As brick-and-mortar earns back its reputation as an essential retail channel, a growing number of companies are offering to help DTC companies transition into the offline.
On Wednesday, one of these types of firms, Fourpost announced its first two retail locations, set to open on Nov. 1 in the largest malls in North America: Mall of America in Minneapolis and West Edmonton Mall in Alberta, Canada. It’s one of many new companies positioning itself as “the Shopify of physical retail,” pointing to the turnkey e-commerce company powering sites for direct-to-consumer brands from Allbirds to Kylie Cosmetics. Shopify is reportedly worth $17 billion.
Fourpost is offering at-the-ready retail spaces called Studio Shops — available in cube, rectangle and triangle shapes, ranging from 50 to 100 square feet — up to 30 of which are set in one storefront, much like a traditional department store. Included in available short-term leases — offered in six-month and one-year terms, priced around $3,200 and $2,800, respectively, for the Mall of America store — are in-store fixtures, signage, lighting, WiFi, point-of-sale hardware and a dedicated staff, plus shared amenities like event spaces, storage and a social media manager. Not to mention, there’s the built-in foot traffic, considering the hosting malls are popular tourist attractions. Among first customers are Swedish gift and accessories brand Printworks, sustainable water bottle company Lamose, and maker of “Northern-inspired” men’s and women’s T-shirts The Northern Thread.
In addition, brands gain access to a dashboard, featuring tools and resources that provide access to data like sales and foot traffic, and allow them to communicate with fellow members and deliver product training to store associates. A marketplace will soon launch on the dashboard, offering them services and products through outside brand partners — shopping bag suppliers and companies offering payroll support. They can also book the event space, where Fourpost will offer programming like panels and workshops with thought leaders, including founders of featured brands as well as other inspiring entrepreneurs. Also launching on Wednesday is Fourpost’s website, with dedicated landing pages for each of the 38 brands opening Nov. 1. E-commerce will not be included, though may come into play down the road.
Brand founders buying in offered a variety of strategy-driven motivations: Holly Axling, international sales director at Printworks, said her company had wanted to enter the U.S. with its own full-branded, direct-to-consumer storefront, and Fourpost is facilitating that. For Lamose, Fourpost will serve as a testing ground for physical retail: “It will allow us to grow our brand awareness and build a stronger relationship with our customers, while giving us access to test, iterate and improve business strategies affordably,” said the founder, Chen Liu.
Fourpost founder Mark Ghermezian, who runs the company with a team of 15, said he seeks to democratize physical retail by lowering the barrier of entry, in terms of capital and time required. It normally takes brands 10 to 12 months to open a store, while a brand can move into a Studio Shop in one day. His pitch deck states brands spend 10 times more when opening a store on their own versus through Fourpost.
Ghermezian’s overall concept was “retail as a service,” inspired by his prior experience in the software-as-a-service space.
“With Fourpost, I wanted to create a product in an industry that really doesn’t have a product — transactions are all based in square footage,” said Ghermezian. “When you buy software, you get support; the company is always pushing out relevant content for teams focused on how to use it, best practices. That hasn’t existed in the retail world; landlords aren’t creating thought leadership or building communities. They’re just not equipped to cater to the wave of brands coming through.”
Ghermezian said Fourpost is suited to emerging and digitally native brands, though established brands looking to try new concepts and international brands interested in testing the market have shown interest. The first iterations largely feature brands local to the stores, covering categories including T-shirts, jewelry, home accessories and food. One brand is using its Studio Shop for showrooming, where shoppers scan desired product to later be delivered to their homes — Ghermezian sees an inventory-less shopping experience as the future of Fourpost.
“Each location will always have local flavor,” he said. “We’re being very intentional about whom we work with, how they came about, their purpose. We’re building communities, and we want to ensure each member adds value that will result in an amazing experience for guests.”
A rendering of a Fourpost store
With digitally native brands increasingly opening stores, the timing is right for Ghermezian’s concept — and support from founders of leading direct-to-consumer brands serves as validation, he said. He received a seed round of $5 million from investors including Warby Parker CEO Dave Gilboa and Parachute CEO Ariel Kaye.
“We’ve seen most of the companies in the `we are disrupting retail space,’” said Laurel Touby, managing partner of Supernode Ventures (formerly Flatiron Investors), which has LaunchMetrics and Snowe in its portfolio. “With Fourpost, they’re uniquely combining offline community elements with relevant online business tools.”
Other companies running with like concepts include Neighborhood Goods, set to open its first store in Plano, Texas, in November — it will house 15 digitally native brands, and a communal space featuring restaurants and regular events. It will also have an accompanying app, where customers can shop and seek support. Brick-and-mortar startup Bulletin, which sells female-founded digitally native brands at its three NYC stores, has a tech platform called Bulletin Omni, where interested brand founders can apply to sell at the store and load their SKUs for approval. Even Shopify is helping emerging brands open stores: It now provides guidance and a physical retail toolkit, offering functions like flexible point-of-sale systems and in-store shipping and delivery options at an affordable price.
“We’re looking at our brick-and-mortar space as a means to an end, not the end,” said Ghermezian. “That’s the big difference between us and everyone else: We’re creating a B2B platform for brands in brick-and-mortar. A lot of folks are just thinking, ‘How do I take a space and cut it up, and bring brands in?’ and then it just stops here.”
Syama Meagher, chief retail strategist at Scaling Retail, said modular spaces can be a huge asset to small brands looking to get exposure, but warned against challenges: “If companies like Fourpost don’t successfully drive customers to the locations, their value to the brand will decrease,” she said. “The other question is around how they will curate the tenant mix; a well-thought-out curation is critical.”
As traditional retailers like Sears close their physical stores, more companies like Fourpost’s will be sprouting up, said Sarah Engel, CMO of retail analytics company DynamicAction. “You see the entire concept of physical retail stores shifting quickly from costly, long-term leases, large employee count, physical space dedicated to cash wraps and stock rooms,” she said. “But a data-led strategy will be key to making the new wave of experiential retail successful, looking at key factors such as consumer interest in pure discovery experiences and their affinity for particular brands.”
Ghermezian’s father is co-owner of Triple Five Group, the conglomerate behind the malls he is launching in, as well as American Dream “megamall” set to open this spring in New Jersey. Ghermezian acknowledged he’s “fortunate to have help,” allowing him to hit the market through prime real estate, but he said malls may or may not play into Fourpost’s expansion. “Malls are relevant in some markets, but not in others. We’re going to do what best serves the brands and guests,” he said, listing open-air centers and street-level stores as alternative options he’s eyeing. He’s also looking at secondary markets like Austin, Nashville and Boston, as opposed to NYC and LA, already heavy in experiential stores. By the end of 2019, he plans to have four to five Fourpost locations in the U.S., launching international stores soon after. He’s already booked brands for Studio Shops launching in spring 2019 and foresees a waitlist being implemented in the near future.
“The entire retail market needs to change and be built from the bottom up,” he said. “Brands are demanding a new platform to support their brick-and-mortar needs, and the incumbent services are unable to support the needs of all the brands coming to the market.”