Simon says digital native brands can find a home in its malls

Discussion
Photo: Leap
Nov 18, 2022

Simon Property Group (SPG) is partnering with retail real estate platform Leap to give digital native brands with no or limited physical footprints a brick-and-mortar location in its shopping malls.

Leap empowers digital brands to more rapidly launch brick-and-mortar locations with less risk and expense, and plans to bring four stores to SPG-owned malls in the initial phase of its partnership with the national mall owner. The partnership will be launching a True Classic Tees store in the Del Amo Fashion Center in Los Angeles and stores for ThirdLove, Sugarfina and Goodlife in the Town Center at Boca Raton in Florida.

Leap appears to have pre-existing relationships with all of the brands being launched in SPG malls. The Leap website maintains a list of all the stores launched through its platform, and shows one or more brick-and-mortar locations currently open for each of the brands discussed in the press release.

Some of the relationships appear to be quite new and may represent the brands’ first foray into physical retail. True Classic Tees, for instance, was reported as being an online-only brand in September of this year by Gear Patrol.

More online-only retailers have been expanding into physical retail lately after finding it unsustainable to sell products only on the web.

Allbirds and Warby Parker, two of the biggest names in direct-to-consumer retail, have both made physical stores a big part of their strategy, according to CNBC.

Leap is not the first company that has tried to operate as a middleman in bringing direct-to-consumer brands to the mall. While Leap is different in that it facilitates full real estate relationships and allows stores to launch their own branded storefronts, the concept is somewhat reminiscent of b8ta.

In 2015, b8ta launched as a “retail-as-a-service” platform, charging otherwise online-only brands to have their products showcased in b8ta’s brick-and-mortar outlets, which were often in shopping malls. B8ta closed down all of its U.S. operations earlier this year.

DISCUSSION QUESTIONS: What does it take for digital native brands to be successful in brick-and-mortar environments? Are there benefits for direct-to-consumer brands opening in stores compared to standalone stores?

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"This is a great opportunity for Simon to find new and interesting brands to put in its malls."

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8 Comments on "Simon says digital native brands can find a home in its malls"


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Mark Ryski
BrainTrust

Cultivating new physical stores in-mall is a smart way for Simon and other mall operators to grow new tenants and create a meaningful ecosystem for nascent DTC brands. Translating an online brand into a three dimensional store experience is a big challenge that each brand needs to discover on its own. The fact is there will be lots of trial, error and failure – but that’s the point. It makes good sense for DTC brands to open in malls where they can leverage the existing traffic instead of trying to drive it on their own.

Neil Saunders
BrainTrust

This is a great opportunity for Simon to find new and interesting brands to put in its malls. This helps to fill space and to create offers that are interesting for consumers. By partnering in this way, Simon will also have an early mover advantage with any brands that prove popular and grow.

Ken Morris
BrainTrust

Given the return rates for pure-play digital-native brands, stores give them an opportunity to allow the customer to use more of their five senses to cement the brand in their minds. Warby and Bonobos appear to have successfully made the shift, but they are not scan and bag. I believe the best play is still cash and carry.

One of the biggest challenges that online only brands will face in malls is the almost complete lack of shopper behavior and activity data coming from the stores. Online, they’re used to seeing dashboards and heat maps that give them constant insights into what works and what doesn’t. In the stores, they’ll need to rely on store, managers and associates to make this work. Oh, and find store managers and associates, too.

Cathy Hotka
BrainTrust

Malls’ biggest mission these days is discovery. This is the perfect environment to bring fresh products and experiences to consumers.

David Naumann
BrainTrust

The Leap real estate platorm is a great opportunity for online brand to establish a physical presence and helps fill vacant mall spaces for Simon Property Group malls. Transitioning from online only to physical stores is a big adjustment and the biggest challenges will be staffing and managing inventory at a small scale and in a more dynamic environment.

Ryan Mathews
BrainTrust

I’m not so bullish about this idea unless malls transform the entire retail context and value proposition. A mall full of innovative digital native brands? When does it open? A traditional mall with one digital native store? Not so appealing. So, malls could be significant distribution points – even better than standalone stores – but they need to get their own houses in order before they start inviting guests over. Malls are not innovative and that has to change if they want to successfully attract innovators.

Craig Sundstrom
Guest

If you define “success” broadly enough, I’m sure the answer will be “yes”. But let’s be candid here: this is almost entirely about managers being desperate to fill mall space and almost nothing about the idea being compelling. Oh, I’m not saying it will be some great disaster, only that most “digital native brands” — who comes up with these names? — are that for a reason (and it sure isn’t a lack of available space).

Rachelle King
BrainTrust

At the end of the day, brick and mortar is still king. However, digitally native brands may experience retail differently and they have an opportunity for their consumers to experience retail differently. That’s the upside.

Does this mean digitally native brands should dive head-first into their own brick/mortar space? Or, would it be optimal to start with a store within a store concept? My vote is the latter, at least to start.

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