Smaller spaces, shorter leases, cheaper rents and convergence with ecommerce may provide the model for the emerging retail resurgence.
Meanwhile, in the dirty-little-digital-secret department, the cost of Amazon Prime membership is rising significantly, masking the concommitant growth in shipping and the expense associated with it. 'Free' shipping was never free, but is becoming less so, providing another boost for retail. JL
Carl Swanson reports in New York Magazine:
With
the old models for retail broken and rents finally in decline, risks are being taken. That willingness to
experiment means stores more
resilient than imagined because
new technology minimizes the need for shelf space epitomized by the pop-up shop, The new retail is mediated by the digital: shops without shopping bags act as
showrooms for products to order later online; stores as places
to hang out and drink coffee and then Instagram that you were there.
It’s the last day of April, a chill still in the air, and Michael Goldban, head of retail leasing at Brookfield Properties, wants to take a stroll down the pristinely blighted western terminus of Bleecker Street. Wearing Dolce & Gabbana transition glasses and a black blazer (and trailed by a publicist), he’s here to tell me why he’s an optimist about brick-and-mortar retail. We’re passing empty storefront after empty storefront, including one, at No. 359, that is asking $25,000-a-month rent; it features a dozen loaves of Wonder Bread dangling in its window like Pop Art sausages, presumably to attract the attention of whimsy-minded potential tenants. But Goldban sees “opportunity” in the tidy, bougie desolation of this post-Amazon streetscape.
The company he works for owns dozens of malls and office buildings worldwide, among them the former World Financial Center, opened as the luxury mall Brookfield Place after 9/11. The week before, the firm placed a comparatively smaller bet on Bleecker, buying seven “cool and charming,” mostly vacant storefronts — and, by the way, he says, it’s in the market for more. Goldban regales me with how the company will apply the “place-making” and “activation” strategies that it believes it has perfected at Brookfield to revive Bleecker’s “mispriced assets.” The idea is to position the street as a place to spend the day, as he says, with Brookfield orchestrating the consumer experience rather than allowing each individual shop to pursue its own agenda. Put less delicately: “Let’s look at this as if it’s a mall, even though it’s not,” he says.
Goldban aims to seed this mall-but-not-mall with incubator retail that he then hopes to scale up. One of the first stores that has decided to give Bleecker a go is shoe start-up Margaux, a digital darling in need of a physical space to hashtag. “Listen, if Louis Vuitton came to us tomorrow and said, ‘We have this new idea, and we want to do it here,’ great. But what we really want it to be is a hub for innovation. And because the spaces are small, they don’t require much capital.”
To make Bleecker feel more like a “destination,” Goldban is conferring with Brookfield’s “arts and events” team. He’s not thinking “street fairs” or “tchotchke sellers,” he hastens to add. “In London, there was a flower show that took over a street — something like that. Something tasteful.”
Bleecker has not been alone in its emptiness over the past few years. The number of vacant — and long vacant — storefronts in otherwise safe-and-prosperous New York is unsettling. “It kind of makes you scared for the city, which is geared around pedestrian life,” says former City Planning commissioner Amanda Burden, who can’t understand how landlords can leave the shops along Madison Avenue near her apartment lying fallow. One broker I spoke to, Bruce Ehrmann, said there are about 100 empty storefronts in Tribeca. When Manhattan borough president Gale Brewer sent a team up Broadway last year to count the empties, it got up to 188 — and she and Mayor Bill de Blasio are working on legislation to tax or fine landlords who don’t rent their places already. Cushman & Wakefield’s MarketBeat report for the first quarter of this year put the “availability” rate on Fifth Avenue between 42nd and 49th Streets at 32.8 percent, in Soho at 23.9 percent, and in Herald Square at 31.
Maybe because the real-life writer Jane Jacobs, author of The Death and Life of Great American Cities, and the made-up writer Carrie Bradshaw, heroine of Sex and the City, have both strolled Bleecker (undoubtedly in very different footwear), the fate of this little street has become a sort of real-estate morality tale over the past couple of years. (There’s an entire chapter devoted to it in Jeremiah Moss’s book Vanishing New York.)
Bleecker’s mid-aughts transformation from a place to buy vintage quilts and Afghan rugs to an Edward Hopper version of Rodeo Drive was shocking for many New Yorkers — Marc Jacobs opened six shops over four blocks; Coach, side-by-side boutiques; Burberry, Brooks Brothers Black Fleece, Juicy Couture, Mulberry, and Lulu Guinness showed up too. The street became trendy, and the rents jumped, and while it worked for some brands for a while — the Michael Kors on the corner of Perry was said to be doing $3 million a year in its heyday roughly five years ago — many of them didn’t do enough business to justify keeping the lights on. In fact, every one of the aforementioned boutiques has closed. The lone survivor is Bookmarc, which replaced the 24-year-old Biography Bookshop, to much gnashing of teeth, in 2010.
“We keep hearing these narratives about the retail apocalypse, and clearly you have to be blind to not see that there have been major disruptions,” Goldban admits. Elsewhere in the city, the lingering bust can be attributed to the fact that chain retailers drove up rents over the past decade — filling the city with, as the authenticity Cassandras always put it, drugstores and Starbucks (along with plenty of banks) — but then, with sales being siphoned off by online outlets, couldn’t afford the increases they’d wrought. As noted in the Center for an Urban Future’s annual mall-ification tally (its first report, in 2008, was titled “Attack of the Chains?”), 20 percent of national retailers in the city closed stores over the past year, and only one in seven of the establishments the group follows “increased its footprint — the smallest share since we began keeping track a decade ago.”
“We had ten years of an up-market, and rents were off the charts everywhere, absolutely everywhere,” says veteran Douglas Elliman broker Faith Hope Consolo. But that is starting to change. This most adaptive of cities is beginning to … adapt. “We had to give landlords a wake-up call,” Consolo says. “On Madison in the 60s, it was $2,200 a foot. Today, you can make deals at $1,000 and $1,200 a foot.”
The new retail beginning to rise is, like the rest of our lives, mediated by the digital: shops without shopping bags that act as showrooms for products you have to order later online; stores as places to hang out and drink coffee, maybe pick up a set of millennial-pink dinner plates or sniff a candle, and then Instagram that you were there. There are stores set up as playgrounds of hashtag zones (Philipp Plein on Mercer, with its parked Ferrari and neon signs blaring hipper-than-thou epigrams like your comfort zone will kill you); stores as community centers for your chosen community (Rough Trade records in Williamsburg, Books Are Magic in Cobble Hill); stores as Etsy-souks of artisanal products (Canal Street Market); high-tech stores where you can ogle robot legs wearing sneakers and shoot hoops (the Nike store in Soho); stores that peddle a sense of in-the-know scarcity (line up for the latest shoe to drop at Kith!). Then there are those that cater to the crazily exacting needs of busy, busy, busy, cost-is-no-object Miranda Priestlys. The supercharged-concierge approach is part of the plan for both the seven-level Hudson Yards mall (with Neiman Marcus on top) and the 320,000-square-foot Nordstrom on 57th Street, which is slated to open next year.
In other words, with the old models for retail broken, or at least a good deal less sturdy, and rents finally in decline, risks are being taken. That willingness to experiment means that certain seemingly threatened — but perhaps more resilient than imagined — retailers such as bookstores are returning in new forms. Shakespeare & Co. is opening four stores, but they’re much smaller than the old ones, only 2,000-to-3,000 square feet, because new technology allows books to be printed and bound while you wait, minimizing the need for shelf space.
This move toward experimentation is epitomized by the here-and-gone pop-up shop, what the brokerage CBRE calls “rogue retail.” A U.K. company named Appear Here is running what is essentially an Airbnb for pop-ups and has put its distinctive stickers on unoccupied storefronts all over town (one on the corner of Bleecker and Christopher rents for $1,250 a day).
With city leases drastically shorter than they once were — down to an average of five years, versus as long as 20 in the 1990s — CBRE predicts that the temporary will become the permanent state of things. Our attention spans are shorter, after all. And yet, as Consolo points out, a fair number of the pop-ups are sticking around. Digital-native brands “test the concept,” she says, “and end up staying.”
That’s the big hope for the city, that digital-firsters — Bonobos, Everlane, even Amazon — will keep going IRL. Several trends bode well for that: In the first six months of 2017, Facebook’s ad rates reportedly more than doubled, which might make a #store on a busy street a cost-effective billboard (the entire façade of Kenneth Cole at Bowery and Bond becomes a video ad after-hours). At the same time, the price of shipping is climbing, squeezing already-tight profit margins and perhaps explaining why Amazon announced last month that the cost of Prime membership will swell by 20 percent.
Best of all for New York, most digital purveyors aren’t interested in being in some cavernous mall in the burbs: If they’re gonna get physical, it better be in a #cool #neighborhood. Like, say, Bleecker Street.
Still, none of us is going to stop shopping online, and now there’s even talk of new Amazon technology that — if it works as it’s supposed to — would allow customers to scan their bodies at home, then order clothes that’ll fit perfectly, as if you had your own personal bespoke-bot. Can our shops and legacy department stores survive that? I visited Kenneth Himmel, president and CEO of the development company Related Urban, the firm behind that giant mall being built in Hudson Yards. His office is at the Time Warner Center in Columbus Circle, the mall-office-hotel-condo complex that opened in 2003.
“What’s happened is the trends are so accelerated that nobody can keep up,” Himmel says, looking out over Central Park, a scale model of the building we’re in enclosed in a vitrine behind him. “I mean, when you talk about planning and designing these projects, it’s a five-to-seven-year cycle. In the meantime, look what’s happened in the last three years.” In that short space of time, the retail world has “turned upside down,” he says, prompting “everybody to overreact.” He continues: “Now department stores are reporting better sales against last year. Well, last year’s sales were so horrendous, they better be beating it, but the fact is things are stabilizing.” Still, he’s convinced that a Darwinian contraction is inevitable. “We’re the most overretailed country in the world,” he says.
I mention to Himmel that on the way in to see him I stopped to browse at the Amazon Books in the mall downstairs (tellingly, somehow, the space used to be a Borders). “They’ve been open for about nine months,” he says. “It’s interesting. If you get inside the story of many of these online retailers, they lose money because people send stuff back. I was out to dinner in Palm Beach two weeks ago, and this woman was raving about the experience she was having at Neiman’s and Saks. She was ordering eight luxury items and returning, like, all but one thing.”
“We’re nervous,” admits Jamie Nordstrom, president of stores for his century-old family retail empire, which spent 30 years looking for a location in the city before landing on the 57th Street space. He knows, of course, that “the days of just opening a store on Madison Avenue” and waiting for people to “flock” in are over.
Nordstrom is counting on its new take on the department store to attract the right mix of locals and tourists. (“You’ll never feel claustrophobic in our store,” he swears.) He also touts Nordstrom’s friendly and tech-savvy service (which will include perks like opening the store for middle-of-the-night pickups if you really, really need that Prada backpack). “Service means a million little things,” Nordstrom says. “I want to shop on my phone, but I want to try on in the store. It’ll be in the dressing room waiting for me, in and out in five minutes.” And then how about having your purchase delivered to your home or hotel? “You don’t have to leave with a shopping bag,” he says.
A Nordstrom men’s shop, a much smaller companion to the palatial women’s store going up across the street, opened last month. Walking through, I’m struck by the slate-counter coffee bar with the cute barista, the $5-shoeshine guy, and the clerks, who are almost alarmingly friendly.
It’s a high-low experience: In a Topshop boutique, $200 mauve sport coats are on offer, but not far away you can run your hands over the glittering blue-sequined fabric of a $2,870 jacket by Comme des Garçons. “Fashion today is not about the price,” says Nordstrom. “That’s where some people get confused. Right now the hottest shoe is the Air Max from Nike, which is $150.” And, to finish his sentence for him, if Nordstrom is lucky, you’ll go in seeking the pair that can be had for a relative pittance and end up splurging for the $650 Dior sneakers sitting right by them. “I come in the store to find something I didn’t know I was looking for,” Nordstrom philosophizes. “That’s what a great store does. The treasure hunt. A new fit, a new brand.” Such grand adventures aren’t possible online, he says, because digital excels at leading you to things you already know you want. Or, in my case, trying to get me to buy the thing I just bought by hectoring me with ads for the same pair of sneakers I’m already wearing.
“Anybody who thinks that the department-store industry is over: You’re crazy,” agrees Himmel, who, admittedly, has some skin in that game. “This Neiman Marcus store in Hudson Yards, that will be doing, I believe, $150 million in volume. That’s my belief.” Still, he humbly submits: “If I had it to do over again, I would actually probably shrink the department store and add a 60,000-square-foot luxury-movie-theater complex.”
Propagandizing aside, it’s true that those algorithmic online ads can’t replace the flâneur pleasures of walking the streets, browsing, trying on new versions of ourselves. Jennifer Mankins, who opened her first Bird, a women’s-clothing boutique, in Park Slope in 1999, is finding a different kind of niche in the digital environment. In the past year, she’s opened two new stores, one in Culver City in Los Angeles and one in Fort Greene. “On the one hand, it’s sort of a nutso time” to expand, she says, “because in a lot of ways things are in flux. But it’s really a fascinating time, too.” Bird is managing to thrive, she posits, because it gives consumers an escape from the internet’s tyranny of choice. “I don’t want to look at 20,000 new black dresses. I want to see ten,” she says. “There’s a value placed on the edit. It can actually be less convenient to shop online. There’s too much.”
Himmel manages to be both elegiac and forward-looking about the fate of brick-and-mortar. “I’ve got three granddaughters. One’s 16, one’s 13, one’s 8. I watch them; I watch their friends, I watch my wife; I watch how everybody’s shopping.” And, he concedes, a lot of it is, indeed, online. It’s more convenient, or, once you’re used to it, it definitely feels that way. “But you can’t spend your whole life doing everything on these devices. You hope! That’s our objective: to get you off the device.”
The Multi-Hyphenate Model: Be Five Stores Instead of One
Since Saturdays NYC opened its part–menswear shop, part–coffee bar in 2009, retail hubs with many distinct components have multiplied across the city, culminating in the recent opening of the Roman and Williams Guild, a 7,000-square-foot homewares store (with a flower shop and a restaurant) in Soho. Scott Haven, co-owner of Greenpoint’s flower-slash-coffee-slash-retail shop Homecoming, believes this model gets more people in the store. “They come first and foremost to hang out. Then maybe they buy something. Or take a photo for Instagram,” he says. —Katy Schneider
Additional Costs
Liquor-license renewal: $2,000 every two years.
Restaurant license: $1,500 every year.
Insurance: $2,800 every year.
Accounting: $400 quarterly.
Sales tax: approximately $7,500 quarterly.
Rent increases by 8 percent every year.
Jane, which opened in Williamsburg in 2013, sells motorcycles — plus coffee and a menswear line for those who don’t ride.
Revenue Breakdown
Apparel: 70 percent. “On a good day, you can make $10,000 in apparel; the margins are great.”
Coffee: 20 percent. “You can make up to $1,000 a day in coffee, but you can’t have a $10,000 day in coffee alone.”
Motorcycles: 10 percent. “We sell them sometimes, and we make good money on them when we do, but it’s more to bring in people. And for brand awareness.”
While other early-to-the-scene Greenpoint shops have been forced to close because of skyrocketing rents, Homecoming continues to thrive. In May, the owners opened a second location, in Williamsburg. “We’ve seen so many places close in the last five years,” Haven says. “But we’re lucky, because our landlord lives in the building and is very hands-on with the community. He likes us, and he hasn’t drastically increased our rent.”
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Revenue Breakdown
Café: 40 percent.
Cold brew accounts for 25 percent of the café’s sales, followed by hot coffee, then cappuccinos. Pastries amount to only 15 percent of the café’s business. Though the café is lucrative, it has its downsides: The store has to go through an annual inspection and pay café taxes.
Plants and Flowers: 40 percent.
Seventy percent of plants sold are “general foliage” — which, says Haven, just means everything that looks like a houseplant. Next, the four-inch potted plants, which sell the fastest because they’re so small. Cacti make up a surprisingly small (30 percent) portion of the plant business.
Homewares: 15 percent.
Haven stocks everything from doormats to coffeemakers, but the items that sell best are ceramics and pots from locals like Helen Levi.
Apothecary: 5 percent.
Homecoming sells soaps, perfumes, lip balm, and candles. The two best sellers are 1509 perfumes and Grown Alchemist products.
Books: Less than 1 percent.
Though Haven is committed to stocking books, they aren’t big movers and have a small profit margin. Still, he says, “they say something about what we’re into in the store.”
Stephen Alesch and Robin Standefer opened the 7,000-square-foot Roman and Williams Guild in December. The sprawling Soho space includes a shoppable library, flowers by Emily Thompson, furniture (their own, plus one-of-a-kind vintage pieces), and a full-fledged French restaurant, La Mercerie. “Our dishes and napkins [that we use in the restaurant] fly,” says Alesch. “So do the stools and artwork — we put it up one day, and it’s gone the next.”
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Key Factors
Lighting: The lighting that’s used in the shop — the Oscar and the Felix fixtures — are selling particularly well, according to owners Robin Standefer and Stephen Alesch.
Plates: The café brings in the most foot traffic, and the napkins and plates used for service in the café are also frequent purchases. Same with the Japanese glassware: “We’ve had to reorder it many times already,” says Standefer. “People really love to carry something home under their arm.”
Furniture: Standefer and Alesch were surprised at the popularity of two pieces in particular: the oak and seagrass Seamoor chair, and the small hoof stools. “When we made the prototypes of the Seamoor in Montauk last summer,” says Alesch, “we had no idea they would be so popular.”
Café: As for the pastries that do best? Well, according to Alesch, it’s the blinis and the crêpes. “The crêpes in particular just fly,” says Alesch. “It’s hard for everyone to keep up.”
Wall beside the bathroom: Standeferand Alesch decided to utilize a stretch of empty wall near the downstairs bathroom by hanging up a series of (buyable) framed prints. Surprisingly, and despite the odd location, they’ve sold extremely well — so well, in fact, that almost every day the team has to do new hangings.
The One-Item Model: Just Carry One Very Specific Thing
Specialty shops might seem like a relic of an older New York. But in 2015, 24-year-old Caroline Weaver opened CW Pencil Enterprise, a store that sells only pencils and pencil accessories. A little over a year later, Jordan Roschwalb opened Pintrill, a pin store in Williamsburg. And they’re still kicking — even expanding. We brought together Weaver and Roschwalb to chat with original one-thing seller Millicent Safro, who’s helmed the Upper East Side button shop Tender Buttons since 1964. —Lauren Levy
Millicent Safro. Photo: Joana Avillez
Millicent Safro, Tender Buttons: There was a Hungarian man who sold buttons on 77th Street who wanted to get rid of them all. It was the ’60s and my friend and I wanted to be artists, and we saw it as a possibility for a work of art. So we bought all the buttons and rented the shop to store them. After that, people just kept coming into the shop and asking to buy buttons. Before we knew it, we were a business. In 1964, we moved to our current location. We went from $200-a-month rent to $800.
Caroline Weaver. Photo: Joana Avillez
Caroline Weaver, CW Pencil Enterprise: I understand going from a tiny shop to a big shop where the rent has multiplied. We moved into a new shop in October that was double the size of our original, but also had a finished basement. Now we do online fulfillment from the same space. That was big.
Jordan Roschwalb. Photo: Joana Avillez
Jordan Roschwalb, Pintrill: We just switched our fulfillment to the back of the store, and it’s been incredible. We saved money on the rent from the other space, while also bringing the inventory into one place, which makes it a thousand times easier. The difference for me is that the store came kind of second to the web, whereas for you, Caroline, you were always going to open up a store.
CW: I had a website first, but the endgame was to have a store. It wasn’t meant to happen that fast, but then I found the perfect space. It was important that it was tiny.
MS: I had that too — the perfect space. It just looked like a button shop. We bought this whole building in the ’80s. At one time, it was a blessing, but the real-estate tax has gone up so incredibly, about 600 percent or so, and the value of my product is so inexpensive. Most of what we sell is $3 or $4.
JR: I do a lot of wholesale and private label manufacturing, but the average pin for us is $12 to $18. We also sell dollar pins, which is a huge driver for us. So many people like digging through them.
MS: What really boggles my mind is that you two have started your shops when you’re competing for rents with big-box shops.
JR: The hardest thing is that if you could buy a T-shirt for $20 at Zara, do you really want to spend $15 on a pin? It’s cultivating that value, whether it’s for the designs or the quality. To keep the space, we have to sell 500 to 1,000 pins a month. E-commerce is a whole other entity for us. The store is self-sufficient on its own, which is great.
CW: My rent is very expensive, but I can pay everybody and pay my bills. Having our quarterly subscription box has been a game changer. We can count on it every three months, and we have 1,200 subscribers and a waiting list. Knowing that even if we have a slow month we can rely on that money makes a huge difference.
JR: For me, people always walk into the shop and they’re just like, Wow. Instagram is huge for us. If we had gotten on Instagram a year or two years later and the algorithm changed, our business would not have become half of what it was.
MS: I really don’t know Instagram and I’m realizing that I should get with it, but we recently changed our policy from “No pictures” to “Yes pictures.”
CW: I think that because there are fewer specialty shops, people are more interested in them. Most people are so confused by the concept that somebody in the 21st century would attempt to open a specialty shop, and because of that curiosity, they come by.
MS: We had a woman come into the store, and she spent all day here looking at the buttons and listening to the opera. At about four o’clock, we got a call from a man who said, “Did my wife spend the entire afternoon in a button shop?” He thought she was lying. It was true.
A mold problem forced Caroline Weaver to vacate her first, 200-square-foot space last year. Her new store is double the size (and rent), but she’s managing just fine.
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Key Factors
Everything in the shop is labeled, to eliminate the need for customers to ask questions. The exception is the more expensive pencils, which are close to the shop clerk. With those, Weaver says, people want to ask questions, and the more they know, the likelier they are to buy.
Colored pencils are in the front. “People overlook them, and they’re something you’re more likely to buy if you can compare them all,” Weaver says.
The sharpening and pencil-testing stations are at opposite sides. Weaver knew that’s where people would congregate. “A lot of decisions were focused on how to control the flow of people,” she says.
The average in-store purchase is $25. Online, that number grows to $40. Weaver suspects customers want to justify the shipping costs so they’re more likely to stock up.
A typical shopper will buy about 12 pencils each visit, along with one accessory, like a sharpener, a grip, or a notebook.
Most expensive non-vintage pencil: Mitsubishi Kohitsu Shosha; $7.50. “This is specifically designed for practicing Chinese calligraphy.”
Most expensive vintage pencil: An original Blackwing 602 from the ’60s; $75. “There’s a big collectors’ market for those,” says Weaver.
The Pencil Wall was designed for social media. And Weaver made sure there was enough space in front for people to stand back and Instagram it. “We get a lot of people who find us on Instagram and think our shop is cute,” she says.
The Pencil Vending Machine keeps people returning to the store. Weaver fills it with vintage advertising pencils that she buys from a collector in Colorado. For 50 cents per pencil, it’s become a cheap attraction. One couple stops by every Sunday for a new pencil.
The Sticker Department is hidden in the back. “It’s called the CW Sticker Emporium, and it’s a little secret thing that brings a different crowd of younger cool people. They make a beeline for the back of the store, and maybe they’ll buy a pencil, too,” Weaver says.
Weaver’s expected 2018 revenue is $1.2 million. She pays $9,000 per month for rent and sells between 1,000 to 2,000 pencils a day.
The Indie Book Model: Exploit the Barnes & Noble Void
“We’re all picking up the crumbs that the chain bookstores left behind when Amazon forced them to close,” says Sarah McNally, owner of McNally Jackson. The crumbs are enough for many indie-bookstore owners to create a thriving business, it seems, especially if they carefully curate their selection and sell merchandise that complements the store’s aesthetic. McNally, for one, flies to Japan for greeting-card shows, and Emma Straub, whose Cobble Hill shop Books Are Magic opened last year, has sold some 2,000 millennial-pink-branded tote bags. It’s a difficult business, to be sure. Owners face high rents and low margins. But still: It seems a good bookstore has a better chance now than ever of surviving. “We’re doing far better than we projected,” says Straub, who has consistently sold around 12,500 books per month. “People see us on Instagram and come visit from Japan. And our events have been so successful that I worry for the mental health of our events coordinator.” —K.S.
The first outpost of Sarah McNally’s successful Soho institution opened earlier this year. (Two more are on the way.) She got a good deal on the rent. The owners of the Lewis Steel Building, a converted factory, wanted an anchor tenant to give the space some buzz. A similar thing happened over at the South Street Seaport, where McNally will open another location soon. “Their goal was to bring in cool tenants, which they were very upfront with,” she says. Meanwhile, her Soho rent hasn’t risen much since she opened in 2004, though costs have increased: The property taxes are now well over $100,000 a year; when she opened, they were only $25,000.
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Key Factors
McNally’s business is almost 100 percent brick-and-mortar. “Our website is just awful,” she says. “The user experience is literally a joke.”
The Williamsburg shop has had several “sure bet” events — writers like Michael Cunningham and Sloane Crosley. But events are difficult to monetize, she says. “If 100 people come, you’re lucky to sell 20 books.”
McNally is committed to having a magazine section in Williamsburg. “It’s currently 4.8 percent of our business,” she says. “Our magazine section in Soho is 6 percent, which is depressing because it used to be 10 percent.” Their profitability has become worse, too: McNally used to get 40 percent off her best-selling magazines; now she gets only 20 percent.
She sells lots of cards and stationery. Though she carries fewer in Williamsburg than in Soho, they still make up about 11 percent of the total business. In Soho, McNally Jackson sells about 4,000 cards a month. “Our best seller says ‘You’re One Succulent Motherfucker,’ ” says McNally.
So far, so good with the bathroom. But the Soho bathroom “breaks every week,” she says. There’s a methadone clinic nearby, and “people flush needles down the toilet. It’s easily tens of thousands a year for the fucking bathroom.” There is one benefit to the bathroom: When McNally moved it to the lower level, there was an uptick in sales in every section that’s downstairs.
Paperback fiction is 15 percent of the business, the biggest category in Williamsburg. There are 6,611 paperback-fiction titles in the Williamsburg store, versus 8,201 in Soho. “We have more books here than a 30,000-square-foot Barnes & Noble,” says McNally.
The kids’ section is quite large: 8,868 kids’ books, making up 14.72 percent of the business. “There are a lot of kids here, as it turns out.”
The Cooperative Model: Team Up With 69 Other Designers
Here’s how Flying Solo, a fashion cooperative founded by jewelry designer Elizabeth Solomeina, works: Each of the 70 designers puts in two four-hour shifts a week at the 7,000-square-foot store, and membership fees, which cover rent, production, and events, are taken out of their individual sales. They each get a place to work (at a 5,000-square-foot space down the street) and a store that also acts as a showroom and photo studio. —K.S.
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What the Designers Say
“I’d noticed while working in the store that customers were drawn to other designers’ tactile materials, so I’ve started using more three-dimensional silhouettes and fabrics.” —Jenny Lai, NOT
“I’m working with people who would typically have been my competitors — they’re sharing with me secrets of their businesses — to try to help me.” —Anna Sokol, WeAnnaBe
“I couldn’t have my own space in Soho — the overhead for that location is extremely expensive. So it’s like Flying Solo prepares the table and we get to enjoy the dinner.” —Daniela Zahradnikova, DZ Zone NYC
“It’s great, free PR for us — between all the designers, they have so many friends and stylists who do editorial pulls. Because of them, we’ve gotten into Vogue Italia, Vogue Arabia.” —Sienna Li, Sienna Li LLC
The Web-First Model: Start Online, But Don’t Stay There
“We are going to shut the company down before we go to physical retail.” That’s what Everlane co-founder Michael Preysman told T magazine six years ago — five years before opening a shop on Prince Street. It’s not far from Warby Parker’s flagship on Greene Street. Also in walking distance: Glossier’s pink-and-white showroom, where teens and tourists come in droves to buy makeup they purchased for years online. Digitally native brands are the second-biggest category of new tenants in New York, according to Cushman & Wakefield. (Fast-casual food chains are the first.) Thanks to VC funding, they have lots to spend on rent, making retail a not-totally-risky endeavor. And it’s working: The stores we talked to said their brick-and-mortars are, for the most part, moneymakers. —Margaret Rhodes
Warby Parker
In-store best sellers: Percey glasses ($95). Photo: Courtesy of the Vendor
When Warby Parker first launched, co-founder Neil Blumenthal recalls, “people were saying, ‘Hey, can we just come to your office and try them on?’ And we were running it out of my apartment. So the first store was on my kitchen table.” Today, the glasses brand has 67 stores in the U.S., with 23 more coming this year. “When it’s our first store in a new market, we see some cannibalization off web sales for a few months. But it only lasts nine to 12 months. And then e-commerce starts to grow faster than it would have before,” Blumenthal says.
Away
In-store best sellers: The Bigger Carry-On ($245), in blue. Photo: Courtesy of the Vendor
In 2016, as a marketing experiment, Away ran a pop-up on Lafayette Street from May to September, selling its luggage as well as travel-themed trinkets. It was profitable within a month. Away signed a five-year lease on a permanent Bond Street store, and soon after, the brand saw a 40 percent lift in online sales in the New York market. Jen Rubio — who met her co-founder, Steph Korey, when they worked at Warby Parker — says each of the four stores around the country are profitable as stand-alone enterprises.
Everlane
In-store best sellers: The Day Heel ($145). Photo: Courtesy of the Vendor
In December, co-founder Michael Preysman opened the brand’s first permanent store in Nolita. Two months later, he opened the second in San Francisco.
Preysman says he didn’t intend to sign a lease but agreed to a ten-year one after seeing the skylights in the Prince Street store. “I was like, Holy shit, this is the brand in physical format.” For the first few days after the New York store opened, customers either needed an appointment or to wait in line to get in and shop. So far, Everlane’s averaging $4,500 of sales per square foot.
The Arrivals
In-store best sellers: The Moya III oversize shearling ($1,095). Photo: Courtesy of the Vendor
After exceeding their targets during a holiday pop-up in 2016 (then tripling revenue the next year), selling thousands of their leather jackets, Arrivals co-founders Jeff Johnson and Kal Vepuri have settled into a winter pop-up routine — one that’s almost rent-free. “Soho landlords all want a five-year signing at $90,000 per month,” Johnson says. “We don’t have anywhere close to the ability to do that.” So for the last pop-up, architect friends put in HVAC and got the storefront up to code in exchange for rent.
What’s with all the Sephoras? And why do so many stores have couches?
1. What other types of stores are doing okay?
According to Faith Hope Consolo, chairman of Douglas Elliman’s retail division, who likes to say “Retail is my detail.”
Beauty
“They’re booming. It’s all about Sephora and Blue Mercury and Ulta. But whether it’s natural beauty” — since 2011, Aesop has opened ten New York storefronts—“or the new Korean cosmetics chains” — Amorepacific, South Korea’s Estée Lauder–like company, has opened Aritaum stores in the city; Innisfree has an experiential Union Square store — “a lot of the single brands are expanding like crazy, and they’re going onto Madison Avenue, into Hudson Yards: M.A.C, Kiehl’s, Jo Malone, Milk.”
Home
“There’s a new crop of stores doing something special like bedding” — like Parachute Home, which is moving into a permanent Soho store soon — “or the new Casper mattress stores, where they create little mini-bedrooms and vignettes. It’s almost like a testing ground for the product. The Hästens store on Madison is the benchmark for that kind of specialty-experience shopping.”
Apparel
“It’s all about these big brands reinventing themselves: It doesn’t matter that H&M closed all those stores; they have new concepts with Cos and & Other Stories. Athleisure is a bright spot: Lululemon is expanding, Bandier is opening a massive flagship. But the trend is always for luxury: I mean, there’s Gucci, which just took practically a whole block in Soho — how about that. I don’t think you get bigger than that.”
Kids
“East Side, West Side, downtown, there are a lot of kids stores. I think it’s because there’s all these grandparents. You have a very wealthy customer base.”
—M.R.
2. Where might a storekeep hang her shingle?
Consider these on-the-up-and-up stretches.
Wythe Avenue: 1. Pilgrim; 2. Baggu; 3. J.Crew; 4. Mociun; 5. The Shade Store; 6. Muji; 7. Sandro; 8. Maje; 9. Rough Trade; 10. Kinfolk; 11. Wythe Hotel; 12. Halcyon; 13. Suitsupply; 14. The William Vale; 15. Fellow Barber; 16. The Great Ethos; 17. Bulletin; 18. Gant; 19. A&G Merch; 20. Credo Beauty; 21. The General by Vans; 22. Space Ninety 8; 23. Chrome Industries; 24. Aesop; 25. RRL; 26. McNally Jackson. Photo: Map by Jason Lee
Wythe Avenue
“When I opened my home-goods store six years ago, there wasn’t a ton there: It was Pilgrim, Brooklyn Denim Company, and Oroboro, which is now gone. Kinfolk was there, but they didn’t have the store yet. It was before Williamsburg turned into Murray Hill vibes and every Japanese-tour-guide book said to go here. Girls who worked at my store dated dudes who worked at Pilgrim. It was a little happy-family vibe.
I feel like I’m talking about a time 20 years ago; I can’t believe how fast it’s changed. The first wave started in April 2014, when Space Ninety 8, which is actually an Urban Outfitters, opened. Then in September came J.Crew. The second wave was nearby: RRL in October 2015, Levi’s, Scotch & Soda, and G-Star Raw that November, all in the building that would eventually house a Whole Foods. That was across from the Apple Store, which opened in July 2016; Muji followed the next year, in September 2017. And the hotels keep popping up: The William Vale, The Williamsburg Hotel, and this summer, The Hoxton. A lot of this happened on Wythe because it’s very commercial. The block also has an expansiveness to it. It’s like the Champs-Élysées.
I’ve watched my friends and a bunch of customers get priced out. But a lot of the people who’ve moved in are a little more affluent, which is good for us. We’re successful enough to afford the rent, so we’re going to stay here.”
—L.L.
Canal Street
Where $85 ceramic plates are replacing faded tourist tees.
In five years or so when Canal Street is unrecognizable, it’ll be thanks to two landlords. The first, Philip Chong Jr., who developed Canal Street Market, the 12,000-square-foot airy, natural-wood-lined bazaar and food hall off Lafayette Street and transformed New York’s last bastion of tourist crap and knockoff bags into a destination for ramen lovers and ceramic snobs. The Market is right down the block from Acne and Mansur Gavriel’s new headquarters. And a couple blocks down, Roman and Williams Guild and secondhand sneaker emporium Stadium Goods have opened shop. This new sheen is what the second landlord, Albert Laboz of United American Land, hopes to continue by upgrading all those empty Canal storefronts between Broadway and West Broadway. This summer, along with Laura O’Reilly at Wallplay, a platform that matches empty spaces with artists, brands, and programming, and Sonny Gindi, of the Instagram account @Vibes, they’ll turn their combined 22 vacant stores into mixed-media art galleries and experimental retail pop-up shops.
—L.L.
The South Street Seaport
Where Milan’s 10 Corso Como is arriving in the fall.
“It used to be snow globes and ‘I Love New York’ T-shirts,” explains Saul Scherl, president of the New York Tri-State Region at the Howard Hughes Corporation, which inherited the Seaport District in 2010. Two years later, when Hurricane Sandy devastated the area, the company saw an opportunity. “We had the chance to develop something different, not just another mall.” Central to their plot has been securing the right tenants. Among them: culinary stars Jean-Georges Vongerichten and Momofuku’s David Chang and much-loved New York originals like McNally Jackson, Big Gay Ice Cream, and Fellow Barber. But to really succeed, Hughes needed to secure an impressive landmark fashion retailer. It set its sights on 10 Corso Como and spent close to five years convincing — and insiders say, incentivizing — founder Carla Sozzani that the Seaport was the best home for its first U.S. flagship. She was convinced. This September, the boutique will open doors on a 28,000-square-foot space.
—Hayley Phelan
3. Why do so many new shops look the same?
The Linger-for-Hours Living Room
Photo: Joana Avillez
Why it works: “The more time you spend around a product, the more ownership you feel over it,” says consumer psychologist Kit Yarrow. “People don’t want to ask permission to touch something; they want to feel comfortable.” Stay-awhile approaches include the Apartment’s loftlike layout and Foundrae’s lending library.
The Minimalist Art Gallery
Photo: Joana Avillez
Why it works: “Today’s consumer is easily overwhelmed,” explains Yarrow. Stark white walls and clean-lined tables, like at La Garçonne in Tribeca and Away in Noho, create a pocket of calm designed to quell such anxiety. “Plus, when there’s less of something, it seems rare,” adds Yarrow. “Apple is a forerunner in understanding this.”
—H.P.
4. What happens when a store’s too popular?
Photo: Joana Avillez
Photo: Courtesy of the Vendor
It used to be that a well-timed release of a limited run of goods made your store successful. The “drops,” as these releases came to be known, were a way to entice people into your space and create an energy and sense of necessity around the physical store. They were so valuable that, while they began in the then-insular world of sneakers, drops quickly went mainstream with Supreme, and now we’re at the point where Alexander Wang has announced he’ll be forgoing New York Fashion Week to refocus on droplike direct-to-consumer experiences. Birkenstock has even begun dipping its earthy sandals into the fray. But for the sneaker and streetwear worlds where they started, drops are no longer the blessing they once were. Past Nike releases were shut down after fights erupted outside the store. When Supreme and Louis Vuitton applied for a pop-up location to sell their much-anticipated collaboration line on Bond Street, they were denied — the local community board wasn’t interested in the commotion. So brands are rejiggering. Supreme now requires that customers sign up online to reserve time slots for Thursday “drop day” releases. But it’s Nike that is perfecting the Drop 2.0 with its SNKRS app, which has completely digitized the idea of the drop. Instead of guiding buyers to its stores, Nike is sending them to public spaces, like parks, where a technology called “geo-fencing” recognizes their location and allows them to cop a drop. —L.L.
5. Where did all the menswear boutiques go?
Low ✓
Photo: Joana Avillez
Streetwear brands like Kith, Palace, Noah, Round Two, Supreme, Maharishi, Aimé Leon Dore, and Off-White are going gangbusters. “Today’s savvy and in-the-know menswear shoppers, mostly between the ages of 18 to 35, are hyperaware of and increasingly loyal to specific labels that define the cult of streetwear,” says Lawrence Schlossman, brand director of Grailed, the online men’s resale shop. “They wear head-to-toe one brand.”
Middle ✗
Photo: Joana Avillez
For middle-of-the-road retailers, it’s either adapt or close. Earlier this year, multi-brand store Gentry, which specialized in American workwear and imported Japanese garments, shuttered because it seemed people would rather shop directly from Carhartt WIP. When Carson Street closed its retail shop in 2016, it announced that it would focus on its more classic menswear line, Deveaux.
High ✓
Photo: Joana Avillez
Bespoke-suiting shops, specifically transplants from London’s Savile Row, all happen to be opening here at the same time. Huntsman was one of the first to make the trip Stateside, opening in March 2016. Richard James was next, followed by British shoemaker Harry’s of London. Drake’s learned that 30 percent of its online customers were actually in New York, so it might as well sell directly to them here.
As a Partner and Co-Founder of Predictiv and PredictivAsia, Jon specializes in management performance and organizational effectiveness for both domestic and international clients. He is an editor and author whose works include Invisible Advantage: How Intangilbles are Driving Business Performance. Learn more...
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