Retail

Luxury shoe brand M.Gemi looks to succeed in retail by avoiding the boring

Key Points
  • M.Gemi is an Italian-luxury shoe brand that was started by Cheryl Kaplan, Maria Gangemi and Rue La La's Ben Fischman.
  • The company is expanding more into bricks and mortar.
  • M.Gemi joins a number of brands including Casper, Allbirds, Away and Warby Parker, which are growing offline after starting online.
Cheryl Kaplan
Source: M.Gemi

Cheryl Kaplan tried consulting, merchandising and buying, and even once was a restructuring advisor for distressed companies. But all along she was itching to create something of her own. Then came M.Gemi.

The Italian-luxury shoe brand is gaining popularity among fashion's elite today but also targets shoppers on a budget. All the products — sneakers, heels, flats, boots and loafers for men — are made in Italy, constructed within one of M.Gemi's workshops, but cost on average $350. For quality leather goods, many would call the price tags a steal.

The timing of new inventory is unique, to keep customers interested in M.Gemi and always coming back for more. Every Monday, the company drops a new shoe style for shoppers to snag, but only for a limited time. (Though some styles, like the coveted Felize moccasin or Corsa ankle boot, are here to stay.)

"Retail is like everything else — if you stay the course people will get bored," Kaplan told CNBC about the current retail environment, which is rife with store closures and businesses going bankrupt. "Everything cycles through, and right now consumers are looking for experiences. ... If you don't change, you get stale. It's as simple as that."

Kaplan started her career in retail as an intern with Gap, then leaving college with a fashion and business education. She went on to build Rue La La with some co-workers from SmartBargains.com, where she spent more than seven years early in her career.

The Rue La La business model became well-known for offering stellar sales on brand names, but only for a small window of time. It's an approach to retailing that Kaplan and Rue La La founder Ben Fischman eventually brought over to M.Gemi.

In 2014, Kaplan got together in Boston with Maria Gangemi and Fischman to pull together the idea for an online shoe brand that filled a niche.

Fast forward to today and Kaplan is president of M.Gemi, which is named for Gangemi and is expanding its e-commerce business into bricks and mortar. But M.Gemi's stores, more like showrooms, are a far cry from a Finish Line, Stride Rite or Clarks.

The company opened its first location in 2016 in New York's SoHo neighborhood, where other e-commerce brands such as Allbirds, Casper and Warby Parker got their start.

Source: Janie Liu

Inside the SoHo shop, one will find every style of shoe M.Gemi currently has available, in a slew of different patterns and colors and rotating weekly.

Employees are prepared to walk shoppers through the company's history and how the browsing process works — shoes aren't meant to be taken from the store. Instead, shoppers can sample shoes in various styles and sizes and then order the best fit via a tablet on the spot, or at a later time on mgemi.com.

"Prior to opening stores, we were always trying to limit hurdles through having the best customer service, making ordering online and returns really simple, ... having a prepared label in the box," Kaplan said. "But at the end of the day, being able to walk in and try on [the shoe] was something we wanted."

Instagram and gelato trucks

M.Gemi also has a temporary shop uptown in New York at The Shops at Columbus Circle and keeps a second permanent fitting location at The Shops at Prudential Center in Boston. To date, the company has raised $47.2 million from backers including Accel Partners and General Catalyst, helping the company grow.

"Those stores have become destinations for people," Kaplan said. "We want to expand ... but we want to do it in a smart way and location is everything. We will look for the right location, at the right time, and with the right contracts in place to be flexible in how we build these stores."

M.Gemi has also outfitted a gelato truck that roams around the U.S., popping up in hot markets to act as a showroom for its shoes and raise awareness for the brand. Social media — tapping influencers and keeping a fresh Instagram profile — has played another important role in M.Gemi's success.

"[M.Gemi] has done something really smart. ... These advancements in production, logistics and delivery are [making] a pretty novel experience for the consumer," Sutian Dong of Female Founders Fund told CNBC. The New York-based venture-capital firm has invested in woman-led retail companies including Rent The Runway, Winky Lux and Eloquii.

"They leverage social channels to talk directly to consumers and deliver a product that changes consistently," Dong added. "In the shoe category, they've created a brand that consumers resonate with and something that the modern shopper wants."

Fischman praises Kaplan as a key to M.Gemi's success.

"She's one of the most pragmatic people," Fischman told CNBC. "Cheryl has this incredible filter where she cannot only be uniquely creative about the business but also understand the practical realities: Will it work? Is it feasible?"

The next wave

Dong and Female Founders Fund's founding partner, Anu Duggal, believe the best e-commerce businesses today are more often than not led by women. Diversity is especially ripe in New York, they said, which is why so many brands are sprouting up in SoHo.

"We believe the next wave of companies will be founded by women," Dong said. "You have the undeniable success of IPO stories like Stitch Fix. ... [The landscape] is looking very different than it did 10 or 20 years ago."

For Kaplan, being a female and working in retail was never really out of the norm — until she started rising up the leadership ranks. It was then when she would find herself in boardrooms, looking around and thinking: "I'm the only woman in here."

According to Catalyst, women in leadership positions are still a scarcity, and that holds true in the retail world. All the major U.S. department stores, for example, are led by men. Kohl's will soon change that when Michelle Gass takes over Kevin Mansell's position in May. But more often than not, women's names only start to appear in second- or third-tier roles.

A new class of upstart retailers could change that. A number are led by women, including Denise Lee of activewear line Alala; Karla Gallardo and Shilpa Shah of apparel retailer Cuyana; Ariel Kaye of bedding and linen brand Parachute and Jessica Herrin of accessories merchant Stella & Dot.

"It takes a real confidence in finding your voice and not trying to fit in and use other voices, ... and I've had to work on that," Kaplan told CNBC. "There were times in my past where I would say I was trying to be what other people wanted me to be, but where I've been more successful is when I do it in my own way."

"We are starting to see more women like me in leadership roles," she said. "That's taken time."

Kaplan also believes that a growing #metoo movement will push more women to higher ranks in the retail trade.

A recent CNBC/SurveyMonkey Small Business Survey found that companies are increasingly reviewing policies around diversity and gender equality in hiring and promotion while also revisiting their sexual harassment policies and reporting procedures.

"Women speak to the customers, they leverage digital channels. ... It's just a difference in how they approach brand building," Duggal said about what female leaders in retail can bring to the table. That's not to say men aren't capable of the same things, she said, but women's capabilities and skill sets have been disregarded for too long.

"These conversations around diversity and leadership are more relevant than ever," Duggal added. "Before, some of these conversations were too difficult to have."