Macys Investment in Tech Startup Reflects Retailers' Larger Defensive Against Amazon

On Tuesday, Macy's Inc. (M) announced a new partnership with startup b8ta, as part of its broader initiative to expand Market @ Macy's, a pop-up shop within its stores. The traditional department store chain took a minority stake in the three-year-old company, which specializes in helping brands build out their physical retail locations.  

(See also: Amazon to Be No. 1 in Apparel in 2018: Morgan Stanley.)

Old-Age Retailers Double Down on Brand Engagement, Boosting In-Store Experience

B8ta was founded by a team of three former employees of Nest and intended to allow shoppers to try out tech products before buying them and giving them access to yet-to-be released gadgets. At Macy's stores, b8ta will sell items, including digital art canvases, that a typical Macy's store would not carry, as reported by CNBC. The tech startup will also provide back-end support for Macy's pop-up store, which will be in continuous flux. 

The news comes amid a broader transformation in the disrupted retail industry, which has performed much better this year than its brutal 2017. Better-than-expected results from traditional players has led some on the Street to become more bullish on older brands and their ability to hedge against the rising dominance of Inc. (AMZN) in a new digital era. Earlier this year, and as part of its larger plan to take on the Seattle-based tech giant, Macy's bought out Story, a Manhattan-based concept store which swaps out merchandise based on a theme every six weeks or so. 

The two deals mark Macy's larger strategy, which is also being leveraged by many of its peers, in which they have differentiated themselves against online retailers and worked to revamp the in-store shopping experience. Retailers have doubled down on niche markets such as luxury, bulk and off-price, while others have invested in their own private label brands, personalization, customer service and other in-store experience enhancers. 

After a multi-year slump, Macy's is looking to shake off its image as a discount-heavy retailer in favor of becoming a "fashion authority, with a greater emphasis on updating product selection and presentation."

“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,” said Macy's president Hal Lawton in a statement, adding that the investment in b8ta will drive that forward. 

(See also: ‘Retailpocalypse’ Is Over—Macy’s a Bargain: Bulls.)

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