How to plan your business footprint

Skincare brand Malin+Goetz sees small stores as key to its big ambitions.

The brand, a gender-neutral line of personal care products, seeks spaces as small as 400 square feet, or about the size of a typical hotel room. Each of its 15 stores sells a slim assortment of moisturizers, shampoos and other products, color-coded by category for easy browsing.

“We tend to want to be your neighborhood apothecary,” said Brad Horowitz, CEO of Malin+Goetz. “I wouldn’t say we have a flagship approach.”

The strategy fits well with a minimalist brand that urges customers to “simplify your diet.” It also reflects a new reality where retailers face rising labor costs and soaring rents on the most coveted blocks, even as sales per square foot have declined since the rise of e-commerce. Brands still see value in physical stores as a way to attract customers and showcase their products, but think differently about everything from a store’s location to how it looks and what it stocks.

Emerging brands often opt for small stores in trendy neighborhoods rather than flagship stores on busier streets. Many brands are looking for their physical spaces to serve as many functions as possible, whether it’s building brand awareness or serving as a mini-warehouse for e-commerce orders. Generating sales is still important, but it’s no longer the only factor in a store’s success.

“Costs are 40, 50% higher than 15 years ago,” said Barrie Scardina, head of retail services, Americas, at brokerage Cushman & Wakefield. “Overall, when you think about store fixtures and staff, everyone wants to maximize productivity.”

Brands are also opening fewer stores as they grow, compared to the pre-internet boom of chains like Gap, which at its peak operated thousands of stores globally. Vuori, a fast-growing activewear brand that secured $400 million in funding from SoftBank last year, plans to hit 100 locations by 2026 (that’s about a quarter of the way there).

“We have taken and will continue to take a conservative approach to store openings,” said Anthony DiMaggio, Vuori’s vice president of development. “It has a lot to do with being in the right place. If we find a market that interests us, we don’t just grab the first available spot.

Below, BoF unpacks new ways to approach brick-and-mortar, from how to make smaller spaces work to choosing the appropriate post-pandemic location.

A new flagship paradigm

Not so long ago, it was common for a large retailer to have multiple flagship stores – usually that means 10,000 square feet or more – in a single market. In New York, for example, it might look like a flagship in Soho and another on Fifth Avenue.

Nowadays, one department store per city is sufficient for most retailers. Vuori’s new 5,000-square-foot location in Soho, for example, its first in New York, plays the brand’s flagship role, offering everything from running shorts to coats to deodorant. Additional locations in the market could be smaller and in neighborhoods rather than more commercial areas, DiMaggio said.

Even if commercial vacancy remains high, brands are taking their time to find the ideal location.

From the beginning of Silk Laundry, founder Katie Kolodinski knew she would eventually open a store in Los Angeles, one of her biggest markets. Eight years after launching the line, Silk Laundry has finally found the right space on Melrose Boulevard, slated to open next year. This will be the brand’s sixth store.

When brands opt for larger spaces, the goal isn’t just to showcase more products. Silk Laundry, which typically operates stores under 2,000 square feet, plans to open larger locations so it can more easily host in-store events, such as poetry workshops and fabric-dyeing tutorials.

“With one big store, we could create two smaller stores and enter two markets instead of one, so which one are we going to do?” said Reece Rackley, CEO of Silk Laundry and Kolodinski’s husband. “We’re actually comfortable with both approaches.”

stay local

At the height of lockdowns in 2020, neighborhood stores turned out to be a resilient segment physical retail. This remains true even though the world has fully reopened.

“You’re focusing a lot more on high-value neighborhoods that may not be overrepresented in retail,” said Jonathan Schley, broker for CBRE.

Schley said in his hometown of Los Angeles, that means neighborhoods like Silver Lake and Pacific Palisades have become unlikely retail hotspots, rather than the usual blocks of West Hollywood or Rodeo Drive. French brand Officine Générale, for example, is opening its first Los Angeles store at Palisades Village, an outdoor retail development in Pacific Palisades.

Malin+Goetz’s entire commercial strategy is based on the local, in addition to a few spots in tourist areas. Its two Brooklyn stores are in Williamsburg and Cobble Hill, for example, and it has four stores in London: Islington, Covent Garden, Spitalfields and Canary Wharf.

Size doesn’t matter

When bedding brand Parachute began its foray into retail, it also prioritized location above all else, said founder and chief executive Ariel Kaye. (Parachute launched an indoor clothing line in 2020).

“Early on, most of our decisions were driven by opportunism and the desire to be in specific neighborhoods and only jump on an available opportunity if it fit our criteria,” Kaye said.

The brand’s first stores were all smaller, between 700 and 1,000 square feet. As they sold fewer products, the brand used images and online in-store orders to meet customer needs. It has since opened larger spaces, but no more than 4,575 square feet — the size of its largest store in Nashville.

“We can easily fill a 5,000 to 7,000 square foot space, but we choose not to,” Kaye said. “We want people to really know the products and experience them in a smaller setting…We also like to host events, workshops and speaker series.”

Beyond its tiny stores, Malin+Goetz has other ways to present its products to customers, from its website to wholesale retailers and partnerships with hotels and restaurants. A few hundred square meters are enough to get your message across, whether in New York, London or Hong Kong.

“The white space we own has always been simple, urban, and gender-neutral, and that hasn’t changed in the past 18 years since our inception,” Horowitz said.

Especially post-pandemic, he added, “There’s such a craving for simplicity.”

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