Matt Alexander, CEO of Neighborhood Goods, details the remarkable comeback of physical retail post-pandemic, revealing how his experiential department store model is thriving through brand partnerships and a revenue-share approach. He shares how Neighborhood Goods strategically pivoted to leverage stores as fulfillment hubs during lockdowns and is now navigating the challenges of overwhelming customer traffic, offering key lessons for retailers on adapting to evolving consumer behavior and integrating physical and digital strategies.
Key takeaways
Physical stores can serve as crucial local fulfillment centers (local delivery, same-day delivery, in-store pickup) to maintain revenue during disruptions and enhance customer service, even for brands without their own DTC infrastructure.
The 'experiential department store' model, based on revenue-share partnerships with diverse brands, can successfully drive traffic and sales in prime urban locations.
High in-store traffic, while a positive problem, demands strategic operational adjustments to maintain customer experience and efficiency (e.g., staffing, store layout, checkout processes).
Growth in physical retail requires a strategic approach to market expansion, carefully selecting locations with high consumer demand and adapting the retail model to diverse urban environments.
Omnichannel retail is critical; while digital supported Neighborhood Goods through lockdowns, the focus has swung back to optimizing the physical store experience as primary revenue and brand engagement driver.
Things got scary for Neighborhood Goods in 2020.
"We went through layoffs and furloughs -- all sorts of challenging things," said co-founder and CEO Matt Alexander. "And we had just come into the year on a real tear, and it was just really gut-wrenching to suddenly be in that moment."
But business has returned, and his updated department store model -- which has retail space in city centers like Manhattan, Austin and Plano and hosts a variety of brands in exchange for a revenue share -- is doing numbers once again. "Sales continue to grow and we continue to add more brands," Alexander said on the Modern Retail Podcast.
Alexander joined Modern Retail for a live podcast recording at his New York City store in Chelsea Market during Digiday Media's Commerce Week. There, he spoke about changes to the business and how he's preparing for the future.
While sales obviously dropped during the pandemic -- and the company had to close all of its stores for an extended period of time -- Neighborhood Goods was able to see some glimmers of light via its digital services. "Our stores are ostensibly their own warehouses. Local delivery, same-day deliveries, in-store pickup, things of that nature, we were able to offer that for products that were otherwise going to take weeks -- if not months -- to arrive with customers," he said. "And so that actually became a real driver for us."
But now, digital is no longer the focus -- it's all about the store. Traffic, Alexander said, has picked back up to pre-pandemic levels and stores are more productive than ever before. In fact, he said the real issue he faces is too much traffic. "We're just getting an absurd amount of people to the point that it creates like a lot of challenges as to how you operate with it," Alexander said.
Still, it's a good problem to have. Now, the focus is on growth. That could mean more stores, though Alexander he's still trying to figure out where that may be. It could be California, Atlanta, Nashville or even a sm
What does this episode say about retail & omnichannel?
Physical stores can serve as crucial local fulfillment centers (local delivery, same-day delivery, in-store pickup) to maintain revenue during disruptions and enhance customer service, even for brands without their own DTC infrastructure.
What does this episode say about brand & content?
The 'experiential department store' model, based on revenue-share partnerships with diverse brands, can successfully drive traffic and sales in prime urban locations.
What does this episode say about founder & leadership?
High in-store traffic, while a positive problem, demands strategic operational adjustments to maintain customer experience and efficiency (e.g., staffing, store layout, checkout processes).
What does this episode say about retail & omnichannel?
Growth in physical retail requires a strategic approach to market expansion, carefully selecting locations with high consumer demand and adapting the retail model to diverse urban environments.
What does this episode say about retail & omnichannel?
Omnichannel retail is critical; while digital supported Neighborhood Goods through lockdowns, the focus has swung back to optimizing the physical store experience as primary revenue and brand engagement driver.
