b8ta’s shuttering of operations was a loss to the retail community, ending a valiant effort to change a retail industry that’s evolving faster than ever. In some ways, b8ta attempted to recreate the feel of Soho or Austin’s South Congress area in one store. In 2018’s Neighborhood of Goods, I explained:

But when you leave the bricked roads of the Soho streets, it’s unlikely that you’ll find another place quite like it. Not in Macy’s recent Facebook collaboration, or the b8ta stores, Four Post, or even Neighborhood Goods. There are noteworthy shortcomings for each: for the majority of the goods discovered at b8ta and Neighborhood Goods, consumers cannot leave the store with the product that you purchased.

b8ta is the latest casualty in a retail industry dealing with the fallout of a pandemic. CEO Vibhu Norby said the decision to shutter his company ultimately came down to failed negotiations with landlords. But it wasn’t only the pandemic that forced b8ta to close its US doors on February 18, which was announced today on its website. For digitally-native brands, the physical retail industry evolved beyond the retailer’s core competency. 

The retailer was designed to be a destination for consumers looking to experience new-age and digitally-native brands who wanted exposure without opening owned shopping experiences.

b8ta launched in 2015 as a store primarily for testing out consumer tech products like speakers and exercise bikes. But the company’s vision was to rethink the wholesale-brand relationship by acting not just like a store but as a “retail-as-a-service” provider. In that sense, it made a bigger promise to the brands that sold in its stores. Brands paid a fee to b8ta to appear on its shelves as well as get access to its software, which fed insights on customer behavior analytics like foot traffic and time spent demoing. During the experiential retail peak, coinciding with direct-to-consumer brands’ move to physical stores, b8ta proved a promising partner. Its model was friendly to new brands without big store footprints who wanted to test customer reception in person. It also catered to customers who liked to try before they bought, and wanted a curated selection of new products in one place.

Since 2015, there have been a number of similar efforts by mall ownership groups: Unibail-Rodamco-Westfield launched pop-ups at several Westfield malls; Macerich had designs for similar operations; Brookfield also had its own. But many brands began to skip this testing ground altogether. b8ta was also an asset to malls and department stores looking for ways to drive new foot traffic. Macy’s led an investment in b8ta and used its technology in its Market @ Macy’s concept. As many brands began to invest in omnichannel experiences, experiential retail was insourced. They wanted their own footprint in malls, they wanted stock on hand, and they wanted a place to process returns. b8ta could not offer this.

However, the company’s software is exactly what many malls need to build data-driven strategies. The type of software b8ta was selling is in line with what Placer.ai says malls need in order to adapt for a new generation. In its 2021 “Mall Deep Dive” report, Placer.ai summed up the mall’s need to adapt to the digital age as such:

Major malls accommodate not dozens but hundreds of tenants, so connecting the inventory databases of all the different retailers requires advanced technological resources. Measuring the success of such a platform is even more challenging, and requires tools that can sync online and offline data. As a result, while there are already a few outliers, most malls today still lack this type of comprehensive online app or e-commerce channel.

b8ta’s own downfall was, in part, due to a lack of eCommerce sales. When the pandemic choked off foot traffic – an effect felt even after stores reopened following lockdowns – some stores saw as much as a 98% fall in foot traffic after stores reopened. This Retail Touchpoints report paints a grim picture:

The stores reportedly were never the same even after they reopened, according to media reports; b8ta’s Houston location averaged 1,000 shoppers on a typical weekend before the pandemic, but dropped to 40 customers during the first weekend of May 2020, according to Protocol. The Austin store saw a similar 98% drop in foot traffic.

With most retailers, their physical stores can indirectly drive eCommerce sales. Whereas, at b8ta, stores are directly responsible for online retail sales. There was no eCommerce-first opportunity that b8ta could rely upon as stores were closed during the early pandemic months. Then, the retailer likely endured countless supply chain issues that impacted its product selection and availability. In short, the market forces, consumer behavioral changes, and supply chain preferences all contributed to the company’s operational end.

But as one last attempt to stave off the recent announcement, b8ta had to attempt a pivot: turning stores into video studios for live streaming. There’s another lesson in that. Pandemic-era technologies that materialized in the mainstream may be an asset but not a lifeboat. Live streaming sales failed to bridge the gap b8ta faced, one that ultimately came down to one landlord’s decision not to negotiate its lease, Norby told Modern Retail:

“We were pretty inventive throughout Covid,” Norby said. But he concluded: “probably the nail in the coffin was the treatment from landlords overall, and whether or not they felt like your company mattered. We exhausted all options, and this was the thing that had to happen.”

b8ta’s closure is not a simple failure of concept but rather an outcome of market forces that ate up a retail future still coming into focus. Future iterations would be wise to take notice: don’t put all stock into one channel, even the one you’re reinventing. The company spent seven years in beta and the industry experienced wholesale change in the meantime.

By Web Smith | Edited by Hilary Milnes with art by Alex Remy and Christina Williams