Dallas isn’t exactly known across the country as a mecca for fashion, but a number of the country’s biggest retailers are headquartered here. So maybe it should be.
Denton houses one of the most valuable fashion collections in the nation. The first Neiman Marcus opened in downtown all the way back in 1907. Greats like Christian Dior have visited and become inspired here.
Given the recent events, Dallas could be the best place to incubate and launch new retail concepts. Or at least that’s what David Matthews, managing director of RevTech Ventures, thinks.
In a newly released blog, Matthews outlined why he thinks North Texas is the ideal place for the future of retail.
Given the COVID-19 pandemic, online commerce continues to rise. Many think only top-tier shopping malls will make it.
“Last week, I was watching my favorite business news program and saw this depressing headline: three of four bankruptcies shown are retailers headquartered in DFW,” he writes. “Made me think of the question I hear most frequently when traveling in New York or San Francisco, ‘How can Dallas possibly be a viable retail tech hub?’
North Texas—known to be a headquarters of headquarters—has had the largest concentration of top 100 retailers located here for a number of years. There’s Neiman Marcus, JCPenney, Michaels, Container Store, Tuesday Morning, 7-Eleven, GameStop, Rent-a-Center, Sally Beauty, and many more.
But, according to Matthews, the city could be in danger of losing that.
“With the exception of JCPenney, the reason is that these retailers opened their first store in North Texas and it worked,” he writes. “For over 100 years, North Texas was a perfect place to test and prove a new restaurant or retail model and then scale it to the world. Then the internet happened.”
In the era of Amazon, most new store concepts are originally launched online, Matthews notes. To effectively compete with the eCommerce giant, concepts tend to be focused on proprietary products that are marketed in a way that directly touches the consumer.
But, Matthews says, most direct-to-consumer brands discover that eventually it becomes more cost-effective to acquire a new customer in a physical store than an online one.
“The retail landscape will continue to shed stores due to the massive overbuilding that occurred during the leveraged buyout years and the growth of online commerce,” he writes. “What will replace all these stores besides fitness clubs, nail salons, and other personal services? After all, as we emerge from our pandemic-induced hibernation, we’ll gradually begin frequenting stores again.”
As the economy begins to open up and quarantine dwindles, people will start shopping again—and that means more innovation.
Customers need to be educated and entertained in the store, Matthews says. Products need to be available to sample and pickup, and personalization capabilities should be integrated throughout.
He points to Neighborhood Goods, the next-generation department store that opened its flagship location in Plano in 2018. Matt Alexander and his team were able to garner fast success—Neighborhood Goods has since opened two more locations in Austin and New York—by creating a sense of community.
In a combination of physical storefronts and e-commerce, the store is a hub for rotating brands, whether that be digitally native sites, new startups, or direct-to-consumer platforms. Each brand pays a monthly fee to receive its own space, staffing, marketing, and retail design. Inside each store is also a restaurant and bar, events, and communicative app.
“We’ve tried to step in to create something much more communal, something much more perennial, something much more traditional in many respects. We fundamentally believe that the most important thing we can all do is trade the currency of relevance more than anything else,” Alexander, the co-founder and CEO, said at a RevTech event last year. (RevTech is an investor in Neighborhood Goods). “And deliver a room that can excite people on a very localized basis, bring people together, and generate a certain degree of magnetism that has very little to do with transactions.”
As for RevTech, the retail technology VC firm, it will continue progressing as well. The team responded to the pandemic by doubling its financial commitment to a COVID-19 support grant program in partnership with UT Dallas and SMU. It also awarded $40,000 in grants to eight local companies through its Impact Grant Program.
Two portfolio companies, Vessel and Airion, also announced a new partnership with Evvnt, a premium multi-channel local event distribution service.
“North Texas will continue to be the perfect place to test new retail concepts as online commerce continues to harmonize with offline experience,” Matthews says. “We at RevTech Ventures can’t wait to see the next generation of retail store concepts.
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