Big brands like Toys R Us and Bon-Ton liquidating their businesses might paint a gloomy picture for the retail industry, but smaller brands say there couldn't be a better time to grow.
Direct-to-consumer businesses like Bonobos and Warby Parker have paved the way from online stores to bricks and mortar. Others are following — in droves — and could help fill the glut of vacant real estate on the market in the U.S.
Like Warby Parker and Bonobos, these up-and-coming brands are being cautious, opening locations at a measured pace and setting up primarily where they have large followings online. In turn, mall and shopping center owners are all vying for their business. But many upstart retailers are also generally tougher negotiators than traditional ones and come to real estate owners with unique requests as the companies map out growth.
It's more common today, for example, for lease deals with online retailers to extend for just 18 to 24 months, also offering an optional kick-out clause where the retailer can terminate a contract early, Brandon Hoffman, a senior associate at Ashkenazy Acquisitions, said at the annual ICSC RECon conference in Las Vegas this week. "Trying to explain 10 years to some of these young brands [is hard] because some of them haven't even been around that long."
Growing retailers to keep on your radar include Adore Me, Outdoor Voices and MM.Lafleur. Below are eight brands looking to open more stores across the U.S. as they expand beyond the internet, where many of them started.
Cuyana, the women's clothing brand built around offering shoppers "fewer, better things," is opening its first physical store in New York on Wednesday. It already has two in California. Co-founder Karla Gallardo said the business is "going to be moving at a much faster pace than we have before," setting up shop in "key cities." As for going into U.S. malls, Gallardo said the "setup needs to change for us to enter."
Unlike Cuyana, Untuckit has already established a strong presence in the retail landscape across the country but is still looking to grow. The company has grown its product mix from button-down men's shirts to a women's line and options for kids. CEO and co-founder Aaron Sanandres has said Untuckit should have about 50 stores open by the end of this year. Untuckit is also known to have signed leases with some of the top-tier mall owners, including Simon and GGP.
Rebag earlier this year opened its second permanent store in New York — on Madison Avenue — joining its flagship location in SoHo, which debuted last year. The shops, designed like high-end boutiques, are filled with shelves full of second-hand handbags. The business has been running online for roughly four years and initially tested pop-up stores before determining it wanted to settle down for a longer term.
Outdoor Voices, similar to Untuckit, is fairly well established in the world of retail, but the online athletic apparel upstart still has big plans. Founder Tyler Haney told CNBC earlier this year that the retailer plans to open five more shops by the end of 2018. She wouldn't count out having one store in every state in the U.S. one day. The brand has really exploded of late, with some shoppers moving from Lululemon to Outdoor Voices for its pastel-colored leggings.
Women's apparel retailer MM.Lafleur is one example of a company following the "pop-up to permanent" trend. The company had previously run a showroom in New York before signing a long-term lease in the Bryant Park neighborhood earlier this year. MM.Lafleur has amassed a loyal following online, and its new store is known for superb customer service — shoppers schedule appointments ahead of visiting to secure a fitting room.
Adore Me is starting to take L Brands' Victoria's Secret by storm. The lingerie company, born online, is planning to open as many as 300 stores over the next five years. Many of the initial locations are slated to roll out in New York; Adore Me currently has one showroom for NYC customers to try on items.
Suit Supply runs about 100 stores globally, namely in the U.S., China, the U.K. and Russia. The company opened its first location in the U.S. (having started internationally) about seven years ago but still has its eyes set on growth in North America, a market that's increasingly being flooded with suit sellers like Indochino and other bespoke retailers. It's been reported recently that Suit Supply is embarking on a hiring spree in the U.S. before it opens additional shops.
Online clothing thrift store Thredup opened its first store in an outlet center in Texas last year and now has plans for more than 100 locations. The consignment chain is considered a notch up from Goodwill but not as high-end as TheRealReal, which also runs a handful of stores in the United States. According to Thredup CEO James Reinhart, the goal is to make the stores as personable and convenient as possible, accepting returns and making better-educated purchases of inventory for each location. Similar to T.J. Maxx and Ross Stores, these shops will offer a "treasure hunt" experience but with used clothing.