Macy’s takes stake in retail-as-a-service tech firm

Discussion
Photo: b8ta
Jun 13, 2018
George Anderson

Macy’s announced yesterday that it is partnering with b8ta, a retail-as-a-service startup founded in 2015 with the goal of giving consumers access to try new technology products before they buy. The department store retailer has also taken a minor stake in b8ta, with the intent of using its software platform to scale The Market @ Macy’s, the chain’s in-store pop-up concept.

“Macy’s is in the experience business. We’re always looking for new formats that allow our customers to discover and connect with our products and services in-store in a way that drives engagement with our brand,” said Hal Lawton, president of Macy’s, in a statement.

“We believe physical retail will thrive as a platform for discovering new products and brands. Macy’s was the best partner for b8ta to scale our pioneering retail-as-a-service model to a breadth of categories like apparel, beauty, home, and more,” said Vibhu Norby, CEO of b8ta. “With b8ta’s software platform and business model, product makers can go from solely selling online to launching their products with Macy’s in a few clicks. Our platform makes it easy for makers to deploy, manage, analyze, and scale amazing offline retail experiences.”

To date, Macy’s has opened its pop-up concept in 10 locations. The initiative has been pitched as a turnkey operational solution enabling companies to reach Macy’s customers. Those companies in the pop-up locations pay Macy’s a fee for the space while keeping all the sales revenue. The minimum rental length is one-month, and rates vary based on the store.

Over the next year, Macy’s plans to test different size spaces using b8ta’s technology. The retailer expects to expand the size of The Market @ Macy’s in some locations. Along with its recent acquisition of STORY, the department store chain sees The Market @ Macy’s as another way to establish itself as a destination for experiences that will enhance engagement with shoppers across its locations.

STORY, which was founded in 2011 by Rachel Shechtman, completely changes its layout and merchandise every four to eight weeks with a new theme. The concept emphasizes brand collaboration and focuses on delivering new experiences to consumers. Ms. Shechtman, a former brand consultant for Kraft and TOMS shoes, is now Macy’s brand experience officer.

DISCUSSION QUESTIONS: How do you see Macy’s using STORY and The Market to create compelling experiences for shoppers in its stores? Do you expect Macy’s to successfully ramp up The Market pop-up concept via its partnership with b8ta?

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Braintrust
"It's nice to see Macy's branching out and exploring new ways to deliver on its core premise and brand strength."
"It’s both fascinating and encouraging to see an iconic retailer such as Macy’s taking such bold steps with their investments in STORY and b8ta..."
"Cheers to Macy’s for boldly trying new concepts on the sales floor to thrill customers."

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19 Comments on "Macy’s takes stake in retail-as-a-service tech firm"


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Mark Ryski
BrainTrust

These are two small but potentially important pieces of a much bigger puzzle for Macy’s. Both STORY and The Market concepts are good moves directionally, however the challenge will be executing these at scale. I suspect these will both take a considerable amount of time to be fully realized.

Phil Chang
BrainTrust

I’ll admit it. I was a doubter. I hoped that Macy’s wouldn’t ruin STORY. With b8ta the possibility of success and retail joy increases signficantly.

Having a nimble technology partner to compliment a nimble retail experience (STORY) makes sense. Macy’s is working hard at being in the experience business. High five from here — I can’t wait to see what comes out of this partnership!

Ken Lonyai
BrainTrust
“b8ta, a retail-as-a-service startup founded in 2015 with the goal of giving consumers access to try new technology products before they buy” Macy’s has no business figuratively and literally trying to sell technology. Doing so only clouds their brand perception and it is not a vertical they can be competitive in. “Macy’s was the best partner for b8ta to scale our pioneering retail-as-a-service model to a breadth of categories like apparel, beauty, home, and more” If carefully curated by Macy’s or in Macy’s interest, their involvement in these categories via b8ta makes some sense. However, I don’t believe that a few years down the road, a revenue analysis is going to show much benefit nor will a customer acquisition analysis. Macy’s is acting as landlord with the hope of attracting add-on sales from the shopper attraction b8ta’s clients bring. That’s murky and the long way around to trying to reinvent the diminishing department store category. STORY was more in line with what Macy’s really needs: bold thinking and a new department store paradigm that is… Read more »
George Anderson
Staff

I think the following quote is why so many are optimistic about the prospects for the Macy’s and b8ta partnership:

“We believe physical retail will thrive as a platform for discovering new products and brands. Macy’s was the best partner for b8ta to scale our pioneering retail-as-a-service model to a breadth of categories like apparel, beauty, home, and more,” said Vibhu Norby, CEO of b8ta.

Carol Spieckerman
BrainTrust

It’s nice to see Macy’s branching out and exploring new ways to deliver on its core premise and brand strength. Forging outside brand and platform partnerships makes so much more sense than throwing darts at new categories (J.C. Penney) or crow-barring third party sellers into an online marketplace (many others). Newness and frequency have never been more important in softlines/fashion retail and STORY and The Market allow Macy’s to quicken the cadence through partnership, even as it maintains a more traditional pace with its core lines.

Max Goldberg
Guest

With STORY and The Market, Macy’s can create a treasure hunt experience for consumers, while sampling different product lines. b8ta will help them accomplish this. Perhaps these concepts will bring some excitement back to shopping at Macy’s.

Neil Saunders
BrainTrust

Macy’s is definitely going in the right direction with these initiatives. However, they are peripheral and do not remedy the problems with the core business, especially in apparel. Macy’s still has a lot of work to do there to secure a prosperous future.

Art Suriano
BrainTrust

I think Macy’s is on the right track and I like that they are experimenting with new ideas and concepts. The in-store customer today is looking for an experience that is different and exciting. Old store concepts are not it, and Macy’s has done a great job with breaking its traditional department store image compared to its competitors. The Market @ Macy’s concept is another move to pull them away from their competition and should appeal to customers who will be curious and will visit the pop-ups. Over time, I think Macy’s will continue to bring in more ideas and through STORY build a compelling in-store experience that could indeed make them the department store of the future.

Harley Feldman
BrainTrust

Under the STORY and The Market brands, Macy’s offers new and interesting products to consumers. Since these are not current Macy’s products being sold, it can offer some excitement and curiosity to the shopping experience. The challenge is, will this excitement be enough to entice the shopper to come to the Macy’s store regardless if she is looking for a Macy’s product or not? Adding b8ta to Macy’s toolkit should provide additional items for the shopper that are more technology-focused, ostensibly increasing the excitement level. However, this is not a slam dunk for Macy’s. It will take some time for these concepts to pan out.

Brandon Rael
BrainTrust

It’s both fascinating and encouraging to see an iconic retailer such as Macy’s taking such bold steps with their investments in STORY and b8ta, which will help enhance both their experiential and community-based retail strategies.

We were having far different discussions about Macy’s a year ago. However, these are strategic steps that the company has to make to stay top-of-mind, relevant, new and fresh to the customer. The challenge as we all know is the ability to scale and operationalize these experiences beyond the 34th Street Herald Square store.

Lyle Bunn (Ph.D. Hon)
BrainTrust

Macy’s direction will inspire other department stores and retailers to focus more fully on the visit experience. This will put pressure on retailers and brands to define their target shopper and on brands to take more ownership in customer conversion. And it holds the promise of making a Macy’s visit even more worthwhile.

Christopher Jordan
BrainTrust

Macy’s plan around The Market always made sense. They (as do other department stores and malls in general) needed to create a “draw” — a real reason for consumers to make the trip vs. the multitude of more convenient options they have for the same merchandise. In theory, The Market delivers that experience — something new, something different.

The concept should work, but is a tough one logistically — identifying/signing brands that will drive interest, getting the displays/pop-ups built consistently and quickly, measuring impact, etc. Build by b8ta should expedite a number of these steps. The question of the day is if Macy’s is looking to go fast, will b8ta (with the undisclosed investment amount from Macy’s) be able to scale to keep up?

Ricardo Belmar
BrainTrust

Macy’s continues to show us encouraging steps towards transforming their overall retail experience. With b8ta and STORY they are focusing on product discovery and a curated experience which they hope to scale. This is an important piece of the puzzle to bring more foot traffic to their stores and hopefully drive stronger brand loyalty with their customers. The missing piece now is how they will improve their apparel business while Amazon continues to chip away at them. It’s encouraging, though, to see how Macy’s is clearly trying to diversify themselves to become more than an apparel department store.

Matthew McAlister
Guest
This strikes me as simply another way Amazon is forcing brick-and-mortar retail to innovate by replicating some of their tried-and-true strategies. Amazon famously rents out sections of their warehouses to third-party vendors, charging them for the space while allowing them to take advantage of Amazon’s Prime shipping and other benefits on the Amazon Marketplace. No different here: these vendors pay for the space while taking advantage of Macy’s reputation and foot traffic. It’s interesting to see the way Macy’s has rolled this out, but I’m left with a few questions: what influence does Macy’s have over the product makers and the individual products that will be represented in their stores? How do they align the products in The Market with their rotating stock and planograms? How do they ensure the products in The Market are on-brand, if indeed product makers can go from “selling online to launching their products with Macy’s in a few clicks” through b8ta? All that said, I think it’s a great idea — I’m looking forward to this coming to my… Read more »
Cynthia Holcomb
BrainTrust

Macy’s is on a roll. The essence of their strategy? Experiential retailing married to a whole new world of product discovery. Baby steps now; real momentum for the future of Macy’s as the company redefines the physical world of retail. And no, I do not own Macy’s stock!

Georganne Bender
BrainTrust

Cheers to Macy’s for boldly trying new concepts on the sales floor to thrill customers. I like what Macy’s is doing with The Market and I look forward to seeing what it does with STORY.

That being said, those experiences will happen in a limited number of Macy’s stores. The customer experience for the average consumer is still hampered by tired stores where shopping isn’t much of an experience.

So while I love all the innovations coming to select locations, I still want to see its other stores shine a little, too.

David Weinand
BrainTrust

The reason Macy’s partnered with b8ta last year in its NY flagship was to gain intelligence to scale its Market @ Macy’s, so taking a minor stake is not a surprise. As I stated earlier this year in a blog, as the department store model evolves, I can see chains like Macy’s becoming almost entirely a retail-as-a-service model (with the exception of their major brand partners).

Trevor Sumner
Guest

STORY and b8ta provide a powerful combination of experience and enabling technology that give Macy’s a real chance at executing the Market strategy well. It’s an important recognition that success often includes augmenting the existing organizational DNA and one of the reasons we are seeing so much investment and M&A into enablement technology organizations.

Min-Jee Hwang
BrainTrust

Macy’s innovative use of both STORY and The Market @ Macy’s is redefining the shopping experience for department stores and shoppers alike. Not only do these concepts allow consumers to discover and test new products, but they also keep the shopper engaged by interacting with them on an emotional level. It’s concepts like this that keep modern department stores alive in today’s marketplace. I do expect that The Market @ Macy’s pop-up shops will be very successful in its partnership with b8ta. This is a way to keep the shopper on the edge of their seat and interested in what Macy’s has to offer.

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Braintrust
"It's nice to see Macy's branching out and exploring new ways to deliver on its core premise and brand strength."
"It’s both fascinating and encouraging to see an iconic retailer such as Macy’s taking such bold steps with their investments in STORY and b8ta..."
"Cheers to Macy’s for boldly trying new concepts on the sales floor to thrill customers."

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