eCommerce Brands Find A Home At The Mall

Digitally-native brands are testing the brick-and-mortar retail waters, and, now, new malls are set to have entire spaces designed around them: Hudson Yards, which is under development in Manhattan by the Related Companies and Oxford Properties Group, will reportedly house a dedicated floor for these brands called The Floor of Discovery. Related Companies Retail Specialist Esty Ottensoser told The Wall Street Journal of the idea, “We want to showcase their brand in a way they can’t do behind a screen.”

Among the space’s future tenants are said to be the Drug Store, which will reportedly be opened by Dirty Lemon’s parent company, and offer lemonade drinks in exchange for cashless payments. It is also said to feature stores by Stance, a maker of socks, and Rhone, a menswear brand. There will also reportedly be a place “with a coffee station from Japanese housewares and clothing retailer Muji” per the WSJ report.  In addition, the space is said to house a M.Gemi’s store that will tap into Resy for reservations.

Ottensoser said of the space, according to Chain Store Age, “The addition of sought-after emerging brands and one-of-a-kind experiences round out our collection of leading brands in every category from luxury to fast-fashion.” She continued, “It reflects our passion for creating a destination that fosters retail innovation, offering our customers and retail partners opportunities to explore new products, services and technologies.”

But there is a potential downside for landlords to having these digitally-based retailers. That is, there is a chance that their success in the eCommerce world might not equate to the physical brick-and-mortar world. As a result, WSJ reported that the development could have a “larger-than-anticipated number of store failures.” In the words of Sandler O’Neill + Partners, L.P. Senior Real-Estate Analyst Alexander Goldfarb in the WSJ, “Landlords are taking these retailers for a test-drive.”

But commercial real estate firm JLL forecasts that online retailers will open the doors to a minimum of 850 stores from this year until 2023. And a little less than half of them — 41.3 percent — are predicted to have their first permanent locations in the Big Apple, where Hudson Yards is located. Lifestyle brand goop, for instance, opened its first permanent store in the city’s SoHo neighborhood. The retailer had previously tested out the world of brick-and-mortar with a pop-up shop on nearby Long Island.

Brick-And-Mortar Options For Digitally-Native Retailers

Hudson Yards is not the only opportunity for digitally-native brands and other newcomers. Fourpost, for instance, was set to open concept shops at the Mall of America in Minnesota and West Edmonton Mall in Alberta, Canada last year. Its model has been described as part high-end food court and part WeWork, which enables brands to lease space within its premises.

Instead of signing a lease for years, merchants can opt for a short-term commitment. During that time, they can set up and test-drive their physical retail concept in a customizable space that comes equipped with the physical and technical tools to get shops running fairly fast. They also get some support like access to fixtures, Wi-Fi, lighting, signage, point-of-sale hardware and the ability to customize the space.

Fourpost Founder and CEO Mark Ghermezian said, according to past reports, “We want to democratize the traditional department store experience and inject new energy into physical retail.” He added “We built Fourpost to completely re-architect the process in what has been a stale industry between landlords and brands for hundreds of years.”

The spaces also come with some technology to help brands run their stores such as Fourpost’s software-as-a-service (SaaS) dashboard and its included business management tools. Those features, according to the firm, are designed to allow merchants working within the physical space to onboard members, manage accounts, centralize calendars, handle billing and make even bookings. In addition, the dashboard comes with analytics tools to offer merchants real-time data on traffic, merchandising and consumer interest.

Will emerging brands call spaces like Fourpost and The Floor of Discovery home in the future? For now, developers are providing the chance for them to test their brands with these places in one of the latest developments in the innovation of brick-and-mortar retail.