone book-sized warehouse manuals into an interactive tablet app.
Uses AI-powered compliance verification to reduce costly chargeback fees for brands.
Leverages computer vision technology to validate whether items are packed correctly.
Targets an overlooked yet massive compliance market, saving retailers and brands billions.
Backed by top investors, including Y Combinator and Stord’s co-founder.
8. Finaloop
Year founded: 2019
Location: New York, USA
Funds raised: $35 million
Finaloop is transforming e-commerce accounting with a fully automated, real-time bookkeeping platform designed specifically for online retailers. Unlike traditional accounting software, Finaloop integrates directly with platforms like Amazon, Shopify, Walmart, and TikTok, eliminating manual data entry and providing businesses with instant financial insights.
Key ways this startup is shaping the future:
Automates accounting and bookkeeping for e-commerce brands.
Integrates seamlessly with platforms like Amazon, Shopify, and TikTok.
Combines financial tracking, bookkeeping, and inventory forecasting in one system.
9. Refabric
Year founded: 2023
Location: Delaware, USA
Funds raised: $1.16 million
Bringing AI-powered creativity to fashion design, Refabric allows designers to transform inspiration—whether from art, nature, or history—into fully realized fashion pieces. Positioned as a revolutionary force in the industry, Refabric streamlines trend analysis, enhances 2D visualization for precise design refinement, and reduces waste through digital-first, AI-driven production workflows.
Key ways this startup is shaping the future:
Accelerates trend analysis to bulk production with AI-powered insights.
Provides advanced 2D visualization tools to refine designs before production.
Offers a vast digital library of patterns and design elements for inspiration.
Enhances sustainability by minimizing waste and promoting digital-first collaboration.
10. Fleek
Year founded: 2021
Location: London, UK
Funds raised: $20.4 million
The booming secondhand clothing market is still fragmented, with wholesalers and retailers relying on outdated sourcing methods. Fleek is modernizing the process by creating an online marketplace that connects wholesalers with retailers, making it easier to source and sell secondhand fashion globally.The platform has already facilitated the movement of 2.5 million clothing items across 70 countries, working with over 10,000 resellers and retailers.
Key ways this startup is shaping the future:
Digitizes and streamlines the wholesale secondhand clothing supply chain.
Brings large-scale wholesalers online, allowing global retailers to source inventory remotely.
Uses predictive analytics to forecast fashion trends and optimize sourcing.
Enhances transparency and quality control, helping retailers find authentic secondhand goods.
Supports sustainability efforts by increasing access to pre-loved clothing, reducing textile waste.
3 startup retail business ideas
While the retail startups we've highlighted are revolutionizing areas like AI-powered analytics, secondhand fashion, and supply chain optimization, there are still untapped opportunities in retail. Here are three startup ideas that address challenges not yet fully tackled.
1. AI-powered in-store navigation and personalized shopping assistant
Despite advances in online retail, brick-and-mortar stores still struggle with helping customers find products efficiently. Shoppers often wander through aisles searching for items, and store associates are not always readily available to assist. Large retailers, especially grocery chains and department stores, need smarter ways to guide shoppers and enhance in-store experiences.
Solution: A mobile-based AI-powered store navigation and personalized shopping assistant. Using computer vision and real-time store inventory tracking, this app would guide customers directly to the exact shelf location of their desired items.
2. Smart returns logistics platform for retailers and consumers
E-commerce return rates are soaring, costing retailers billions in logistics, restocking, and processing fees. Many consumers also struggle with inefficient return processes, dealing with long refund wait times, unclear policies, and inconsistent drop-off locations. The current system is both wasteful and frustrating for retailers and shoppers alike.
Solution: A smart returns logistics platform that optimizes and automates the return process. This startup would partner with retailers to offer an AI-powered returns assessment tool that helps determine whether an item should be resold, refurbished, or recycled—reducing unnecessary shipping and waste.
3. Subscription-based sustainable packaging for e-commerce brands
Sustainability is an increasing priority for consumers, yet most e-commerce brands still rely on single-use packaging that generates massive amounts of waste. While some retailers are experimenting with eco-friendly solutions, there’s no standardized, cost-effective system that makes it easy for small-to-mid-sized brands to adopt sustainable packaging without high overhead costs.
Solution: A subscription-based sustainable packaging service for e-commerce brands, offering reusable, returnable, and biodegradable packaging on demand. The startup would provide brands with customizable, reusable mailers and boxes, complete with pre-paid return labels that allow consumers to send packaging back for reuse. The service could also include smart tracking for packaging circulation, helping brands measure and communicate their environmental impact.
Thinking about building a retail SaaS startup?
The retail industry is evolving rapidly, and SaaS solutions are driving its transformation. Whether you’re building an AI-powered analytics platform, an automated supply chain tool, or a next-gen customer experience solution, having the right development partner is crucial.
DevSquad specializes in high-performance SaaS development, helping founders turn ideas into scalable, secure, and market-ready products.
Our expert-led product strategy ensures your concept is validated before development, and our agile teams accelerate your launch with pre-built SaaS frameworks that cut down time to market. With continuous improvements, flexible month-to-month engagements, and a focus on user-driven innovation, we make sure your retail SaaS stays ahead of industry demands.
Ready to build the next big retail SaaS? Learn more about our SaaS development process!
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