Platforms Bring New Brands, Better Retail Economics to Main Street

Walk down America’s premier shopping boulevards and you’ll likely notice a lot of empty storefronts. The pandemic shut down a lot of those, but opening a store is neither easy nor cheap, even when the metaphorical sun is shining. Creating a physical retail presence is harder now than ever.

Regardless, physical retail is recovering — consumer sentiment to go to stores is palpable after two years of online living, and there’s lots of retail space to rent. The problem is that few small entrepreneurs have the capital, connections or expertise to put up retail operations.

“Historically speaking, when brands go out and do retail on their own, they’re significantly disadvantaged,” Amish Tolia, co-CEO and co-founder at brand-building platform Leap, told PYMNTS’ Karen Webster. “So many times, they’re using [their] gut and don’t have the data and intelligence to be able to make smart decisions” about locations, systems and back-office minutia.

Tolia said even businesses with an established online presence are now having difficulty scaling and are looking to complement their eCommerce presence with physical storefronts. Whether a small brand or merchant already has an online foothold and wants to grow it, or is starting from scratch, it need not be a slow and frustrating slog from the pre-digital past.

“Here we are in a world where you’ve got easy to use platforms like Shopify, where you don’t have to think about building the infrastructure yourself,” Tolia said. “You’re more so licensing a storefront, and you’re really thinking about what you’re exceptionally good at, which is brand building, product innovation, great marketing strategy and getting customers through your funnel.

“Very similarly, that’s what we’re building, but for brick and mortar.”

See also: Retail Platform Leap Raises $50M to Accelerate Growth

Infrastructure Gets Easier

A platform approach to the creation and sustenance of physical retail stores is in demand now, he said, as vaccinations bring a sense of safety and digital options have reached “a glut.”

“We found this massive spike in demand from brands wanting to do retail and address the retail channel, but wanting to do retail in a different way, not build the infrastructure in house, and we continue to see that trend happening,” Tolia said.

Leap finds the markets and locations, and has the store designs, systems and analytics already running, all of which help fledgling brands connect with customers and start to repopulate commercial throughfares — but not in the same old ways.

Leap’s strategy is to create clusters of appealing stores in sub-markets identified through its analytics engine. “When you create a vast amount of density by putting stores close together, you can minimize costs for all the brands that we’re powering,” he said.

It’s hybrid physical-digital strategy, but Leap is more focused on the physical store. “These are categories where it’s important to touch, feel, experience, try in advance of buying,” Tolia said.

See also: Leap Platform Raises $15M To Boost Store Count To 250 By End of 2022

Resilient Retail

Churn is a constant in retail, and Leap is using data to combat it on its brand-building platform.

It pulls in first-party and third-party information to help entrepreneurs made decisions about merchandising in every location, and Tolia said its clustering strategy helps everyone save money at the store level.

“Our network is way more resilient than that of any one brand doing their stores themselves,” he added. “Our landlord partners think about Leap as a different type of tenant versus that of a one-brand organization.”

Currently running 35 brands and roughly 50 locations on the platform and expecting to “grow pretty significantly this year,” Tolia noted that Leap creates margins based on performance.

“If we deploy a brand into a particular location, that brand actually covers the cost to run the store, the rent and the labor predominantly, then all the other components that go into the OPEX of running a store, they cover that,” he said. “We take a percentage of all the transactions.”