Off Brand

Retailers Are Now Making Stores A Lot More Like the Internet

A new startup is working with department stores to give them a ‘third wave’ retail boost

EEven with Black Friday looming, there’s not a lot of holiday thrill emanating from the traditional retail sector these days. The liquidation of Barneys is just the latest plot point in what’s become a very familiar story: department stores and big-box chains suffer as shoppers (especially younger ones) do more and more of their buying online. We’re deep into the age of e-commerce now, and the shopping excitement all seems to be digital.

And yet… surely it’s too soon to write off physical retail completely. Online sales still account for only about 10% of retail transactions. Maybe there’s hope yet for putting a bit more pizzazz back in analog shopping.

“A brand can learn that 100 people walked into the space, 20 spent some time looking at your product, five actually demoed it and, and three converted and bought it.”

Among those betting on, and trying to enable, this outcome is a startup called b8ta. In short, it’s luring innovative, digital-first brands into physical, legacy retail spaces, partly by deploying technology that offers consumer analytics that have been hard to collect in the real world.

I’ll explain b8ta’s business strategy momentarily. But first, to get a sense of how this all shakes out for a typical shopper, I paid a visit to Macy’s flagship Herald Square store in Manhattan — they are a b8ta investor.

On the first floor, a b8ta-branded space displayed tech and tech-adjacent products like Quip toothbrushes, Eone watches, and Common Fibers wallets. I lingered to watch shoppers paw and sample the merchandise — including one woman who tested a Theragun G3Pro for the better part of three minutes. In the mezzanine, The Market @ Macy’s — a b8ta partnership involving dedicated space within a dozen Macy’s locations, showcasing new and established fashion and design brands — was filled with offerings from “next-gen female entrepreneurs” backed by SoGal Ventures, which bills itself as “the first female-led millennial venture capital firm.” These included toy brand Lovevery; a techie water bottle called HidrateSpark; and the “gender-inclusive” eco-friendly underwear brand TomboyX.

The upshot: a lineup of brands with engaging energy and novelty that’s now more associated with e-commerce than with department stores. Fun shopping, IRL!

What’s tricky is making this a worthwhile endeavor not just for the shopper, but for the legacy retailer and the upstart brand. The answer, according to b8ta, is data. Its spaces are outfitted with a combination of hardware — touch-screen devices, cameras, and RFID sensors — that monitor how shoppers interact with whatever is for sale, and software that interprets that data for the brand.

“It’s the same story of tracking how a consumer behaved that, online, you would get from Google analytics,” says b8ta executive David Munczinski. “We’re trying to do that in a physical space. So a brand can learn that 100 people walked into the space, 20 spent some time looking at your product, five actually demoed it and, and three converted and bought it.” (The data is anonymous, he emphasizes.)

Founded in 2015, b8ta now operates about 20 self-branded retail stores, but is lately focused on deploying its underlying platform — they’ve named it Ark Marketplace — in other retail settings. Aside from its work with Macy’s, it has launched a fashion-oriented store called Forum, in Los Angeles. It has also partnered with the owners of the Toys “R” Us brand to use a b8ta-like model in new mall locations under the defunct big-box retailer’s familiar name. And it hopes to sell retailers with a significant footprint on the idea of using the Ark platform to turn over a chunk of space to newcomers willing to pay for access to physical retail.

The upshot: a lineup of brands with engaging energy and novelty that’s now more associated with e-commerce than with department stores. Fun shopping, IRL!

B8ta is, of course, responding to a perceived business-side opportunity — perhaps legacy retailers with significant footprints could benefit from essentially renting a chunk of space to startups. Think of this as something like a physical Shopify, offering consumer-goods startups a chance to dabble in physical retail without the risk of, say, a full-on pop-up store. “This makes it easy for a two-person startup in a garage to get their product from Indiegogo to consumers who can demo it and test it,” Munczinski says. “The brand can test pricing or the marketing collateral that they want to use.”

That might not sound exciting to a typical shopper. Munczinski argues it’s a “third wave” of retail, melding the digital and physical in a new way. And maybe it takes a new variation on digital analytics to give actual shopping a fresh boost — luring surprising and innovative brands into familiar department store or big-box spaces.

Maybe this is how shopping becomes engaging again: Not just for the one-time bargains of Black Friday, but because of what you can discover and — like that Macy’s customer with the massage gun — even road test. Maybe that helps make shopping in the real world something that it was always meant to be, but rarely has been in recent years: fun.

Author The Art of Noticing. Related newsletter at https://robwalker.substack.com

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