COVID-19 changed one Dubai retailer's business model inside out

Dubai: Come up with a new regional retail concept, open that first store at Dubai Mall - everything was going according to plan. Then came the pandemic, the lockdown…

It’s been a year like no other for everyone, but for the promoters of b8ta, it meant having to change the rules of the game even before it got started.

Instead of being an out-and-out brick-and-mortar trendsetter, it made an immediate shift to an online presence. A few months down the line, b8ta is very much in contention and dealing with the hand that it’s been dealt.

No option but change tack

“We realized our plans need to pivot considering not just the pandemic but in terms of buying behavior changing,” said Ramit Harsinghani, General Manager at b8ta MENA, which is the regional venture between Chalhoub Group and US-based b8ta. “It’s working for us, as we now have a pure omni-channel approach where we not only have an influx of brands coming in, we’re also able to list those brands online.”

The bit about omni-channel is resonating quite well these days within the wider retail space If the initial weeks and months of the lockdown phase was all online shopping, it’s now gradually migrating towards a hybrid model of online buying and offline pickup of the orders. This is clearly visible in the supermarket space and getting to make quite a difference in the fashion and accessories category as well.

Offer up a platform

What was so cutting-edge about b8ta’s original concept? What the store does is offer prominent space for those brands and gizmos that are in the early stages of testing out a market. These brands get space within b8ta and try and catch the consumers’ eye. The concept worked quite well in the US, to the extent that the parent company operates a network of stores.

It makes its money by renting out that space rather than through any of the sales of merchandise happening in-store. The same formula was applied at the Dubai Mall location, which opened earlier in the year.

Same principle, some tweaks

“The whole USP was ‘never seen before products’,” said Harsinghani. “Things did really slow down quite a bit from March onwards. I remember the last few brands we got was in early February, and then it completely switched off until July or August when we started seeing some traction again.”

That b8ta managed to build itself an online presence in double quick time helped, as a longer spell on the sidelines could have proved highly detrimental to a new brand.

In its online avatar, b8ta also tinkered with its business model. Rather than ‘renting’ its platform to brands, as it does at the stores, b8ta functions as an e-tailer. “It’s pretty much similar like any other retailer has in e-commerce place,” the official added. “What we had to do for online was renegotiate the contracts to get margins on products sold.

“We have a lot more SKUs (stock keeping units) that go online only, because a few brands have come in all at once. Yes, going digital as a big part of our strategy is what we’ve learned from COVID-19."

Back to bricks?

The pandemic has not swayed minds to disavow physical stores for good. “We’re definitely targeting a shop-in-shop in first quarter next year,” he added. “I think another flagship store would be there next year as we’re looking at one of the other Gulf countries outside to expand to.”