There's a new class of retailers to pay attention to in 2019. And some of them could soon be opening up shop in your neighborhood.
As decades-old brands like Victoria's Secret, Gap, Claire's and Mattress Firm are shutting stores across the U.S., combating sluggish sales thanks to lack of innovation, a group up-and-coming retailers — many of them born on the internet — are starting to grow offline. Names like Outdoor Voices, Rothy's and Mirror are following in the footsteps of e-commerce brands like Warby Parker, Untuckit and Casper, which are slightly further along in their growth journeys at the start of the new year. These three companies already have a strong bricks-and-mortar presence throughout the country, and growing. Shirt brand Untuckit just hit 50 stores, glasses retailer Warby Parker is close to 100, and mattress maker Casper plans to have 200 locations open by 2021.
It's these direct-to-consumer brands — as they're often referred to because they're bypassing other outlets like department stores and selling goods directly to shoppers — that are going to be the next businesses to help "reinvigorate" antiquated shopping malls, according to Web Smith, founder of 2PM, a subscription platform that tracks retail start-ups and their growth.
Many e-commerce brands are getting to the point where they realize they can't grow any further through buying Facebook and Google ads, and so they're turning to opening stores, Smith, who also co-founded shirt brand Mizzen+Main, explained in a recent 2PM research report.
"Physical retail embodies a social and tangible experience that America's Amazon-driven format of online retail has yet to duplicate," he said. And so, "digital-first retailers are ... investing in extending their direct-to-consumer relationships by owning permanent storefronts in worthwhile locations." It's a theme that's expected to continue to ring out in retail this year. A study in 2018 by real estate research firm Green Street Advisors found so-called digitally native brands altogether have more than 600 stores blanketing the U.S., and counting.
Here are 9 companies to keep your eyes on in 2019, as many of them are looking to open more stores.
Direct-to-consumer beauty brand Glossier was founded by Emily Weiss in 2014 and has already raised more than $86 million. Weiss recently told Bloomberg her business would surpass $100 million in revenue in 2018. Glossier also late last year finished remodeling its flagship store in New York's SoHo neighborhood. That one location often draws throngs of shoppers, lining the sidewalk and eager to shop inside or pose for photos in front of millennial pink-covered walls. Glossier has stores in New York and Los Angeles and this year plans to experiment with more pop-up locations.
New York-based Mirror, launched this past fall by Brynn Jinnett Putnam, is already generating buzz in the fitness industry. The company sells a $1,500, full-length mirror that customers put in their homes and then look into to stream workout classes with coaches live and on-demand. It's following in the footsteps of other fitness brands like Peloton, SoulCycle and Rumble, which are increasingly marketing products that offer fitness instruction at home. Mirror has raised $40.8 million to date and recently opened its first store in New York's Flatiron neighborhood for people to experience a workout before they buy.
Last year, you might've noticed Rothy's shoes taking over your Facebook and Instagram feeds. And now, the retailer is starting to open stores where you can see those shoes in real life, or try before you buy. Rothy's, which was started in San Francisco in 2015 by Roth Martin and Stephen Hawthornthwaite, sells shoes ranging from ballet flats to loafers for women and kids that are made out of recycled plastic bottles. It recently landed a $35 million investment from Goldman Sachs and has raised $42 million to date. Rothy's also recently said it planned to book a little more than $140 million in revenue for 2018.
High-end sneaker brand Koio, started in 2014 by Chris Wichert and Johannes Quodt, has raised $5.1 million to date and already has a handful of stores across the U.S., including in Chicago, Los Angeles and New York. But Wichert and Quodt say they're just getting started. Koio tends to sell more shoes to men, though it offers the same styles for women. This year, the company says it will invest in rolling out new silhouettes. Koio joins a league of sneaker makers like Common Projects that have exploded in popularity of late. These companies have benefited as luxury retailers including Gucci and Balenciaga invest more in the sneaker category, making it a business everyone wants to be in.
Rivaling the likes of Lululemon and Athleta, women's active wear brand Outdoor Voices was started in Austin in 2014 and has raised $56.5 million to date. Founder Ty Haney told CNBC last year Outdoor Voices wouldn't count out having at least 50 stores in the future — one in every state. It currently has 10 locations up and running in cities like Chicago, Los Angeles, Boston and Nashville. A vote of confidence for this brand: Mickey Drexler, the former CEO of J.Crew and Gap, serves on its board. Haney said he's played a key role in helping Outdoor Voices grow offline.
Started in 2013 by Nate Checketts, men's apparel brand Rhone has raised $13.5 million to date. It has a handful of its own shops today, like in Brookfield Place in downtown New York, but has grow primarily though selling in gyms like Equinox and Barry's Boot Camp, gaining a loyal following among fitness junkies. Unlike Nike or Adidas, Rhone also pushes items for day-to-day wear, like polo shirts and "commuter pants." Rhone's senior vice president of marketing, Adam Bridegan, has said the brand plans to have an even larger bricks-and-mortar presence in the future.
While it's not traditional retail, Candid locations are starting to pop up across the U.S. in retail centers. Started by Bobby Ghoshal and Nick Greenfield in 2017, the company has raised $15 million to date, and it's goal is to revolutionize the way people straighten their teeth. Candid started online by offering customers a way to complete an impression kit at home and then receive clear teeth aligners in the mail. Candid now has stores in cities like Austin, Boston, San Francisco, Columbus, Ohio, and a handful in New York. As younger shoppers look to spend more on "experiences" versus goods, Candid hopes a more accessible price point for teeth aligners will appeal to millennials.
Started in 2016 by Rachel Blumenthal, kid's apparel company Rockets of Awesome has raised $19.5 million to date. It sends members — parents — a box of children's clothing four times per year after they complete a quiz to determine the best style, be it preppy, sporty or chic. Rockets of Awesome has also started letting customers purchase individual items — like a jacket or T-shirt — on its website. And it's opened pop-up shops within other retailers in recent months to test having an in-real-life experience. Blumenthal said stores are something she's thinking about as a next step, as brands like The Children's Place and Gymboree are increasingly falling out of favor with moms.
Beverage brand Dirty Lemon has generated enough buzz to catch the attention of beverage behemoth Coca-Cola, which recently led a $15 million investment round that value's Dirty Lemon's parent company, Iris Nova, at roughly $60 million. That news came on the heels of Dirty Lemon opening its first store ever — in New York — late last year. Started in 2015 by Zak Normandin, Dirty Lemon is a text-to-order service that sells health-conscious drinks with flavors ranging from charcoal to matcha, rose and at one point CBD. (The latter was pulled from shelves to make sure this particular flavor didn't create any regulatory issues during Dirty Lemon's latest funding round.) Normandin said this year the company will shift its digital spending to focus on physical retail.