When B8ta launched in 2015, I loved the idea. What wasn’t there to like about a highly experiential, tech-powered retail concept where consumers could try out cool new gadgets and companies could get invaluable early feedback about their products?
The same with Amazon Books, which opened the same year. I mean, sure, it almost seemed cruel that the dominant e-tailer was going to head to head with Barnes & Noble on their turf, but that didn’t mean I wasn’t intrigued to see how the tech giant might rethink physical goods retail.
Fast forward to this year, and within the span of a couple weeks, we’ve learned both B8ta and Amazon Books are closing their doors.
Contrast this with the world of food retail. Everyone from Amazon to Walmart to upstarts like Nourish & Bloom are employing cutting-edge technology like AI, robotics, and more to power new food shopping experiences. So why is it that tech-powered food retail is flourishing while other retail concepts seem to struggle?
Part of it may be due to changing consumer habits post-COVID. B8ta founder Vibhu Norby talked about this when explaining the company’s struggles with Modern Retail:
“Although foot traffic began to tick back up, “a lot of specialty retailers like us, we had a much slower recovery curve,” Norby said. “A lot of landlords – they were looking at percentages, looking at averages…trying to determine who they should give concessions to.”
That slower-than-expected recovery led the company to close 15 of its stores roughly a year ago to cut costs, even though b8ta was still on the hook for leases. “We didn’t really have a choice…part of the plan was to negotiate settlements of different types with the landlords,” Norby said. Eight stores in California, Colorado, Massachusetts, New York and Texas remained open.
In other words, physical goods retail had struggled for years and COVID just made things much worse, killing walk-in traffic during the worst part of the pandemic and permanently reducing traffic during the long and slow recovery.
Another big reason is that most retail industries outside of food have already been cannibalized by e-commerce. Items like books and electronics, which is pretty much all Amazon Books sold. Of course, it has to be noted that Amazon itself is as responsible for the death of physical goods retail as anyone, all of which makes the Amazon Books concept seem something of a self-indulgent thought experiment. But thought experiment or not, it does say something that a company as inventive and tech-forward company as Amazon couldn’t make physical retail work.
Finally, it may have a lot to do with how entrenched physical retail food shopping is, even two years into a period of massive growth for online grocery shopping. The reality is that even after grandma and grandpa finally tried Instacart, most people, young and old, continue to shop for some or all of their groceries at their local store. That’s for many reasons, whether it’s the difficulty of selling fresh food online or the last-minute nature of many dinner plans. Still, I imagine the biggest reason is this: Consumers like to see, touch, smell, and taste the food before buying it.
I still think there’s a future for new retail concepts, but potential operators should tread carefully and make sure it’s not an industry where consumers can easily buy the product on Amazon or elsewhere.
And, if possible, sell some food.
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