With $5.75M Start, Neighborhood Goods to Create Stores Within a Store

Xconomy Texas — 

Dallas—A not-yet-open retailer called Neighborhood Goods announced it has raised $5.75 million to help develop what co-founder Matt Alexander calls the next evolution of the department store.

Neighborhood Goods combines the flexibility of pop-up shops with the presence of a traditional retail space, he says. “What we’re doing is creating an ecosystem, wherein these brands test new product types and capture new customers in a way that’s really affordable and easy for them to get into,” Alexander says.

The seed funding round was led by Forerunner Ventures, and includes participation from Maveron, CAA Ventures, Global Founders Capital, NextGen Venture Partners, Revolution’s Rise of the Rest Seed Fund, Michael Dubin, the CEO of Dollar Shave Club, and Alan Shor, co-founder and president of The Retail Connection in Dallas.

With e-commerce taking traffic out of brick-and-mortar operations, retailers are increasingly looking for ways to make a visit to the store more than just a transaction between buyer and seller. On Tuesday, Seattle retailer Nordstrom announced it was adding two more locations of its Local store to the Los Angeles area. Local, which launched last fall, has no inventory but offers services such as on-site tailoring, pickup and returns of online orders, manicures, and a beverage bar.

Neighborhood Goods’ approach is to use modular display forms like companies erect at conferences that can be altered or easily expanded, depending on a brand’s specific needs.

The Neighborhood Goods store will not carry any inventory itself, but provide the retail infrastructure such as access to a point-of-sale systems and employees a brand might need.

Alexander says he expects Neighborhood Goods to feature lesser-known brands with stores that will appeal to shoppers looking for something unique. (The brands haven’t yet been picked.) “The mix of brands won’t be changing at a blinding pace that it makes it uncomfortable for people coming in, but if you come in every month, you will find something different,” Alexander says.

In addition to the featured brands, Alexander says Neighborhood Goods will have a bar and restaurant and host events to boost in-store traffic beyond shopping.

Key will be the use of new technologies through a store app that will employ technologies like analytics and geolocation to target customers depending on how physically close they are to the store. “We’ll also be focused on your location once you come into the store,” Alexander says. “There will be the ability for product to be brought to you if you’re sitting in the restaurant area or you can text the staff,” he says.

The first Neighborhood Goods store is scheduled to open this fall in Plano, TX, located north of Dallas, and feature 13 brands, which will have a range of durations, the company said. Neighborhood Goods will either charge them rent, which Alexander says would be far below typical retail leases, or take a portion of sales.

Each store within a Neighborhood Goods store would largely feature apparel and housewares, with the odd lifestyle or art-related product thrown in, he says. “Some brands won’t want to sell anything; they may want to create a small cooking class or sponsor a reading area.”

A year ago, Alexander left Edition Collective, an e-retail business he had sold in 2016 to men’s e-commerce shop, Q Fifty One, a Houston-based brick-and-mortar retailer. (Three months prior to the sale, Alexander made staffing cuts and faced being locked out of Edition’s premises because of delinquent rent, according to D Magazine at the time.) Edition had been formed out of two businesses, Need and Foremost, which Alexander had founded in Dallas. Edition’s focus was emphasizing the story behind a brand, product, or designer as a way to better connect with shoppers.

But about a year ago, Alexander says he met Mark Masinter, president of Open Realty Advisors in Dallas, who, among other projects, helped Apple roll out its retail stores. The two began sketching out a retail concept that has become Neighborhood Goods. Alexander left Q Fifty One for the new startup, which officially launched in August.

“If you think about what we did with Edition Collective, with the focus on editorially driven commerce, we saw that that works,” he says. “This takes some of those threads and carries it further.”