Bye Bye Baby plans to close all of its stores less than a year after its launch, according to retail dive.

Bye Bye Baby plans to close its entire physical store footprint by the end of this year, quote transforming into a digital first brand, end quote, and allowing it to focus, quote, all our energy on providing an exceptional online experience.

Also another end quote, store closing sales began on Friday and the banner will transition to an online only business, the company said in an FAQ on its website.

Omnitalk fans will remember that the New Jersey based Dream On Me won the Bye Bye Baby brand, intellectual property and digital assets at auction for 15 and a half million dollars and then bought 11 store leases in seven states for $1.17 million in a separate auction and relaunched the company in 11 stores last fall ahead of the store launch.

Bye Bye Baby CEO Pete Deledin said in a statement that the retailer sought to position itself as a go to destination for all parents, caregivers and families seeking thoughtfully designed and quality baby and child focused products and exceptional customer service, end quote.

Lakshman, let's go back to you on this one.

Can a successful baby business exist in the long term without a store footprint?

Well, I'd like to connect three disparate data points and probably try to make the connection.

So first is the birth rates, second is influencers and third is quality, right?

I mean we are currently at 1.6 birth rate which is well below the 2.1, you know, replacement.

So much so that you know, the likely huge billionaires and leaders of the society and politicians are talking about this consistently now and it's gotten national press, right?

Including Wall Street Journal and other, you know, talking shining a light on this, this particular problem.

So industry itself has a population headwind that is fundamental and structural.

So there is that particular pressure that is kind of building up towards for it or against it.

Then you have the second part of this is influencers over the last three to five years since the time of COVID if you go to YouTube or Instagram, one of the highest group of influencers belong to this young mothers and or expectant mothers.

They are publishing so much content and material on how to have safe, high quality products access to them.

Where can you find it, how can you use it, how can you install it, right?

All of that has become such a big, big driver of that group of small group of influencers that are very, very vocal and influential.

The third is the commoditization of some of these products themselves.

Where you wanted to test drive, you wanted to go look and feel Touch.

But since COVID what has happened is, I mean interestingly, the quality of the product again tying to influencers and all of the ratings out there.

You have almost commoditized something as complex as a stroller into a very simple scorecard that clearly lays out does it have, you know, harmful chemicals in it?

Does it have stability?

Does it have balancing wheels?

Does it have counter.

All of these content metadata characteristics of the, of the product itself has been very widely published and there are tons and tons and tons of information and content regarding how it can be done.

So consumers have naturally gravitated towards the department stores and Amazon where if you think about this entire segment, about, you know, 12, 13 billion in size, you have Amazon, Target and Walmart dominating 80% of the market share here.

Yep.

Right.

So it feels like a logical move from Bye Bye Baby to kind of shutter the store because of the high operating expenses likely in the area that they were thinking about and you know, likely exiting all of its formats and just being a online store where they can invest more into the marketing and attracting and go to the higher end of the funnel as opposed to servicing the customer in store through all of the associate experience.

Okay, so interesting points.

So you, so you like, you like this move.

Hmm.

Okay, Throwing me for a loop here already.

Chris, what are your thoughts on this?

It's a good point Lakshman raises.

I guess the, the, the first like the counter to the question of can you survive without a physical retail store is like can, can anyone survive with one?

Right.

Like everyone in Baby.

I mean there's like 15 to 20 million feet of retail space has been vacated that used to be in Baby like Gymboree, Babies R Us.

Carter's is closing stores.

Bye Bye Baby.

You know, now you have Once Upon a Child is like that consignment space and local luxury boutique.

So most at scale, there's very few.

I don't know of another major baby brand that has a big physical retail footprint.

Like a lot of the people who would do try, you know, try and browse would end up going to buy online to, to what Lakshman's point was that role that used to get traffic in the door, which was like try and evaluate is now being filled in by social media and influencers.

So then it makes sense.

Maybe you don't have the physical retail footprint, but then the question is so you're just competing to buy traffic.

So basically they already know the product they want to buy.

So then you're just spending marketing and your customer acquisition cost goes up and then you're just competing against Target Walmart to buy that traffic and then you don't have the lifetime of the customer to make that money back, that investment back.

Whereas Target Walmart and Amazon, you can spend more to acquire a customer because your customer lifetime value is so much higher because for the next 20 years they're going to be buying product from you.

Whereas if you're buy by baby, you have to make enough back from that customer over the next year and a half of their baby purchases to be able to make the investment to capture that customer.

I mean I'm sure there's some potential here, but for me I'm a pessimist on whether, whether you can really survive and compete against the brands that have taken so much of your market share already without a physical footprint.

So yeah, pessimistic.

So that, that's interesting.

So you basically just think at this point, given the saturation of the marketplace, just the baby business is just a bad business to be in.

And particularly when you look at the macroeconomic factors too in terms of the declining birth rates as well, that can't help anything too.

That's your point, Chris, right?

Totally.

I mean it's puzzling, right?

It's a hundred billion dollar market and it's really, really like you'd think massive market share, currently only being done by Amazon, Target, Walmart really well.

Wow, that sounds like a great opportunity for like a niche brand that better connects with consumers.

But no one's been able to do it really successfully.

Yeah, yeah, and I 100% agree with you too.

I think the idea of doing it alone on the online only side is a fool's, fool's errand honestly.

Because the margins, the products are all market available, right.

There's not one thing that differentiates you from anyone else.

You can get it from Amazon's third party marketplace pretty easily and it's really expensive to ship the gear in the cribs.

The only margin in the business as the former, you know, head of this for Target is in the feeding area and the clothing area which quite honestly are a little postnatal too, as much as they are prenatal.

And so that's kind of a different business in that first time mom business as well.

So, so yeah, so it's just the market's too saturated with the incumbents to, to make a hay at this I think without a physical store presence in particular.

But Anne, what do you think?

I, you know, I, I agree with what you're saying.

I don't think that they need to have these again like we were saying with, with beyond, like I don't think that there needs to be this Baby superstore anymore.

Do think we have to look at what's happening with like Babies are us and Kohl's.

I do think that there still is a need to go out and test and trial some of these products, especially the gear.

So I do, I think the smart move from Buy by Baby might be to look for a partner the same way that beyond is looking at Container Store and at Kirkland's because you do get traffic from that.

So whether or not they're ordering that stroller from you, for example, you do get people in the store to test it.

And I think that's what Kohl's is banking on here with their strategy.

Pay is like hopefully once you're inside of a Kohl's they're capturing you as a longer term customer.

Like Chris was saying, they're, you know, they're giving you some reason to kind of be and start to stay and develop a relationship in the store.

I just, I don't think that it needs to be the grand footprint that we're talking about.

And if I were Bye bye Baby, I would start looking for a similar partnership of Kohl's and Babies R Us with another retailer like especially, you know, might be far fetched but even like an Ikea where you're like really in the furniture space or you're thinking of like a place that you're going to get people to invest in for the coming years after that in other higher margin areas potentially.

But that's that key answer.

Yeah, I mean the thing that, the thing that, the thing that's interesting about Buy by Baby is they get the brands that the targets in the Walmart's don't get too.

They get the upper echelon gear brands which is what is the differentiation point.

So that's what you have to play up.

The last thing I'd make here too, I think if there's a condemnation that should go out on this headline, it's that, it's that they try that they have the audacity to think they could run stores across what was it, seven states as an online only brand.

You're going to come in and know how to do that.

That's just really hard.

So you shot too hard and why didn't you just keep one of them and make one of them really, really strong?

I'm curious why that isn't part of this announcement.

Why is it just shutting everything down completely.

I don't know, you gotta wonder like.

How bad it was going for them for them to buy 11 leases and within.

Oh my God.

Because when you open a new retail store, you have a new presence.

I mean, there's a ramp up time.

Right.

So how bad was it going that like.

Because that decision was probably made four or five months ago to close it all down.

So, you know, within the first five months they were just like, oh my God, no.

Yeah, they must have been like drowning.

That's the only thing I could think of.

They're like, what do we get ourselves into?

Let's just get out of this completely.

And.

And that's what ultimately didn't work here.

Which is why I still think there could be a concept for the baby market at the upper end.