Could Re:store, a VC-backed "WeWork for brands" in San Francisco, or something like it, be the next Barneys?
Barneys New York may have bought itself more time after its recent bankruptcy filing, but that doesn't change the fact that, over the years, the luxury retailer has lost some of its relevance as one of New York's most revered, influential sources of newness in fashion. Even as the Madison Avenue flagship still stands, its popularity and cult status have been casualties of a rapidly changing landscape, which has left many other legacy retailers in the dust.
For all the talk of a "retail apocalypse," it's become clear that brick-and-mortar retail isn't dead — most sales still happen in stores — it just takes an innovative approach to survive. So in an era when the coolest brands are starting online and discovery happens on Instagram, what does the future of multi-brand, IRL retail look like? Entrepreneur Selene Cruz, and the Silicon Valley venture capitalists who provided her with over $1 million, have one idea.
On Thursday in San Francisco's tony Union Square, Cruz opened the doors to Re:store, which positions itself as a sort of WeWork for cult-y, online-only or difficult-to-find brands. It brings cool millennial-targeting labels — many of which would fit the "Instagram brand" descriptor — like Sézane, Boy Smells and Lisa Says Gah together under one roof, and instead of a traditional wholesale model, brands pay as little as $350 per month for a presence on the immersive, experiential and Instagrammable (of course) retail floor, as well as a 20% commission. There's also a community workspace on site, offering fledgling entrepreneurs who may otherwise be operating out of their apartments a place to work and interact with customers. For many of them, San Francisco was a promising market, but opening a store there would have been too costly.
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Among Re:store's backers and champions is Jess Lee of Sequoia Capital, who has led funding rounds for other female entrepreneurs including The Wing's Audrey Gelman and Glossier's Emily Weiss, putting Cruz in successful, millennial-friendly company (and making her one of the few Latinas receiving less than 1% of Silicon Valley VC funding today).
Cruz did not have business success or venture capital in mind when she came up with the idea for Re:store, which started in her apartment, where she was running a sustainable leather handbags company called Archer Brighton. She found that customers wanted to see and touch her bags before purchasing, but she couldn't afford a store. She did, however, have a ground-floor apartment that she decided to turn into a "mini showroom." As she found that fellow entrepreneurs in the area had the same issue, Cruz invited them to showcase their products and collaborate in her apartment as well. "The cool thing about online businesses today, while they're really easy to get started, there's a lot of learning curves and if you work together, you can kind of skip on a lot of those," she says.
While she wasn't actively pursuing taking this operation outside of her apartment, Cruz found herself at a local event called Female Founders Office Hours, where she pitched her idea, coming up with the name Re:store in the moment. She then created a pitch deck and met with investors, ultimately raising $1.7 million within a month and a half to make it a reality. Getting people to invest in brick and mortar during an era of mass store closures wasn't easy, though.
"We had to sell a lot of people on this idea of the future of retail," she says. "I think most investors, given physical retail, everyone's still a little bit scared. You see the news and it's kind of scary. So you have to be a real risk taker, a real innovative investor to feel like, 'Okay. If everyone's leaving, I'm coming in.'" Cruz found she had to come at it from a technology standpoint, given her audience: "We really had to tell the story of how technology is going to really push the future of retail and how we're starting with it." For someone like Lee, however, it was easier to understand.
"Selene wasn't just pitching a product," Lee said in a statement. "She was pitching a new solution to an old idea, one that brings more people together while giving startup brands a chance to shine in their own space. Her enthusiasm is contagious, and her vision is exactly what retail needs right now."
Her vision is not dissimilar from a couple of other new retail concepts. There's Texas's Neighborhood Goods, which has been dubbed the "department store of the future" and rents out retail space to DTC brands like Hims, MeUndies and Serena Williams's clothing line in an experiential, Instagram-friendly environment. It's also recently raised $14.5 million with plans to open in New York. Meanwhile, the city's Hudson Yards mall has a whole floor devoted to online-native brands. And WeWork actually has its own retail offshoot, WeMRKT.
Cruz was able to get some well-known brands on board for her venture, like Sézane, & Other Stories, Sleepy Jones and Mansur Gavriel, alongside more under-the-radar labels, like The Line by K, Boyish and Feals — all spanning men's and women's apparel, accessories, beauty, home and wellness.
"We had to make sure that the brands were all the brands that we really admire and we're all obsessed with on Instagram," she says. She got help with the brand roster (and a little extra publicity) by partnering with influencers Alyssa Coscarelli and Vivid Wu to help curate, which helped speed things along. "We didn't have to go through months of trying to acquire these brands. It actually happened really, really quickly," Cruz says. She adds that Coscarelli and Wu were both game to continue the relationship, and she might bring new influencers into the mix in the future as well. The inventory at Re:store will also regularly rotate to keep things fresh, and brands will cycle in and out occasionally as memberships are flexible — a testament to the decreasing need for permanence in retail, perhaps. And once the concept proves itself in SF, Cruz hopes to expand it to more locations; Los Angeles would likely be next.
Each brand gets its own space, and Cruz wanted to ensure shoppers would be able to connect with and learn about them, both through technology touchpoints throughout the store and via Re:store's sales associates. "We're very similar in mindset to Sephora, this idea that the store associates should be very informed on the brand and [it should] be more of a casual conversation and less of a hard sale," she says. "As customers are seeing the selection of a brand, we don't want you to just leave and question where you ever heard of that brand or where can you see that brand again."
That opportunity to connect with customers is no doubt a draw for brands, particularly those for whom this is their brick-and-mortar debut. Plus, Re:store lowers the barrier to entry for upstart brands to have a physical presence and evade the downsides of wholesale, like meeting deadlines and other strict terms while having to put up all the money for production (only to have unsold products returned, in some cases). In an era where innovative, digital-savvy companies can launch without the massive resources doing so once required, it may no longer make sense to look at a retailer like Barneys as a place to find the most exciting new labels.
"There's some brands that are paying $350 a month to sell their products in Downtown San Francisco next to Chanel and Hermès and all these amazing brands, and in the last two days they've made up that money," says Cruz. (Re:store has held a few events before officially opening.) "Hopefully, it kind of pays for itself, and it's not putting designers in bankruptcy to get into physical retail."
It's an especially attractive opportunity for new brands led by new entrepreneurs, of which there are more and more every day. "We're seeing a huge trend in a lot of influencers turned designers, and a lot of people that are quitting their jobs and starting businesses," says Cruz. "Places like Etsy, like Shopify, they're doing great because there's so much entrepreneurship happening in the space."
And for shoppers, it brings a fresh take on retail: "Retail, in my opinion, has gotten a little bit stale; people are no longer going into a store to buy something and leave. If you purely want to buy something, you can go online," she says. "So I think physical retail similar to Glossier, Warby Parker, Everlane, they are creating experiences. They are being genuine about what they stand for. And I think people are drawn to a place that they feel like there's a message there. So the message shouldn't be shopping, it should be something else."