Department Stores

Macy's takes a minority stake in tech retailer b8ta and expands its pop-up marketplace

Key Points
  • Macy's is partnering with b8ta to expand its pop-up concept, Market @ Macy's.
  • B8ta allows shoppers to try out technology before they buy it.
  • Macy's launched Market earlier this year in 10 stores.
  • As part of the expanded relationship, Macy's is taking a stake in b8ta.
Source: Macy's

Macy's on Tuesday announced it is partnering with b8ta to expand Market @ Macy's, a pop-up shop within its stores. As part of that partnership, Macy's has taken a minority stake in b8ta, which helps brands build out physical stores.

B8ta, founded in 2015 by Nest alums Vibhu Norby, William Mintun and Phillip Raub, helps shoppers try tech gadgets before buying them, even if those products aren't yet in stores. With its new Macy's partnership, it will sell items, such as a digital art canvas, that Macy's typically would not offer.

B8ta will also provide the back-end support for Macy's constantly rotating pop-up store.

For Macy's, the announcement is the latest in a series of moves to transform the shopping experience with technology and investments. The retailer has some of the best real estate compared with its department store peers, but has had to rethink the use of that space, as the draw of merchandise is no longer enough to bring shoppers to stores.

Macy's just last month announced its acquisition of New York-based Story, a shop that rotates merchandise based on a theme every few months.

"We are deeply committed to creating an in-store experience that is new, compelling and exciting," said Marc Mastronardi, Macy's EVP of business development. "The model that Story has built in their location [in New York] is entirely about experiential retail ... [and] the same concept is behind Market @ Macy's and b8ta."

Market originally launched in February as a pop-up concept in just 10 of Macy's stores. As part of the program, the retailer opened its ground floor to brands that don't yet have their own locations. After positive initial feedback, Macy's now plans to expand Market more broadly, Mastronardi told CNBC, though he did not provide details around scale or a timeline.

"We learned that the idea of newness for the consumer [in] physical retail is really attractive to our customer and to our brand partners," he added.

It's "too early" to answer whether shoppers in Market are translating into more spending elsewhere in the store, said Mastronardi, but the pop-up concept is creating an "overall halo" for the store's shopping experience.

Meantime, taking an equity stake in b8ta allows Macy's to further deepen its relationship with the company.

For b8ta, which has nine standalone stores across the U.S., the Macy's deal provides it a path to quickly expand its footprint. It also works with Lowe's to run stores within its stores for smart-home products.

Prior to Macy's investment, b8ta had raised $19.5 million in funding. The two did not disclose the size of the stake.