PALO ALTO, CA— While many retailers struggle with the concept of connected home products, b8ta, an independent retailer, has developed a unique product selection and merchandising strategy that has enabled it to prosper in the era of smart home.
Founded in late 2015 with one store front, located here, b8ta has grown to three, with two new locations in Santa Monica, California and Seattle, Washington.
Each store highlights four categories: Home, Move, Sense and Play. While the retailer’s product selection does include non-connected, electric or battery-powered products, it features a wide variety of connected home and health devices in its Home and Move sections, including Coway’s air purifier, AirMega, Simplehuman’s Sensor Mirror Pro and Qardio’s blood pressure monitor and body scale, for example.
According to Phillip Raub, b8ta co-founder and CEO, while much of the industry is rushing towards e-commerce, successful retailing of connected home devices will be dependent upon the brick-and-mortar experience.
“Everyone is chasing Amazon. Right, wrong or indifferent, they’re chasing Amazon, and the problem is that online sales still only make up about 10% of total sales,” he said. “Seventy-eight percent of consumers still want to touch and feel a product before they buy it. My hunch is that number is much higher when it comes to new technology, consumer electronics and anything that is connected.”
According to Raub, b8ta stores experience, “average dwell times three times that of the industry average” with consumers “looking at 40 to 50 products” per store visit.
This success, according to Raub, is directly related to its product selection and merchandising strategies, which emerged as an approach to make the most of both the e-commerce and brick-and-mortar worlds.
“How do you bring the ease and simplicity, the attributes of online, into the physical world but keep the things that are great about those [brick-and-mortar] elements. That was truly what we were trying to do,” he said. “Most retailers just don’t look at it in that framework. They are bogged down… and really fail to understand that there are new and unique ways that they should be looking at things.”
Open Marketplace
When it comes to product selection, Raub said b8ta tackles the process in contrast to traditional retail strategies. “Retail has their buyers and sometimes I think their judgment is clouded by how much money the company has or the longevity of the company,” he said. “If we had gone down that path there’s a lot of product that would have never made it into b8ta that have been wildly successful within our stores. For us, it was how do you create an open marketplace that just allows for products to come and go?”
That open marketplace approach allows vendors to request retail space in b8ta stores virtually, through a sophisticated online dashboard, making the onboarding process quick and simple.
Through the dashboard, vendors can also configure and update their in-store digital displays from anywhere and at anytime. Each brand is able to manage its messaging, pricing and imagery, and b8ta, through its proprietary retail technology, offers live insights into capture rates, dwell times and engagement, according to the retailer.
As the retailer is able to bring products in quickly, its technology driven approach allows for product to cycle through the store quickly as well. Vendors can choose which store locations they want to offer product and can quickly exit if, for example, the products are not resonating with consumers or are in need of price adjustments.
Raub noted, “My partners and myself were all previously at Nest, and we recognized that too often for makers, especially new companies coming into the space, it’s very challenging to get product onto shelves. I think typically today in retail the first thought is, ‘how do you create a better consumer experience?’ While the consumer experience is absolutely critical, the maker experience is also critical and that was always forgotten.”
Merchandising A Smarter Home
When it comes to the store’s merchandising strategy, Raub said the stores were intentionally designed for discovery, “letting people come in and look at a product in an unboxed, hero like experience.”
Raub noted that the stores were designed with a feel similar to that of a museum or gallery, where consumers can look at one item “and feel like it’s the only item that’s in front of you.”
“There isn’t something on top of it or underneath it, there isn’t someone standing on top of you because they’re looking at the product below,” he explained. “We’ve created an environment where it’s safe to look, to try, to learn about things. You have this freedom to roam and check things out. I think that’s one way that we’ve seen consumer habits changing.”
The retailer’s staff is also trained on every product merchandised, and Raub noted that having a knowledgable staff that can speak to every product, answer questions and truly educate consumers “just changes the whole environment.”
When it comes to the store’s mission, Raub noted that he views it more as a retail service rather than a competitor. “It’s not necessarily about going in and opening thousands of b8ta stores throughout the world, it’s about helping retailers be better, providing them the tools they need in order to change the landscape for makers as well as consumers,” he said.
He added, “We do think that what we have and what we built is definitely scalable, and we think that, in a short amount of time, we have been able to start changing the conversation a little bit. Things need to change.”
In fact, b8ta is the company behind the new Smart Spot concept at Lowe’s. Currently, Lowe’s is testing the concept as a store-within-a-store in three California locations, in an effort to merchandise and education consumers on connected home devices.
Merchandising in the SmartSpot locations, powered by b8ta’s proprietary retail technology and similar to that of its own retail locations, features digital displays that vendors can adjust remotely. Vendors are also able to capture information about customer interactions, and the locations offer on-site experts trained on smart home products.
“Lowe’s already established themselves as a best in class experience around connected home, they are bringing in augmented reality to help people design their homes and they were the first ones to take a gamble on Nest, but still there were opportunities,” Raub said. “While I don’t think they’re going to change their whole business model overnight, I commend Lowe’s in the sense that they realize the landscape of retail is changing and they need to do things to keep on top of that.”
