I had the opportunity to chat with Richard Rizika. Richard is Partner and Co-founder of Beta Agency.
Richard has been in the commercial real estate industry for 30+ years. Prior to founding Beta Agency, he was a Vice Chairman for Retail Services @ CBRE inc. He is an internationally recognized expert in creating leasing and sales strategies for leading retail brands and retail property owners.
Andrew: Richard, what is the Beta Agency?
Richard: Beta is the next generation of retail services. We use data, technology and imagination to advise our clients to achieve their real estate goals. We create strategic solutions that enhance the real estate transaction process. We understand that disruption is inevitable in the world of retail, so we commit ourselves to staying ahead of the curve as retail continues to transform.
Andrew: While it’s understood that retail has been heavily impacted by the pandemic, are there any examples you can share of companies that have pivoted effectively to Digital to maintain relationships with customers, drive revenue, find new customers, etc.?
Richard: There are many examples of retailers that have pivoted effectively to Digital during the pandemic. Several big box retailers have recognized that “brick and mortar” has a competitive advantage when used as fulfillment centers. Best Buy is one example. When stores were forced to close under “Stay At Home Government Ordinances”, Best Buy serviced customers by engaging with customers online and implementing a “click and collect” model at each of their stores. Rather than becoming a victim, Best Buy used its resources and created a turnaround strategy that included matching Amazon on price and speed of delivery and leveraging its physical stores to meet customer demand. They controlled the customer experience while customers flocked to the internet to purchase electronics for their “new home office” while other online and physical retailers were caught flat footed.
If you look at Target, they did an exceptional job of creating a digital strategy over the past several years. Shoppers converged on Target, as its strategy was to introduce new brands and entice online shoppers to visit an actual store.
Prior to the pandemic they made the difficult decision to invest and modernize rather than short-term profit maximization. There stores were able to remain open, while others were forced to shutter. As an “Essential Retailer” they executed a “click and collect” strategy that enabled customers not to have to wait for essential merchandise. To increase the speed and efficiency of its supply chain, Target reported that they have implemented robotics solutions to replenish inventory to hundreds of stores.
Andrew: Any examples of how retailers have been using the Web to drive into traffic stores and track behavior?
Richard: This has been a trend that started before the pandemic. We found that retailers were working with different technology companies utilizing web enabled apps to track customers within their stores. They’re using sensors to recognize time spent throughout the store and identifying merchandise customers engage with. This allows retailers to get a better understanding of return on investment of every sq ft in each store. Some retailers are actually providing promotions or coupons to customers via a retailer app to reward customers to engage with different products that they believe, based upon their profile, the consumer will want to purchase while in-store or after the in-store shopping experience.
Andrew: Any examples you can share where both digital and physical have come together profitably?
Richard: Retailers are becoming e-tailers and e-tailers are becoming retailers and the winners are meeting in the middle with a strong and compelling omnichannel solution. That’s really where this is all going. A handful of e-tailers have been successful. Companies like Suitsupply, Warby Parker., Kendra Scott, Untuckit, Bonobos and Indochino have made the transition to a physical retail environment.
You get to a certain level of growth, usually less than a billion dollars of online sales, where you determine that you can’t really do much more without getting into a physical store world. And that’s when they start to make the transition.
At the same time, brick and mortar retailers are having to enhance their digital strategies.
Andrew: Thanks Richard for the great insights.
Beta Agency is a leading commercial real estate services agency providing advisory, design, and analytics services. For more information about Beta, please visit: Beta Agency