When it comes to reinventing its old department store model, Macy’s (M) means business.
The retailer said on Tuesday it was taking a minority stake in b8ta, and working with the Silicon Valley startup to expand its new Market @ Macy’s concept, a pop-up shop within its stores where it showcases newer products of note. B8ta, a three-year-old company founded by Vibhu Norby, William Mintun, and Phillip Raub (formerly of smart home company Nest), lets shoppers try tech gadgets before buying them and has attracted attention for its innovative way of presenting products and collect data about shopper habits.
The investment by Macy’s follows recent its purchase of Story, a concept store in Manhattan Story that switches out merchandise based on a theme every six weeks or so. While both investments, whose exact size was not disclosed, are small, they signal how serious Macy’s is about overhauling how its sells items and making its physical spaces more interesting — key at a time when people can just as easily shop online.
Macy’s is only now beginning to emerge from a multi-year slump that saw shoppers turn away from its discount-heavy approach to retailing and a lot of merchandise overlap with other chains. As detailed in a feature a few months ago by Fortune, Macy’s CEO Jeff Gennette is looking to re-establish what he calls Macy’s “fashion authority” with consumers, and that means updating product selection and presentation to focus on the product itself, its style and information on the product, and moving away from racks and racks of clutter and an emphasis on discounting in both in-store signage and in circulars.
Enter Hal Lawton, an eBay alum that Gennette hired as his top lieutenant last year, who as president of Macy’s led the b8ta move. “We’re always looking for new formats that allow our customers to discover and connect with our products and services in-store in a way that drives engagement with our brand,” Lawton said in a statement. As for the pop-ins, the first of which were opened in February in a test, b8ta will help speed that up, he added.
Teaming up with b8ta and Story — whose founder Rachel Shechtman was hired by Lawton to be Macy’s brand experience officer — are Lawton-led initiatives, but they are not necessarily a panacea. Nordstrom puts on so-called pop-in stores to showcase new, cool brands and has also invested in tech companies, yet its comparable sales growth is soft.
Still, inertia is a much bigger threat to Macy’s (and other retailers, for that matter) than any single initiative misfiring. At this point, b8ta and Story are too small to move the sales needle of a $25 billion- a-year-company. But they could speed up Macy’s metabolism and combat the stasis that has afflicted the department store and its peers.
Last month, Macy’s reported comparable sales rose 4.2% in the first fiscal quarter, well above the 1.4% Wall Street analysts were expecting. But the company knows full well how easy it would be for business to continue sliding again, as these new moves show.