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The Spoon

Daily news and analysis about the food tech revolution

b8ta

Experiential Retailer b8ta Furloughs Workforce, Cuts Corporate Staff Due to Coronavirus

With the exception of grocery, the COVID-19 crisis has hit every retail sector hard as consumers cut back and, in many cases, are forced to stay in due to mandatory shelter-in-place orders.

One of the early casualties of the tsunami is b8ta. The experiential retailer announced this week it would furlough its entire retail workforce and cut its corporate staff in an attempt to weather the storm brought on by coronavirus. The moves, announced in a letter to employees by company CEO Vibhu Norby, were effective last Friday.

In his letter, Norby said furloughed store employees would get paid through March 28 and receive a $1,000 relief checks (part-time employees get $500). Norby also said those corporate employees not laid off would get mandatory pay cuts.

The company’s business consists of both its own flagship retail stores (approximately 25 at the end of 2019) as well as its “retail-as-a-service” platform that powers experiential retail experiences for other retailers such as Macy’s (an investor) and the relaunched Toys R Us.

I’ve always been intrigued by b8ta’s take on retail, which utilizes a model that essentially rents space to product companies (similar to a consignment model) and provides brands granular data about retail customer interactions with their products. Products are often kitchen or food related, such as the Aveine wine aerator or the Hurom slow juicer, and companies such as Thermomix have sometimes used b8ta storefronts as a way to showcase product features and get user feedback.

Norby indicated that b8ta hopes to reopen stores in coming months and welcome back retail employees. The company raised $50 million in funding late last year, so it would appear they have enough of a war chest to weather the coronavirus storm. It’s kinda of a bummer they couldn’t use some of that cash to continue paying its employees past March 28, but it appears the company’s focus is on ensuring its long-term survival by slowing its burn rate through the crisis.

Beyond payroll, the company no doubt has to continue rent payments in upscale retail locations in places such as New York City, San Francisco and Seattle. As well, many of the products sold at b8ta’s own stores are higher-priced, discretionary products, so the company is likely forecasting decreased demand well into 2021 as most consumers deal with financial uncertainty due to the economic fallout from COVID-19.

In a piece of related news, company President and cofounder Phillip Raub announced he would step away from a full-time role at b8ta. He hinted that he has something new he is working on and would share details soon.

Can Smart Kitchen Avoid The Missteps Of The Smart Home?

A few years ago, signs of the coming smart home era were everywhere: Retailers like Staples launched their smart home lines, old-line manufacturers like GE partnered up with fast-moving startups like Quirky, and even Apple launched its own smart home framework called HomeKit.

And of course, any ‘next-big-thing’ would not be complete without a high-profile acquisition. That came in January 2014, when Google announced they would buy Nest for over $3 billion. If the smart home was hot before Google gobbled up Nest, it got white hot after. More money poured into startups, new standards emerged, and Google, not surprisingly, acquired more companies.

But by mid-2015, the bloom had come off the smart home rose. Quirky booted its CEO and looked to sell off assets, Staples scaled back its smart home ambitions and shuttered the project altogether this year, and Apple’s HomeKit stuttered and stopped right out of the gate.

And what about Nest, Google’s $3 billion smart home unicorn? After some high-profile struggles over the past few years, founder Tony Fadell left in June 2016, while the group he left behind is forced to watch as Google hands newer smart home efforts like Google Home to other groups.

Can smart kitchen, which relies on many of the same technologies, avoid the same fate? Below are some ways in which the smart kitchen may differ from the broader smart home.

Focused Benefits

One of the greatest ironies of the smart home – where the promise of your things working together is the raison d’être – is that some of its biggest hits are those products that work well largely on their own. Smart doorbells, video cams, and connected lightbulbs all work as part of a larger fabric of devices but often fly solo as consumers embrace them for the product-specific benefits they offer.

As it turns out, many consumers buy new kitchen tech with a singular focus in mind.  Whether it’s a Bluetooth meat thermometer to monitor your steak while you’re watching football or the sous vide circulator you use to cook seafood, those smart kitchen products that have been successful have been focused tools that do one or two things well.

Just Stash It

One of the reasons retailers have been disappointed with smart home products is the category suffers from high return rates. With complaints ranging from installation problems or interoperability issues, there’s a good chance that a consumer will return a smart home product once the shine wears off.

With smart kitchen, things are a little different. Some products like sous vide circulators often get put into regular usage as consumers embrace a new way to cook, while others, like Bluetooth thermometers, may get stuck in the drawer for long periods of time, only to get called upon when needed.

Either way, according to retailers like b8ta, consumers appear less likely to return them.

Smart kitchen products have “extremely low return rates” relative to other connected home products according to Vibhu Norby, CEO of IoT product retailer b8ta.

“I think people are more likely to stash connected kitchen products they don’t use vs. return, which is quite different from the rest of connected home.”

Riches in Niches

While some early adopters may have a deep passion for tech, no one but the most ardent geeks would say they’re passionate about connected lighting or a learning thermostat.

With food, there are deep veins of passion to mine nearly everywhere you look. If juicing is your life, $700 for a Keurig for juice might seem like a good deal. Want to explore precision cooking to try and cook like a James Beard award winning chef? Drop $1800 on the Control Freak. Love entertaining at home but can’t afford a bartender? Perfect Drink might be your answer.

One Big Similarity: It’s All New To Consumers

However, despite these differences, there is one thing that the smart kitchen and smart home have in common: both are mostly new to consumers.

While most consumers would instantly understand something like a robotic bartender, the reality is it – and many other smart kitchen products – represent a much different way of doing things than the status quo. And even more staid products like Samsung’s Family Hub fridge are going to take some time to catch on, as most consumers will find features like image-based inventory recognition – and $5 thousand plus price tags – somewhat exotic.

Bottom line: The smart kitchen has unique dynamics and taps into deep areas of interest for consumers that may enable it to avoid some of the broader smart home’s problems but, just as with the smart home, the need for market education remains.

Sears Gets Serious About The Smart Home (But Will It Enter The Smart Kitchen?)

Sears debuted a line of private labeled smart home products last week, including a water heater retrofit module and a connected riding mower.

Our Take: Like many brick and mortar retailers, Sears is struggling in the age of Amazon and Costco. Also like many others, the iconic retailer is beginning to turn to connected devices as one way to possibly reinvent itself.

Sears has always derived a significant amount of its business from its own private label brands such as Kenmore and Craftsman, and given the retailer’s historically strong market share in its core markets (like tools) it’s worth noting the move. While the company has yet to announce any connected kitchen appliances, we think doing so would be an interesting move since Kenmore appliances appeal to middle and modest income households and could help mainstream the connected white goods category.

Bottom line, Sears may also want to rethink attention to its traditional sales floor plans and formats in its effort to sell connected devices. Its customers are generally middle to late stage adopters, so it would benefit them to show product benefits through in-store experiential retail formats. I’ve written a lot about how it often takes a new approach to selling products in the era of IoT, one that focuses on experiential retail and possibly even entirely new models like that from B8ta.  While Sears may have a hard time remaking themselves overnight, they could at the very least begin to experiment with lab-style offshoots like B8ta or Target’s Open House in San Francisco.