‘We’re going to revive it’: How WeWork wants to rejuvenate retail
At WeWork’s New York City headquarters last week, 10 companies pitched to get their products on the shelves of a network of in-house stores called WeMRKTs. Up for consideration included bottled gazpacho, spring water packaged with sustainable materials, a wallet that expands with the size of its contents, and other specialty products designed to improve the co-working experience.
With its network of 287 locations across 77 cities in 23 countries and 268,000 members, WeWork is angling its physical assets and membership base to become a retailer in its own right.
“This retail store is becoming another destination for our community to gather, to talk about the things they love, and be part of different maker’s stories,” said WeWork partner Julie Rice, the SoulCycle co-founder who joined the company last year. “In a world where retail is dying, the way we’re going to revive it by creating things that are made from the heart, with love [and] with the consideration of the people who want to use them.”
WeWork wants to build a retail brand around its community ethos with stores selling products geared at the needs of the people who work out of its locations. Since the products are made by member companies, WeWork is betting that companies interested in supporting one other will buy each other’s products. It’s a way for consumer startups to make early sales; it’s also a marketing lift, distribution and testing channel for emerging brands. For WeWork, it’s a foray into a new business area and a revenue channel built off of the scale of its network. Revenue is based on a wholesale model, with WeWork getting a cut of the sales. Member companies work directly with WeWork’s wholesale partners for ordering, supply and distribution.
The 8-year-old company has expanded quickly beyond its original shared office offering to longer-term accommodations (WeLive), gyms and schools. With retail, WeWork is betting that its tenants want to shop unheard-of brands where they work. Despite its reported $35 billion valuation, WeWork hasn’t yet proven it can branch beyond its core landlord model.
The concept of a physical store operating out of a WeWork is hardly new. WeWork’s Honesty Market — a self-serve store where members can pick up a snack or beverage — has been a fixture at its locations since 2013. This takes the Honesty Market concept to the next level. The company conceived of the idea of a staffed store with an assortment of products designed to make the work day more productive, including an assortment of healthy snacks, office supplies, apparel and technology products. Some of these items are WeWork co-branded products.
Since it rolled out its first store at WeWork’s 205 Hudson location in June, the WeMRKT concept has expanded to three more locations in New York. The company plans to open 500 more WeMRKT stores over the next couple of years, along with an e-commerce store, according to Rice.
“Because we have hundreds of thousands of members in our building who are there for [the same] reason, it’s a great use case for them,” she said.
Companies based out of WeWork locations say putting their products on WeWork store shelves is more than just another distribution opportunity. Tio Gazpacho, one of the winners from a recent New York WeMRKT pitch contest, already sells on Amazon and at Whole Foods. Selling to WeWork members is an opportunity to quickly reach a core customer group.
“This type of market is so carefully curated — on Amazon, you can get overwhelmed with all the options,” said Theo Kalogerakis, business development manager at Tio Gazpacho. “Our target market is WeWork members — people who are busy, on the go, and looking for healthy snacks.”
Others see WeWork as an opportunity to build credibility in the eyes of larger retailers. Bennkai, a New York-based accessories company and a participant in a WeMRKT pitch competition, currently focuses on subscription services like Birchbox and Bombfell. To owner Benjamin Kiraly, WeWork would be a way to extend its reach to a group of potentially receptive customers before expanding to larger distribution channels.
“If our products work in the [WeWork] market, I feel it would open up more traditional retail channels for us,” Kiraly said. ” If your product is showcased in a trend-setting atmosphere, traditional retailers are more likely to test your item.”
Letting member direct-to-consumer companies market their products to a friendly audience is a win for WeWork as a loyalty play.
“When you look at the demographics of WeWork, it’s a very entrepreneurial market — what a great place to capture those like-minded people,” said marketing consultant Judge Graham. Over the long term, he added, it will need to consider how to monetize the stores and generate a rich supply of feedback data for members who sell their products through them. WeWork said it plans to offer companies sales reports and a collection of feedback from WeWork members that employees collect and aggregate through a Slack channel.
Jeff Holzmann, managing director of commercial real estate investment company Iintoo, said WeWork’s expansion to retail has a lot of potential, with some parallels to Amazon’s growth in multiple business areas. As the WeMRKT model scales, it will need to carefully consider the store inventory’s ongoing relevance to the member population to continue to be successful, he added.
“WeWork started with short-term office leases, and we can see how they will expand more and more,” he said. “The challenge is if WeWork as a brand can stay cool and offer things people want and desire. I think every retailer should pay attention to what they introduce to the market.”
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