When Neighborhood Goods opened for business in Plano, just north of Dallas in 2018, it was billed as the biggest new trend in the retail industry: a department store-format showcasing direct-to-consumer brands, offering shoppers a chance to see these goods in person.
The company leased space in their store to these brands who paid rent and also cut in Neighborhood Goods on a percentage of sales. The mix of brands was designed to keep changing to provide an always-fresh assortment for shoppers.
Along with a similar competitor named Showfields, the format got off to a good start and eventually, each nameplate had four locations, in major markets like New York, Los Angeles, Austin and Washington, DC.
Maybe it was a perfect storm but with the closing of both mini-chains last month, the “next big thing” has turned into yesterday’s format, joining a long list of new ideas in the retail business that just never made it.
Certainly the pandemic played a big role as each company was forced to close stores for months and when they did re-open they faced severely reduced traffic rates for quite some time. There was also the issue of many of these direct-to-consumer brands selling their products themselves, either on their own websites or through more traditional retailers like department and specialty stores.
But ultimately the business model for retailers like Neighborhood Goods and Showfields may have turned out to be the biggest reason for their failures. With stores located in high-rent locations – Neighborhood Goods was in New York’s trendy Chelsea Market complex while Showfields flagship was in the upscale Noho area of Manhattan – the stores just didn’t provide enough revenue for what was essentially the landlord.
The retail business continues to reinvent itself but those reinventions are often much harder than they initially looked.