Opening at Hudson Yards is also a chance for these young brands to acquire customers at a cheaper price than online, as ad placement on channels like Facebook and Google seems to be getting more and more expensive for some.
“The cost of online [customer] acquisition has gone up so substantially,” particularly within the past 12 to 18 months, said Nate Checketts, the co-founder and CEO of Rhone. Rhone will have its third store ever, in opening up at Hudson Yards on Friday. And Checketts said the project’s real estate developers — Related Companies and Oxford Properties Group — “showed greater flexibility in terms of leases” to his brand and other up-and-coming ones, to make it more appealing and less of a risk for them to open there.
“This is a chance for us to push into physical retail a little bit more and invest in it as a channel,” Checketts explained.
As hundreds of legacy retail stores — like those of Gap and Victoria’s Secret — go dark across the U.S., online brands like mattress maker Casper will open at least 850 stores altogether by 2023, with a little more than 41 percent of them choosing New York first, commercial real estate services firm Jones Lang LaSalle found in a recent study.
Looking to capitalize on this growth opportunity, other real estate developers have been trying to lure online brands to their malls and shopping centers, in different ways.
The third biggest mall owner in the U.S., Macerich, is incubating a business known as Brand Box that it’s rolling out to some of its assets, like Tysons Corner Center in Virginia. There, e-commerce brands like make-up creator Winky Lux and furniture maker Interior Define share a common space but are able to set up pint-sized, individual shops for their goods for the duration of a few months, before another group of retailers moves in.
A business known as Fourpost is doing something similar at the Mall of America. And then there’s Neighborhood Goods, often referred to as the “department store of the future,” which is opening up standalone locations that house digitally native brands — like men’s wellness company Hims and sneaker marketplace Stadium Goods — and soon is coming to New York. A concept called HiO, spearheaded by a former top real estate exec at Gap, is testing out a space for online brands in a shopping center in Brooklyn.
“When you lower the barriers to entry … our concept resonates so much with what these new brands want,” Fourpost founder Mark Ghermezian said.
Back at Hudson Yards, Webber Hudson, an executive vice president with Related Urban, a division within Related, said he’s been thinking about courting these online retailers to the glitzy new center on Manhattan’s West Side for at least the past two years.
“If you are really going to be a curator … you are taking on a role as a merchant … you’ve got to make a stance,” he said. “We took a stance. We went out and identified a number of these digitally minded brands and wanted to be in business with them in a way that they have stakes in the ground.”
“We will be right on a lot of them,” he said. “We will be wrong on a few of them.”
Here’s a complete list of the digitally native brands opening up on the “Floor of Discovery” at Hudson Yards:
AG Jeans by Adriano Goldschmied
L’Oreal (a new concept store)
Milk & Honey