Neighborhood Goods Disrupts the Department Store Model

Last year certainly wasn’t a smooth year for retail, especially for department stores. With challenge though ultimately came positive change and bright spots to signify rebirth and resurgence in retail. The misnomer wasn’t that consumers were abandoning retail; they were just waiting for all of us to create experiences that were relevant. Ultimately, that will be the new consumer currency in the future of retail.

One brand looking to modernize the retail experience and provide a new twist on the department store is Neighborhood Goods in Plano, Texas. Co-founded by entrepreneur, Matt Alexander, and real estate investor, Mark Masinter, the 14,000 square foot “room” (as it’s referred to) provides short-term leases for 6-12 months primarily for digitally native, direct-to-consumer brands. This isn’t about big brands vs. independent though; it’s an equal opportunity platform. The criterion for the retailer’s curation boils down to if the brand has the capability to tell a story in a compelling way.

“We’re trying to create a discovery and delivery mechanism for people to touch, feel, and explore more direct-to-consumer brands. As well as more interesting ways of manifesting much larger concepts and independent brands that people may not have ever heard of before,” states Matt Alexander, Co-founder and CEO.

Bringing the brands all together in one room, this isn’t meant to be a passive shopper experience. Rather than traditional pop-ups within a space, the brands are treated like activations each with their own story with daily events and a live podcast to support. The heart of the store is the retailer’s “Prim & Proper” restaurant serving coffee and cocktails throughout the day. Embracing the digital nature of the house of brands, the Neighborhood Goods app also lets customers interact on their own terms by requesting items throughout the store, the ability for mobile check out, and texting with staff.

Behind the scenes is pretty busy too. Thirty security cameras equipped with computer vision and heat mapping capture analytics and demographics to provide insight into what’s happening in the room. These digitally native brands are used to online access to data surrounding the user experience, so this helps provide a unique lens into what happens in real life.

Another difference in Neighborhood Goods’ retail strategy is location. While most brands pursue major metropolitan markets like New York, San Francisco, and Los Angeles, launching in Plano was not a second choice. In fact, it’s one of the fastest growing cities in the country, and co-founder Alexander has stated that markets like Plano tend to be in one of the top five or top ten markets for these direct-to-consumer brands. Not to mention there’s pent-up demand for modern contemporary experiences not currently available. Although new in its infantry, the founders are already looking to expand the concept to new markets, potentially in Chicago, Atlanta, DC, Nashville, or Seattle, places where it’s not “competing with the noise” but instead bringing something new to consumers.

Over the last couple of years we’ve watched similar concepts like b8ta and Story make a name in the industry but also create an opportunity for a unique conversation between retailer, brand, and consumer. It’s a fertile testing ground for brands that haven’t made the leap to brick-and-mortar to learn a lot about how consumers interact with the product, as well as eliminates the barrier to market entry.

On the flip side, the temporary tenancy doesn’t lock the retailer into brands that consumers lose luster with time and give a reason for consumers to keep coming back regularly to experience something new.

Bottom line, online customer acquisition is costly and will become even more costly as the ecommerce environment gets increasingly competitive. Balancing an online presence with a brick and mortar strategy will almost be critical for survival for today’s direct-to-consumer brands… ironic given all the discussion about the death of physical retail.

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