Retail’s old normal pre-COVID-19 is out, and the new normal is in as retailers begin their store reopenings.
As part of a series on the C-Suite, Sourcing Journal caught up with Vibhu Norby, co-founder and CEO of retail tech startup B8ta, to get his thoughts on the new normal and how he thinks the pandemic will foment change in retail. Norby co-launched the experiential retail company five years ago with Phillp Raub, who in March elected to step down from his role as president in running day-to-day operations.
B8ta was founded after the Great Recession, and Norby says economic downturns represent a ripe time for resets. With the U.S. mired in a down market, and if Norby is right, upcoming changes could herald a new era in the retail landscape.
Sourcing Journal: Obviously the past few months have been unprecedented in retail, between the coronavirus pandemic and then the social unrest that we’ve all seen happening across the country. What has it been like for you as the founder of a startup?
Vibhu Norby: It’s been a crash course on leading through a crisis. It feels like a war. The meetings we’ve been having these days have been so far [removed] from a peace-time conversation. It has been all about protecting our people and our stores, and that’s what it has been for three-and-a-half months now. It is what it is. It’s the company that I chose to start. I didn’t have to do it, and I think the good thing is that our people care about the company, from the employees to the customer brands that we work with. Everybody has come together to be supportive and are working really hard. There’s an amazing and enduring spirit there and it helps me every morning.
SJ: Given the changes that COVID-19 is wreaking on the retail world, particularly with ongoing concerns over social distancing and public health safety issues, what do you think is next for the sector?
VN: The next step is shopping by appointment. Retailers can be the host to more people by scheduling out hours with associates. The customers pre-book visits ahead of time or at the door…. We found that people who book appointments have intention [to buy] and are better customers. They buy more than those who walk in off the street. The learnings for post-COVID-19 is that there is a new normal and that things are never going back to the old normal. We are intrigued by how customers have been behaving these days. There will be some positive changes from this, for sure.
SJ: What would you say will be the top three key positives from the experience of the last few months of shutdowns?
VN: One, the stores overall will be a lot more personal, and so I think also that the experience will be better. Two, the stores are going to be a lot more cleaner. We do clean our stores every night, but had never thought to do a deep cleaning or disinfecting every night. Maybe we do once a month, but not everyday. Maybe we should have done it, but it did not occur to us. Every store and restaurant now will be much more sanitary. Three, there are still too many stores in America and there’s going to be a lot less of them. The types that are going away nobody cares about anyway….. There will be high vacancy rates for malls next year, and the costs [for] those spaces will come down. And when the cost of the spaces come down in the retail world, you will get to see more innovation. People can now afford to take risks because affordability always leads to innovation. Looking into the next three- or four-year horizon, malls will be more interesting.
VN: In the last couple of years, there’s been a growth of new brands and retail concepts. A lot of core things happened after 2009. Crowdfunding was an alternative way for brands to get funding. Shared office space was another trend, and it lowered the costs to start a company. Shopify and [similar] platforms exploded in the last recession…. Recessions are a great reset for entrepreneurship. There’s a lot of hope ahead. In a recession, a lot of companies come to an end, and the worst ones tend to have been artificially propped up.
SJ: I chatted with co-founder Phillip Raub in early March and he spoke about the upcoming B8ta acquisition of 3Den, a lounge on the fourth floor at Hudson Yards in Manhattan. The plan was to rename it The Lounge by B8ta and use it to offer events and blend hospitality with commerce for your brands, but that was before the state and local mandates to shelter-in-place that forced retailers to temporary close their stores. Has B8ta closed on that deal?
VN: Yes, we did acquire the lounge. It was in the midst of retailers shutting down stores in March. We’ve not made any formal announcement, and the [shopping center at] Hudson Yards remains closed [except for curbside pick-up].
SJ: B8ta has launched ShopSafely, a resource located at shopsafely.co, to keep customers informed on safety procedures for the top 200 retailers in the U.S. It also incorporates a rating system using up to 14 sanitation factors. Tell me a little bit more about how this research came about.
VN: Since March, we started tracking what retailers said they were doing around safety. Initially, it was about [supporting] our own research to open safely, but the research kept growing and we assigned one of our teams from retail to go through the top 150 retailers and just monitor them. Most retailers were issuing policies, week by week, adjusting safety [measures] as we learned more about the virus. As that became clearer, the policies continued to change. There’s been a phased roll-out in retail, and grocery has different safety policy procedures than apparel.
SJ: What have you found in general?
VN: A lot of the work around safety that we can do is about communicating it [because] it’s important for shoppers to know what to expect when they come to a store. For most of these retailers who are trying to manage these policies at scale, it’s important for store managers to understand what the store policies are…. A number of retailers reached out [and] wanted us to update our dashboard [after] they adjusted their website policy on what kinds of sanitations they are doing.
SJ: But are consumers actually using the site to make a decision on whether to begin in-store shopping again?
VN: Tens of thousands have been visiting the site…. It’s useful for brands and customers. The brands are asking questions on how to create a safe environment for their products and customers. Retailers, like Walmart, Best Buy and Target, are all thinking about the back half of the year, when lots of traffic is generated to the store for product [that’s on the company] website…. We’ve also received lots of e-mails from people who went to a certain place, and found that this or that [sanitizing procedure] was not actually being done even though the company said it would be.
SJ: So what are the best practices that you’ve found from working on the Shopsafely project? What is working right?
VN: That depends on what kind of retailer it is, but most importantly contactless pickup is the better way to shop for stuff you know you already need. In terms of being in a store, the reality is that as you walk around any store, whether that’s grocery, electronics or apparel, there’s an aspect of putting your hand on things all over the store. A mask is required, along with signage that says ‘Don’t touch the vegetables’ when shopping. That still supports the needs of people, with some self-policing [as in if you touch it, you buy it].
If you’re a store that sells things of desire, like clothing or electronics or makeup, in my opinion, the only really safe way to operate a store is to have a single customer [or family] attached to a single associate at all times. I went to an off-price retailer to exchange a jacket I bought pre-COVID-19. There were very few associates in the store, which was scaling back costs and having fewer associates is the easy place to do it. I browsed the floor carte blanche, using fitting rooms. Nobody was helping me, assisting me or watching me. It’s just easy to have signs that says ‘Don’t touch’ or ‘If you try a jacket, please put it on one of these racks for dry cleaning.’ The better way is to have someone assist you throughout your entire journey–like what we do at B8ta–for better customer service because it’s both guaranteed help and safer, since there’s someone to track what people are touching and later for sanitizing. It also helps with traffic elimination. A lot of stores are saying they limit the number of people in the stores, but don’t actually have a method for doing that.
SJ: But how feasible is it to expect stores to go the one-on-one route, especially if they’re retailers with huge store footprints?
VN: Best Buy is doing it and it has bigger stores. Macy’s has big stores too, but traffic is down about 90 percent for stores that are reopening. If they have enough [store associates], they can do it. The challenge of cleaning a six- or seven-floor store where every single thing in the store needs to be cleaned is what they’re doing now. But [store associates] taking customers on a journey can take notes of what they’re touching. The retailer is giving up a little bit of browsing, but people are not now coming in to browse—they’re coming in on a mission. They are heading to those products, taking it to buy and then leaving. It’s the right thing to do, and easier and more efficient for retailers to clean what’s [being touched].”