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Where the Department Store Meets the Pop-Up Shop

Neighborhood Goods Takes Food Hall Concept To Larger Retail Industry
September 10, 2018
Mark Masinter (pictured, left), a founding venture investor in home goods company Restoration Hardware. Matt Alexander (right), co-founder of Neighborhood Goods, a long-term retail storefront that hosts smaller shops and brands for short periods of time.

Neighborhood Goods aims to be a very different kind of retailer. Actually, two kinds of retailers in one. When the company’s planned first store opens this year in Plano, Texas, it seeks to marry two opposite concepts: the department store and pop-up shop.

The two models are on either end of the retailing spectrum. In an age-old department store, shoppers shift through sometimes staid mass-produced goods in long-standing, big box spaces. In pop-up shops, retailers set up short-term shops - often in small spaces - to test new products, sell alternative merchandise or offer a new experience.

But as the volatile retail market changes, a growing number of companies such as Neighborhood Goods hope to find success by blending the two: leasing large, long-term retail spaces where they plan to host short-term pop-up shops.

"Essentially, it kind of takes the food hall, which is a trend that went viral across the U.S., and kind of applies it to the retail world," said Crystal Allen, senior vice president of Transwestern, a commercial real estate company.

Neighborhood Goods has leased a department-store-sized 14,000 square-foot shop where it plans to host a rotating list of up to 30 well-known and indie brands at a time - some for just a weekend but more often for up to nine months.

The store is slated to focus on experiential retail and be "distinctive, unique and memorable," according to its co-founder, Matt Alexander. It is expected to contain a restaurant, a few shopping areas, social spaces and a place for in-house podcasts and events and its architectural framework can be assembled and taken apart relatively quickly as brands come and go.

Alexander plans to announce the specific brand and restaurant mix in a few weeks.

"It’s an unorthodox idea," said Alexander, who co-founded the company with Mark Masinter, a founding venture investor in home goods company Restoration Hardware. "But based on the feedback we’ve been getting from brands, property developers and real estate owners, we will probably expand at a very progressive rate."

Alexander said Neighborhood Goods expects to open two or three more stores in the near future and rapidly expand after that. The company announced this spring that it had received almost $6 million in seed funding led by early-stage venture capital firm Forerunner Ventures to launch the concept.

Such stores appeal to property owners because they don’t disappear after a short period of time, like most pop-up shops, said Allen. Because their merchandise selection changes so quickly, they also appeal to consumers looking for new shopping experiences.

"These specialized department stores can cater everything they do to that specific market and can be highly successful," said Allen, who noted that developers and property owners are often wary of short-term leases.

It's one reason they've become popular with retailers who don't want to commit to long-term leases and landlords who want to fill vacancies.

Neighborhood Goods will join the ranks of other startups meshing pop-ups with traditional retail such as Bulletin, which offers shelf space to brands on a monthly basis. Bulletin sells apparel, jewelry and accessories for women and operates three stores in New York City after being founded in late 2016.

"Retail isn’t really dead," said Alexander. "All that’s really happening is a lot of complacency. Our core metric is not just sales per square foot, but impressions and engagement. It's a more human approach to retail."

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