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Retail-As-A-Service. How a Silicon Valley start-up reinvents the retail store

Updated: Dec 16, 2019

Stationary retail is under pressure worldwide due to e-commerce competition. Many once strong chains, especially from the fashion sector, have disappeared. Others have changed and built their own e-commerce channels.

Physical retail is under pressure

On the other hand, e-commerce has also allowed many small manufacturers to address a much larger clientele than they would otherwise have been able to. More and more so-called direct-to-consumer brands are emerging that only sell their products online. These include brands that sell sustainable fashion or healthy food. Despite a theoretically unlimited market thanks to the globalized e-commerce, DTC brands often lack something quite important: customer connection and their direct feedback. Online questionnaire forms cannot replace the personal exchange with the customer, since the emotional side and specific queries are not possible and valuable details are lost.

DTC brands, which only sell online, run the risk of missing the customer needs, missing trends or not recognizing opportunities for improvements. Opening their own physical stores is a difficult undertaking, especially for small brands. There is a lack of experience in retail and good locations at affordable rents are still difficult to find. In addition, own stores require significantly higher operating costs and much more personnel.

There is therefore a lack of physical retail space for brands that are unable or unwilling to open their own stores. This demand has been recognised. And as it was the case at the beginning of e-commerce in the 1990s, once again not from classic retailers: after the tech companies had disrupted stationary retail, they are now setting out to reinvent it. "B8ta" is one of their pioneers:

Founded in 2015 in Palo Alto, the tech start-up "b8ta" describes itself as a retail-as-a-service company and today operates around 20 stand-alone stores and shop-in-shops in department stores. In 2019 b8ta opened the first international store outside of the US in Dubai.

b8ta store in Palo Alto, CA

In the b8ta stores manufacturers of consumer products pay rent for a specific surface area, which can be as small as just a part of a shelf. The amount of the fee is based on the sq m and the services used. The b8ta shops are strongly focused on consumer electronics. All products in the shops are unpacked and can be tried out and purchased directly in the store. The revenues go directly to the manufacturers. The shop staff, called "b8ta testers", support customers with demos and product information provided by the manufacturers of the exhibited products. The manufacturers get a direct feedback of the customer reactions by a software platform provided by b8ta. It is either the customers themselves or the staff who enter data on the customer experience. Intelligent cameras with heat sensors are installed in the store, which supply the software platform with additional information on customer interaction. The manufacturers thus receive daily feedback and can react with product adjustments or marketing strategies.

In the summer of 2019, I reported in this blog that the Toys R' Us toy brand, which had gone bankrupt, had risen from the dead and will open new smaller store formats. Surprisingly, Toys R's Us announced that this would be done in collaboration with b8ta. At the end of November 2019, the first of these new toy stores opened in New Jersey. Unfortunately, I have not been able to visit it yet. Information about this can be found e.g. under this external link.

Instead, I yesterday visited “FORUM”, another store concept of b8ta, which opened in mid-November in Los Angeles. With Forum b8ta is reinventing the fashion store concept. I am very grateful that the management of Forum not only invited me to visit their first store, but also personally explained the concept to me with a lot of time and enthusiasm. The world's first Forum store is located on Melrose Avenue opposite the famous Melrose Place in West Hollywood.

The worldwide first FORUM store at 8406 Melrose Avenue, Los Angeles, CA 90069

In the approx. 100 m2 shop you find brands like ALALA, BootayBag, Devialet, FVITH, Hærfest, Lark & Berry, THEY New York, W-Co and many others like Absolut Art, Behno, Breadband, Just Human, Remu Apparel, Tact & Stone, The Laundress and Unemployed Denim. The fashion brands are complemented by jewellery accessories from local designers and home accessories brands. A corner is provided free of charge to the CFDA, a not-for-profit association of 500 fashion brands from renowned designers.

The technology and the general store concept works in the same way as with the b8ta stores. Here, too, there are cameras that show the manufacturers the customer interaction with their products. In addition, the sales staff give feedback to the brands via an online tool.

Forum also offers a new kind of wardrobe that enables brands to automatically adapt the lighting and images of the rooms to match with their aesthetics and brand stories. Customers can request different product colours and sizes directly from a digital display. When a garment is taken to the wardrobe to be tried on, the system recognizes the brand and the exact product by a RDIF chip in the garment. Using a display, brands can suggest combinations of garments and promote social networking. Buyers can also find out about the brand and products.

According to its founders, Forum is meant as a "marketplace" in which customers get to know the products and their background and exchange ideas with others before making a purchase decision.

I believe that this approach will help to keep physical retail alive. I'm looking forward to seeing more shops like Forum or b8ta, because their focus is on the customer and his experience. Actually, this should have always been the case. So e-commerce may have saved stationary retail at the end of the day...

Michael Dressen

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Store Location  8406 Melrose Avenue, Los Angeles, CA 90069

Store Hours  11:00 AM - 7:00 PM

Connect Website: Instagram: @ShopAtForum

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