Developer: Amazon ‘great’ for brick-and-mortar retail
The founder and CEO of upscale real estate company Caruso has a somewhat contrarian view when it comes to Amazon.
In an appearance on CNBC’s “Squawk Alley ,” Rick Caruso addressed the so-called “Amazon effect” and shared his belief that the online retailer has actually been “great” for brick-and-mortar business.
Caruso, the only U.S. based developer with two shopping centers (The Grove and The Americana at Brand, in Los Angeles) in the Top 15 in the world based on sales per sq. ft., said he believes that e-commerce companies like Amazon teach retailers how to be more effective and competitive in the marketplace.
He also noted that retail is shifting to a hybrid model as online retailers recognize that “the social interaction with their customer – the sense of discovery and the sense of experience is critical to an overall retail strategy.” The fact that Amazon is opening physical stores “tells us that a hybrid model where you have digital and you have (brick-and-mortar) retail is very important,” Caruso said.
More action must be taken from major retailers and developers to deliver the “full experience” to consumers in physical retail. Amazon constantly markets sales from a box without any experience and we can do better. Michael Sapir, CEO, Sapir Real Estate Development
I’m Michael Sapir, CEO to Sapir Real Estate Development since 2001. I’d like to comment on Mr. Caruso’s understanding of Amazon. During our Real Estate recession Amazon gained a great deal of traction with the millennial generation. Amazon advertises instructional videos on how to order and live your life online away from the physical retail experience. In fact their physical stores are to teach and introduce further a completely online retail lifestyle. We saw this before when catalogs came out except online retail is more interactive and tailors to individuals with autologic programming. I believe the answer to Amazon unlike Caruso is for major retailers; Walmart, Target, CVS and major Developers is to launch an educational , social and cultural media campaign introducing the “full experience” back into retail shopping. Consumers work on computers , use smart devices for most every part of their lives. The shopping experience should be a real physical experience offline to touch, feel , small and socially interact with others. What’s the point of ordering jeans online from Amazon and waiting for a box “if” you NEVER put those jeans on and go out. Most retail outlets offer the human experience and social interaction and entertainment much needed in human life that Amazon can never Deliver in any box. I’m further available for interview. Thank You. Michael Sapir
b8ta disrupting retail—again
Fresh off its win as “Store of the Year” in the annual Shop! Awards design competition, tech-gadget retailer b8ta is extending its business in a new direction it calls “store as a service.”
B8ta has launched an initiative to help brands open stores with minimal effort compared to the traditional retail model — and for much less cost, according to the company. The new platform, “Built by b8ta,” comes as more and more brands, many of them digitally native, are looking to enter physical retail for the first time. B8ta aims to help them take the leap by providing them with a set-up store, complete with fixtures, state-of-the-art technology and staff. It describes the offering as “a fully built-out store.”
“We take care of everything — from the real estate to hiring and training the staff — on behalf of the brand,” explained Vibhu Norby, CEO, b8ta. “There is no upfront cost for the brand to build out the store.”
The concept builds on b8ta’s model for its own stores. Debuting in late 2015, in Palo Alto, Calif., the company now has nine freestanding locations and 70 in-store shops at Lowe’s. The stores are designed to give consumers a hands-on demonstration of cutting-edge tech products, many from emerging start-up companies.
The business model is unusual: Instead of earning revenue from product sales, b8ta leases space in its stores to the product makers, who pay a monthly subscription fee to b8ta. (All revenue goes back to the makers.) The makers also benefit from b8ta’s software and analytics program, which gives each brand key insights into critical real-time selling metrics, from dwell time to conversion rates, to help them understand just how shoppers are interacting with their products.
Brands that open a store using b8ta’s new platform won’t have to negotiate with landlords, sign a lease, hire design and construction firms, select fixtures, or hire store staff. And they won’t have to worry about technology. Instead, they will leverage b8ta’s data-driven platform and software that includes staff scheduling, inventory management, checkout and other capabilities.
“The brand will keep 100% of its sales, and completely manage store operations using our software,” Norby said. “We also provide powerful analytics that help optimize every piece of the store experience for performance.”
In return, the brand will pay b8ta a flat, monthly fee that is dependent on the square footage of the store and the going cost of the real estate in the store’s specific market. The company has partnerships with leading real estate owners as well as architects and contractors.
“Our economic model makes opening a store with us at least 50% less expensive than doing it on your own,” said Norby. He predicted that in 10 years, most brands who are going into physical retail for the first time will use someone else’s infrastructure.
Norby added that the b8ta platform lends itself to a variety of brands, including direct-to-consumer apparel companies, who are going into brick-and-mortar for the first time.
“Our goal is to have these stores open for a long time,” Norby said, “with a minimum of six months.”
The first brand to use the “Built by b8ta” platform will be Netgear, whose products include a wide array of home networking solutions. It will open a store in June, in the heart of the Silicon Valley, at Santana Row, an upscale lifestyle center in San Jose, Calif.
And more are in the works. b8ta expects from 10 to 15 more brands, including cosmetics, apparel and furniture retailers, to open launch stores using the “built by b8ta” format this year.
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