Breakout Retailers

CSA’s annual award program honors five growing brands

Innovation in retail means breaking down barriers, navigating a fiercely competitive marketplace and making connections with increasingly demanding customers. In this section, Chain Store Age profiles five retailers that are succeeding in both. They are the winners of CSA’s Breakout Retailers Awards.

In its second year, the award honors emerging retail and restaurant brands (less than 10 years old) that have crossed the “newbie” line and are well positioned for growth in the coming years.

Selected by the editorial board of Chain Store Age, the winning lineup features five forward-thinking brands from five different industry segments, including a women’s apparel retailer that combines bohemian fashion sensibility with a giving-back philosophy, a neighborhood pet store concept with a healthy nutrition focus, an upstart eyewear merchant that seamlessly blends the best of offline and online, a gourmet candy boutique for adults and a fast-casual pioneer with a people-first culture.

For all their differences, the five winning concepts share an ability to engage and delight shoppers — online, in store or both. Whether it’s through an on-target merchandise mix, a dynamic multichannel experience, compelling customer service, a strong social mission or any combination thereof, the Breakout Retailers stand tall in today’s disrupted retail Sponsored by market.


ALTAR’D STATE


It’s all about the customer experience, as well as the company’s mission, at Altar’d State.

Since 2009, the young women’s fashion brand has expanded its footprint from one fledgling store in Knoxville, Tenn., to 73 locations throughout the Midwest, South, mid-Atlantic and Northeast. During that time, its merchandise offerings and store interiors have grown more on trend. But the company’s mission to help change the world for the better has remained constant.

“The give-back mission isn’t just what we do — it’s who we are,” stated Altar’d State’s chairman and CEO Aaron Walters. “From the very beginning, our mission has been to help the less fortunate in and around the communities where we have Altar’d State boutiques.”

From its first day of business, the retailer has sought to connect retail with goodwill, with efforts that range from donations in local communities to funding a program that helps support underserved children in Peru.

“Our commitment is to consistently give at least 1% of sales to local and global philanthropic efforts on an annual basis,” said Mary Beth Fox, chief brand officer at Altar’d State. “Each year, our funds donated to charities through our give-back program have grown faster than our sales — a fact of which we are extremely proud.”

Through its “Mission Monday” initiative, all Altar’d State stores donate a portion of their net proceeds every Monday to global and local nonprofit organizations. In November, the company celebrated the opening of its store at the Mall of America with a series of activities that included a partnership with local coffee shops to provide pay-it-forward hot beverages for paying guests.

The company also actively supports volunteerism. This past November and December, employees received a total of more than 8,000 paid hours to support the nonprofit initiatives of their choice.

Expansion

Altar’d State’s stores are warm and inviting, with an eclectic feel. The feminine-styled interiors are beautifully detailed, with chandeliers and vintage accents.

“Altar’d State is a place of refuge, relaxation and rejuvenation for our customer, where she can find a smiling face, beautiful fashion and a truly unique environment,” Fox said.

The merchandise mix, which includes clothing, accessories and select home décor items, has a bohemian vibe. Home goods and gift items are integrated throughout the store. Price points are moderate. Almost all of the merchandise is sold under the Altar’d State brand.

Altar’d State will open 15 to 20 new stores in 2017, with locations in both new and existing markets. Store sizes vary, but start at 5,000 sq. ft. The real estate strategy includes shopping centers as well as street locations.

“Our brand translates very well whether in a lifestyle, outdoor or shopping mall situation,” Fox added.

How does the company stand out in today’s crowded retail scene? “We believe the presentation of unique fashion assortments in one-of-a-kind beautiful environments and great people who have the mission to stand out for good all differentiate and position Altar’d State well in a very competitive environment,” Fox said.


BENTLEY’S PET STUFF


Why should eating healthy, organic food be limited to humans? Our four-legged friends deserve the best possible nutrition, too, say the founders of Bentley’s Pet Stuff — and they’re building a retail chain on that philosophy.

Bentley’s currently operates 65 stores, with locations in Colorado, Georgia, Ohio, Illinois, Minnesota, Missouri and Wisconsin. The fast-growing company ranks as one of the largest independent natural pet supply retailers.

Lisa Senafe, founder and president, first conceived the concept back in 2007 after losing two cats to illness. After examining the ingredients in her pets’ food, she was horrified to discover the number of chemicals and lack of protein and essential nutrients.

She and her husband, Giovanni Senafe, decided to create a store that would put the emphasis on healthy food, along with high-end toys and treats. They debuted the concept, under the banner of Bentley’s Corner Bakery (named for the family dog), in Arlington Heights, Ill., in 2008.

“I wanted to give my dogs and cats a fighting chance for their immune system and overall health,” Senafe explained on the company’s website. “I wanted other pet parents to be aware of all the great options available so they can make an informed and conscious decision about their pet’s health.”

From the one location, the company slowly expanded in the Chicago area, with the Senafes running everything themselves. When it was time to accelerate growth, they turned to an expert: successful entrepreneur Marcus Lemonis, host of the CNBC television show “The Profit” and CEO of Camping World.

Lemonis helped the Senafes bring in a management team, reinvented and updated the store design and provided financial support. He helped them expand through acquisitions of individual stores and small regional chains and new store openings.

In 2015, Bentley’s merged with Pet Stuff, another suburban Chicago chain, essentially doubling from eight to 15 units, and taking on the name Bentley’s Pet Stuff. Smaller acquisitions followed, including a delivery service for the Chicago area. As part of its acquisition strategy, the company retains key people from the acquired company as partners or part owners.

Bentley’s stores average 2,200 sq. ft., with a bright and inviting interior and a signature green paw print on the outside canopy. They have a strong local bent, hosting numerous events throughout the year, from parties to veterinary clinics.

“We celebrate bringing in your dog by hosting numerous events in our stores to make it a fun place to bring your dog shopping,” Senafe said.

The company has donated more than 50,000 lbs. of food to local pet shelters and rescues, and offers regular adoption events at its locations.

The merchandise mix features a curated assortment of natural pet food brands, along with treats, toys and accessories, with about 60% of the assortment devoted to food. Customer service is a priority. Employees are trained to help shoppers choose the right food for their individual pets.

Expansion

Bentley’s plans to open 90 to 100 stores in 2017. It prefers locations in strip centers next to infant or grocery stores.

In addition, the company does business online. It also has a rapidly growing home delivery service. “Our e-commerce division provides the convenience of online shopping while still supporting your local pet food store,” Senafe said. “This allows us to offer local delivery and help to compete with online.”

With its smaller footprint, Bentley’s stands out from most chain pet supplies stores. But that’s not their only point of distinction, according to Senafe.

“We have a curated assortment and are picky about the brands we carry,” she said. “And customer service is our No. 1 priority. We educate our team members so they are a resource to our customers, and not just a place to buy pet food. Our community involvement is extremely important to us. We are the neighborhood pet store in each town we are in.”

The timing is perfect for Bentley’s growth. Natural pet foods make up the fastest-growing segment of the pet food industry, growing at 10% annually compared to about 3% to 4% for the overall industry. Sales of natural/organic pet foods rose to more than $8 billion last year, according to David Lummis, pet market analyst for market research firm Packaged Facts.


MOD PIZZA


Artisan-style, made-on-demand pizzas are a big part of the story at MOD Pizza, one of the nation’s fastest-growing, privately owned restaurant companies.

Husband and wife duo Scott and Ally Svenson founded the company in Seattle in 2008. Already successful entrepreneurs, the couple previously founded two businesses in the United Kingdom: Seattle Coffee Company, which they eventually sold to Starbucks Corp., and Carluccio’s, which they also sold.

Returning to their hometown of Seattle to raise a family, the Svensons began exploring ideas that combined their love of business, people and purpose with a goal of creating a people-first culture where everyone could thrive. MOD grew out of their search for a better way of doing pizza — and business.

MOD, an acronym for made on demand, is considered a pioneer in the now-competitive fast-casual pizza niche. It serves up fresh-made pizza (and salads) in minutes, with customers choosing any combination of more than 30 toppings, all for one set price.

In just nine years, the chain has grown to more than 200 locations in 20 states — along with five in the United Kingdom. And it won’t be slowing down anytime soon. In 2017, the company is expanding in existing markets while also entering new ones, such as Florida, Alabama, Georgia and Utah.

“We opened 100 stores last year and plan to continue this rate of growth [in 2017],” said Charlotte Wayte, marketing manager at MOD Pizza.

MOD has nine select multi-unit franchise partners across the United States. But unlike many fast-casual chains, the majority (80%) of the chain’s locations are company-owned.

“This is a strategy that helps maintain our strong people-first culture and the customer experience,” Wayte said.

MOD restaurants, which have a casual, cool vibe, are typically located in retail centers. It does well in areas with both business trade and strong neighborhoods.

“But we also have some non-traditional locations including Portland International Airport and the Microsoft Campus in Redmond, Wash.,” Wayte said.

Culture

The secret to MOD’s success is not just a quality product. Conceived from day one as a platform for doing good with a “people-first” mission, the company enjoys considerable goodwill and loyalty in the communities in which it operates. With every store opening, MOD donates 100% of all pizza sales to a nonprofit organization within the local area.

Each charity also benefits from the company’s annual “Spreading MODness” initiative. During Thanksgiving week, $1 from the sale of each pizza goes to a charity selected by the employees at each store.

But nothing exemplifies MOD’s people-centric culture better than the way it treats its employees, who are called the MOD Squad. From above industry-average pay and benefits to hiring people with special needs — including those in need of a second chance — MOD has stayed true to its mission of putting people first even as its growth has skyrocketed.

In addition, the company maintains an emergency fund that provides financial assistance to employees in times of unexpected need.

At the end of the day, MOD delivers on a lot more than a good tasting pizza.

“We have a great value proposition … and our stores are designed with the community in mind, with a focus on creating a fun, friendly atmosphere,” Wayte said. “However, what people will also find is a really authentic customer experience, delivered by our MOD Squad, who are at the core of our business. As we say, ‘We make pizza, but our pizza makes people.’”


SUGARFINA


Rosie O’Neil has a sweet tooth, one that she’s putting to good use in her fast-growing gourmet candy start-up boutique, Sugarfina.

The concept grew out of a movie date. O’Neil and Josh Resnick were on their third outing, a screening of “Willy Wonka and the Chocolate Factory.” Feeling inspired, the two started dreaming up the ultimate candy store — for grown-ups.

Two years later, and after a lot of globe trotting and taste testing, their dream became a reality. In 2012, the twosome (by then an official couple) launched Sugarfina as an online retailer of gourmet sweets made by artisan candy makers from around the globe.

Fueled by savvy marketing and social media buzz (partially fueled by a partnership with Facebook soon after launching), the brand flourished. A jump to the physical space soon followed. In 2013, Sugarfina opened its first boutique in Beverly Hills, Calif. It’s been on an upward trajectory ever since.

“Our newest location, which is store No. 23, recently opened at Dallas North-Park. And we have 15 in-store shops at Nordstrom, with 10 in the United States and five in Canada,” said co-founder and chief creative officer O’Neil, who prior to Sugarfina spent seven years as director of marketing for Barbie at Mattel. (Co-founder and CEO Resnick previously was the co-founder and president of Pandemic Studios, a video game developer.)

Sugarfina carries approximately 120 unique candies from around the world, more than three quarters of which can’t be found anywhere else in the United States. Best-sellers include Champagne Bears, Dark Chocolate Sea Salt Caramels and Parisian Pineapples.

Does O’Neil have a favorite Sugarfina sweet? “My personal favorite is our new Dark Chocolate Covered Champagne Bears,” she said. “The bears are made with Dom Pérignon Champagne and the chocolate is a very high-quality chocolate from Paris. Together, they’re a match made in heaven. Josh’s favorite is our Single Malt Scotch Cordials, a chocolate ball with a shot of real scotch inside.”

As much as the product itself, it’s the overall aesthetic and presentation that defines Sugarfina. Everything about the brand is luxe, including the packaging. Sweets are packaged in transparent cubes that are packed in elegant, Tiffany-blue gift boxes. Online orders come with a customized handwritten note.

Sugarfina stores have an upscale, sophisticated feel and a chic, feminine look, with aqua and white color accents. Candies are artfully displayed. Customers are treated to in-store sampling, and are encouraged to customize luxurious candy gift boxes, styled as a Bento Box. A “candy concierge” provides a range of services, ranging from help with custom and corporate gifts, to arranging private events, dessert bars and candy tastings.

The store footprint ranges in size depending on location. The largest shop is in Beverly Hills, at 1,200 sq. ft. The smallest is at the Time Warner Center in New York City, at 225 sq. ft.

“Our ‘sweet spot’ is around 600 sq. ft.,” O’Neil said.

When it comes to locations, the company focuses exclusively on A-level malls, upscale lifestyle centers and high streets. The strategy is in keeping with Sugarfina’s core customer: fashionable women in their 20s, 30s and 40s.

Expansion

Sugarfina expects to open about 12 stores this year. The company recently launched a website in Canada. Brick-and-mortar expansion is a definite possibility.

“At the moment, we do not have any committed standalone stores in the Canadian market,” O’Neil said. “But we are interested in expanding into that market in the future. Our five in-store shops at Nordstrom in Canada are very popular and perform well.”

Expansion in Europe is also on the table. The brand has already launched in the United Kingdom, with in-store shops at Harvey Nichols and Harrods.

“We hope to open standalone shops in the United Kingdom in the future, and possibly in other European markets as well,” O’Neil said.


WARBY PARKER


Warby Parker is a model of retail disruption in the digital age, both online and off. The hip online-only-turned-brick-and-mortar retailer has upended a market dominated by high profile — and high priced — brands.

It’s done so by selling its own private brand of prescription eyeglasses starting at $95, and offering consumers home try-ons and free returns by mail.

Founded by University of Pennsylvania Wharton School students Dave Gilboa Neil Blumenthal, Jeffrey Raider and An-drew Hunt, Warby Parker debuted online in 2010, opened its first physical store in 2013, in Manhattan’s SoHo neighborhood, and now operates 46 brick-and-mortar units in the United States and Canada.

The company has turned an eyewear retail market dominated by designer brands from Guess to Gucci and industry giant Luxottica — which owns chains Lens-Crafters and Sunglass Hut and brands/ licenses from Ray-Ban to Ralph Lauren — on its head.

Warby Parker’s vertically integrated business model enables the retailer to beat the competition on price. The average unit price of eyeglasses in the U.S. is $140, $45 more than Warby Parker’s opening price point, according to market intelligence firm Euromonitor International.

As Warby Parker controls the “design, manufacture and retail of eyewear, it is able to avoid any licensing fees and retail markup, and offer eyeglasses at much cheaper prices,” according to Euromonitor’s report, “Eyewear in the U.S.”

The retailer, which counts J.Crew’s iconic CEO Mickey Drexler as an investor, operates stores marked by a high-service, low-price model. And no two stores are exactly alike, with the company combing its signature library-inspired design details with unique elements in each location. Its newly opened Philadelphia outpost features a vibrant original mural done by a local artist.

Shoppers can opt to receive their frames by mail or pick them up at the store, and non-prescription frames can be purchased on the spot. An in-house optometrist is on hand for eye exams, and its library-inspired environs feature books for perusing from independent publishers. Stores also include selfie-prompting photo booths designed so consumers can try on frames and share them for feedback.

Store employees can shoot pictures of customers trying on frames and email them if they need to mull their choices before committing to a purchase.

Expansion

While traditional retailers are contracting, Warby Parker is spreading its brick-and-mortar wings. Continuing its rollout strategy of setting up shop in densely populated urban areas, the eyewear retailer plans to open a minimum of 25 stores this year, according to media reports.

The new locations are slated for Miami, Philadelphia, Los Angeles and other cities, and are projected to bring the total store count to about 70 by year-end. The stores will vary in size and include freestanding as well as mall locations, the report said.

Despite industry chatter on the troubled state of brick-and-mortar retailing amid the ever-burgeoning encroachment of online shopping, Warby Parker co-founder Blumenthal offers this qualifier: “I don’t think retail is dead,” he told The Wall Street Journal. Instead, “mediocre retail experiences are dead.”

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