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A group of direct-to-consumer brands will be opening new stores at the mall, thanks to a new partnership.
Simon, a real estate investment trust that owns counts many malls, is partnering with Leap, a retail platform that helps brands open physical stores.
Initially, the partnership will bring about four new stores: True Classic Tees will open in Los Angeles' Del Amo Fashion Center. Meanwhile, intimates brand ThirdLove candy brand Sugarfina and apparel brand Goodlife will each open stores at Florida's Town Center at Boca Raton.
It comes at a time when digitally native brands are increasingly pursuing expansion into brick-and-mortar retail amid the return to in-person shopping, a pullback in venture investment into pure-play DTC and a more difficult growth environment through direct online channels as a result of rising CACs and privacy-oriented changes by Apple that hamper attribution.
Leap, which works with about 60 brands across nearly 100 stores, has tools in place to help brands enter the space, including the advantage of a network. It offers assistance with selecting a location, design and customer growth. By clustering stores, it also takes advantage of operational efficiencies via shared resources.
Simon, which owns a total of 250 retail properties, was an investor in Leap’s Series B. The two share an interest in helping brands grow through an omnichannel approach.
“It is our hope that by working together we will continue to both incubate brands through the LEAP platform as well as help them expand throughout our portfolio where they can reach hundreds of millions of their target consumers annually," said Zachary Beloff, VP of leasing at Simon, in a statement.
Many digitally native brands have physical stores, and the strategy isn’t new. Warby Parker opened its first brick-and-mortar location in 2013, and plenty of DTC darlings like Allbirds, Glossier, Everlane, Outdoor Voices and Purple have opened their own since. Many have also clustered in areas like Washington DC’s Georgetown neighborhood and Boston’s Seaport. But it stands out that a company interested in creating a network of such stores and one of the largest mall owners in the world are teaming up to power this channel. It could lay the groundwork for a more out-of-the-box approach to enter physical retail.
Simon has shown increasing interest in employing strategies honed in ecommerce for its properties. It launched a search feature earlier this year that allows shoppers to find details about in-stock products. It has also sought to take part in the very online innovation of shopping holidays, such as a recent livestream series for Singles’ Day. By partnering with Leap, it is bringing the brands found online into the mall, as well.
Of course, it's also not lost on many that there was a time not long ago when it seemed that ecommerce would bring a death knell for the mall. Now, brands that launched through the digital channel are opening stores in those spaces it once seemed it would overtake.
As Simon Property Group CEO David Simon put it on the company's third quarter earnings call: "Many have tried to kill off physical retail real estate, and in particular enclosed malls. And I need not remind you when physical retail was closed in COVID, all the naysayers saying that physical retail was gone forever. However, brick and mortar is strong, brick-and-mortar retailer is strong, and ecommerce is flatlining."
Flatlining is probably a bit too strong, as US ecommerce did grow 7.3% in the second quarter. But, when it comes to acknowledging that the two strategies can co-exist, point taken.
Trending in Economy
Labor disputes on the West Coast could cause further disruption heading into peak season.
When the first half of 2023 is complete, imports are expected to dip 22% below last year.
That’s according to new data from the Global Port Tracker, which is compiled monthly by the National Retail Federation and Hackett Associates.
The decline has been building over the entire year, as imports dipped in the winter. With the spring, volume started to rebound. In April, the major ports handled 1.78 million Twenty-Foot Equivalent Units. That was an increase of 9.6% from March. Still it was a decline of 21.3% year over year – reflecting the record cargo hauled in over the spike in consumer demand of 2021 and the inventory glut 2022.
In 2023, consumer spending is remaining resilient with in a strong job market, despite the collision of inflation and interest rates. The economy remains different from pre-pandemic days, but shipping volumes are beginning to once again resemble the time before COVID-19.
“Economists and shipping lines increasingly wonder why the decline in container import demand is so much at odds with continuous growth in consumer demand,” said Hackett Associates Founder Ben Hackett, in a statement. “Import container shipments have returned the pre-pandemic levels seen in 2019 and appear likely to stay there for a while.”
Retailers and logistics professionals alike are looking to the second half of the year for a potential upswing. Peak shipping season occurs in the summer, which is in preparation for peak shopping season over the holidays.
Yet disruption could occur on the West Coast if labor issues can’t be settled. This week, ports from Los Angeles to Seattle reported closures and slowdowns as ongoing union disputes boil over, CNBC reported. NRF called on the Biden administration to intervene.
“Cargo volume is lower than last year but retailers are entering the busiest shipping season of the year bringing in holiday merchandise. The last thing retailers and other shippers need is ongoing disruption at the ports,” aid NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said. “If labor and management can’t reach agreement and operate smoothly and efficiently, retailers will have no choice but to continue to take their cargo to East Coast and Gulf Coast gateways. We continue to urge the administration to step in and help the parties reach an agreement and end the disruptions so operations can return to normal. We’ve had enough unavoidable supply chain issues the past two years. This is not the time for one that can be avoided.”