No Filter Discussion between b8ta and Westfield: Does COVID-19 Mark the End of Physical Retail?
Coronavirus has forced landlords and retailers to rethink their traditional operations and adjust quickly to the new normal.
Last week we were joined by Ghadi Hobeika, the CMO US & Group CDO at Unibail-Rodamco-Westfield (URW) and Vibhu Norby the Founder & CEO at b8ta to discuss how the crisis is reshaping the physical retail world.
Below are some highlights and insights from our conversation. Enjoy! 🤗☀️
PS: you can find the hour long replay on youtube.
Quickly Pivoting During Covid-19
When URW closed its doors in early March, they knew they had to quickly adapt and come up with strategies to keep up engagement with their customers and retail communities, plus prepare for reopening under a shifted customer mindset. They doubled down on digital communications and used their resources to assist frontline workers, donate and highlight community heroes, ultimately launching “Westfield Cares”.
“We provided information to our customers on what was open,” says Ghadi Hobeika CMO US & Group CDO at URW, and this allowed the mall operator to continue the conversation with their customers and tenants in a personal and direct way. The team also leaned on the convenience aspect to shopping, embracing deliveries, curbside pickup, and using technology to communicate capacity ahead of time. From a reopening standpoint, they put health and safety protocols in place, provided tenants with useful information they needed to navigate the crisis, and partnered with companies like Shopify to help tenants ramp up their operations faster.
“There wasn’t a playbook on how to open safely,” Vibhu Norby, Founder & CEO at B8ta.
Norby said his teams were also quickly ramping up their safety and sanitation practices since the very start of the pandemic, and noted that B8ta runs and operates smaller spaces so they were able to enforce these safety and health measures quickly, which was a big business plus.
Retail Customers Response to the Crisis
“What we saw in Europe was encouraging; as traffic was down 50–60% upon reopening, the ramp up has been pretty fast,” Hobeika added. And, with more customers feeling comfortable coming back and resuming “normal” life, and more tenants re-opening, they’ve had as close to pre-Covid levels of foot traffic (he added it’s only down 7–8%).
B8ta also sees an uptick in weekly growth in traffic in the cities it’s reopened in, but CEO Vibhu Norby says shoppers are now more mission-driven. Whereas B8ta stores are built for discovery, many shoppers today are coming in to pick up one specific item or with one intention in mind, as opposed to coming in and browsing for a while.
Staying Connected to Customers and Visitors
With so many different re-openings and closings happening around the world, it’s important for any retailer to connect to customers and keep them up to date. While Norby admits B8ta is not an e-commerce first company — their business model is around a physical retail strategy — they experienced “tons of organic growth on online channels” and have since amped up customer communications on digital platforms and are sending out more e-mails.
B8ta also started live streaming events on IG which have been successful — check them out, they rock 🤘 — , and promoting their appointments feature which allows customers to pre-book their visit, giving them a “private experience with the products [in store]” — cf. Brickworks.
The Future of Physical Retail
Physical retail has a strong future, according to Hobeika. With reported traffic still lower for URW locations, Hobeika says his tenants are still doing 50% of their sales from services like curbside pickups and delivery options. These added options and services prove “you don’t always need people within your store to generate sales in your store,” Hobeika commented.
Tenants can still thrive so long as they find creative or non-traditional ways to get their products into customer’s hands and landlords are keeping up by enhancing these logistical services and facilitating smoother, multi-channel orders. For example, some tenants are using parts of their spaces as warehouses to ship orders, and URW is offering “runners” at their locations to do the heavy lifting and help their tenants ship or deliver their orders even faster. “We offer a store, but we also offer solutions so tenants can do more,” Hobeika adds.
Both Norby and Hobeika agree that people will still enjoy coming and gathering in physical spaces, and landlords need to make sure their space physically represents convenience, openness and attention to detail to attract customers and longer-term tenants. “The crisis has opened a great opportunity for conversations,” say Hobeika and Norby, tenants now have a ton of power and will be seeking alternatives to the traditional long-term lease.
“At this point, I think most tenants will say no to long term commitments with no guarantees on foot traffic or production”. Vibhu Norby
The future will not only reflect a big disruption in the tenant base, but will shift the demographics of the centers as well. Physical retail is here to stay, but new crops of tenants coupled with new modes of safety and sanitation precautions and high-quality experiences, will make the space one to watch for the months to come.
Thank you Vibhu and Ghadi for joining and thank you The Hive for hosting.
Joseph Sartre is a Co-Founder and Managing Partner at Interlace Ventures, an early stage venture capital fund focused on investing in technology companies transforming Commerce for Better Consumption.
Fascinated about the intersection of Technology and Commerce, he spends his time looking at technology infrastructure of the retail and commerce spaces as well as new models and marketplaces all enabling better consuming.
