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Neighborhood Goods announces $11 million in funding, new Austin store

 

“A lot of [traditional] department stores out there are trying to feature young brands,” Alexander said. “But a lot of them are still huge spaces that aren’t compelling for people to go in and spend a lot of time there. … Department stores are not a great vehicle for discovery.”

Masinter is notably the founder and now a managing member of Dallas-based real estate services firm Open Realty Advisors, having helped major retailers like Apple and Restoration Hardware open bricks-and-mortar stores. Alexander, also based in Dallas, founded other retail start-ups, including a fashion e-commerce company, before launching Neighborhood Goods.

“We’re all about … treating the customer really well and giving them a reason to come back,” Alexander said.

“Some of the brands that launched with us were not meant to be with us this long, but a lot of them are still there,” he added. “That’s a really good indication.”

Neighborhood Goods’ growth fits into a larger trend in retail. There are others trying to build out a similar model — even Macy’s acquired New York-based Story, which has helped it carve out spaces in its department stores featuring brands on a rotating basis, typically around a specific theme like “color” or “the outdoors.” B8ta is another company helping various brands test bricks and mortar. And U.S. mall owner Macerich has a space called BrandBox at Tysons Corner Center in Virginia, where Abercrombie & Fitch is using space to test the comeback of its Gilly Hicks lingerie brand.

Places like Neighborhood Goods “offer a less capital-intensive option” for brands to get into bricks and mortar, Jefferies analyst Randy Konik said in a research note. “We continue to believe that physical stores will serve a purpose in the future, but as the retail landscape continues to evolve, the format and usage will continue to evolve along with it.”

Neighborhood Goods’ Austin location will be part of a new mixed-use development called Music Lane, and will sit alongside a new Equinox gym and other companies including shoemaker Allbirds, fragrance brand Le Labo, and apparel retailers Reformation and Lululemon.

Neighborhood Goods’ Series A round was led by Global Founders Capital, with participation from prior investors Forerunner Ventures, Serena Williams’ Serena Ventures, NextGen Venture Partners, Allen Exploration and Capital Factory.

This content was originally published here.

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