We’re kicking off another episode of RETHINK Retail with guest Matt Alexander.

Matt is the co-founder and chief executive officer of Neighborhood Goods.

Bursting onto the retail scene in 2018, Neighborhood Goods made it abundantly clear that it was not your grandmother’s department store.

Neighborhood Goods is the store of the future, mixing a traditional store environment with the ease of technology and the vibrancy and community of an international bazaar.

Join us as Matt shares his journey to co-founding Neighborhood Goods, his insights for DTC brands and what Neighborhood Goods is doing to help brands hard-hit by COVID-19.

 

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Hosted by Julia Raymond Hare
Produced by Gabriella Bock
Edited by Trenton Waller
Social Media by Madison Freeland

 

Episode 145 of the RETHINK Retail Podcast was recorded on May 18, 2021

 


Hosted by Julia Raymond Hare
Written and produced by Gabriella Bock
Edited by Trenton Waller

TRANSCRIPTION

Julia Raymond Hare:
We’re kicking off another episode today with my guest, Matt Alexander. It’s great to have you on the RETHINK Retail show. You are the founder, co-founder of Neighborhood Goods. This is an extremely buzzed about new concept. It’s not your grandmother’s department store. You’re completely reimagining what it means to be a brick and mortar retailer and mixing that traditional store environment with frictionless technology and bringing brand experiences to life. That’s my interpretation of Neighborhood Goods through the media I’ve seen, the conversations I have. I will plan on making the actual stop to see a store, I haven’t yet but I know you guys are in Plano, New York, and what’s the third one?

Matt Alexander:
Austin.

Julia Raymond Hare:
Austin, keeping it weird. So, Matt, it’s great to have you on the show. I want to talk to you about how to create experiences that aren’t boring and what you think about the future. So I want to kick it off by just giving you the floor and letting you tell our listeners a little bit about what inspired Neighborhood Goods and about yourself.

Matt Alexander:
Yeah. So first of all, thanks for having me on. And that was a pretty good summary. I mean we describe ourselves as being a need-type of department store of sorts, which is varying degrees of accurate, right? We have fixed physical spaces as well as digital experiences where, for the consumer, you walk in and you see most major product categories represented anything from home to kids, to apparel, beauty and wellness and otherwise we have our own restaurants in the space. It’s our stuff, it’s our design and fixtures. So it presents this a small format, a department store or sort of a larger scale boutique. But the brands that you find inside the space, the brands you typically wouldn’t otherwise find in physical retail, then much more of a progressive mix of modern and digitally native brands mixed with some locals younger companies as well as some higher growth big names international more established brands. And instead of being now on wholesale static basis just on a sea of racks, instead, it’s more of an ever-changing footprint.

Matt Alexander:
So the landscape of brands and products and categories represented is changing all the time. So the points of consistency, restaurant team fixtures create something that feels a little bit like a department store. So it helps set those expectations and helps you wrap your head around what you’re in. But for brands it’s… For them, it can be a lot of different things. So you might look at it as a real estate channel to test a new area in the country, for others it’s more of a marketing channel to get in front of more people, for others it’s a sales channel, of course, traditionally it might be that for brand adjacency and otherwise.

Matt Alexander:
And so a lot of them look at it as a hop, skip, and a jump away from having their own pop-up, but without having to stuff it, build it, design it, manage it. And so the ultimate result is that for the consumer, you get something really vibrant, exciting, interesting that’s changing all the time and could buy FMB events in a more normal time and just a really exciting mix of some exclusive brands, products and otherwise, meanwhile, for the brands, it’s something that can be more efficient than wholesale then opening their own stores or otherwise and certainly much more informative as well in terms of data and otherwise. And so we’ve only been around for just over two years, so thereabout, we launched in Plano first, then New York then Austin. Austin was opened for less than 24 hours before the pandemic hit and I-

Julia Raymond Hare:
Oh my God.

Matt Alexander:
We had to close the stores. We’ve also been online the whole time. And so that’s us, a lot of different things to a lot of different people, but at the core of it, something that presents in honestly a fairly traditional way to the end consumer, where it’s just a very progressive, exciting mix of brands that’s presented through a very relevant angle and lens. But a lot of different things for all the brands and partners we work with as well.

Julia Raymond Hare:
Sure. And there are so many things that pop out, you spoke about pop-ups speaking of and you spoke about the localization bringing not only those high growth brands that are more national even global but then some of the really local flare that touches on the community feeling. And I was listening to one of your interviews before we hopped on this one, I forget the show name, but it was about nine months ago, I think is when it aired and you were talking about, you actually do have computer vision and you share that data with your brands. So what’s that experience been like? I mean, that seems that it would be hugely valuable.

Matt Alexander:
I think when we first got started… Of course, you can answer that portion of your question earlier, but a lot of the basis for it, right? Was this recognition of this more progressive modern mix of brands that have started exclusively from a digital perspective. The customer acquisition costs are rising very quickly and more and more brands are being created becoming more and more niche and pursuing the same target demographic of people. So becoming more and more expensive. Physical retail has been seen as a potential solution for a lot of those brands. So you see brands that have sworn up and down that they would never go into physical, like Everlane now doing it quite aggressively. Meanwhile, a lot of digitally native direct consumer brands that also really known for their digital presence like Warby Parker and Peloton and otherwise they now generate more revenue from their stores than they do from their website.

Matt Alexander:
So it’s really this shift to have more of a balanced approach and recognizing the utility of digital, which is obvious and then also really digging into all sorts of different opportunities with physical to complement what you’re doing online. And so the challenge remains for all of them that the cost of getting into physical, incredibly difficult, cumbersome, hard to handle logistics, and otherwise. So the basis for our thinking was to ostensibly lower the barriers to entry as opposed that speaking to things like computer vision otherwise. If you were the founder of a young direct consumer brand that never dealt with physical retail before from your own website and from all these different ad channels and paid media channels that you pursue you would be under the impression rightfully so that every aspect of your business can be extremely well quantified and analyzed just off the shelf, right? That’s just the way of digital business.

Matt Alexander:
Getting into physical, you would assume today that you would at least be able to approximate a decent amount of that, right? Especially if you’re using the same system to be a point of sale and otherwise, but the reality is that you can certainly get some, but not a lot. And the ability to capture something as simple as foot traffic can be quite complicated and quite expensive to do. And so something that became important for us from the beginning was just thinking about what would you assume would be table stakes for data that you would be able to get from an investment into the physical world. And so for us, we started to think about how to capture traffic demographics and how we can marry that with the point of sales, have more of a complete sense of people that come through the space.

Matt Alexander:
And so you don’t want to encroach on people’s privacy and you don’t want to go into a really creepy position with the whole thing, but it is really useful to have a general sense of who’s coming to the space, why, and how that breaks down differently from one space to the next, and then behaviorally what’s different inside that space for different groups of people and why they may gravitate towards a certain brand or another or whatever it is. And so we invested to build that into the space back in 2018 when we opened in Plano and then we’ve done it in all stores since and it’s been incredibly helpful. The thing that we have been under the assumption of, probably wrongly upfront, was that we thought that just the data by itself was the key. And it’s obviously super helpful but just getting, raw sales, top performers and some traffic isn’t incredibly useful by itself, where you really get into that really useful information and really interesting perspectives around it is when you dig into more anecdotal feedback and analysis often from our store teams that comes around the data.

Matt Alexander:
So we built out a platform that launched last year that provides real-time data to our partners. We haven’t rolled it out too much, actually, we’ve done it on a more staggered basis in the past year. So just because with people wearing masks and otherwise it wreaks havoc on how you might be able to discern demographics-

Julia Raymond Hare:
It’s true. Yeah. You got some bias in there.

Matt Alexander:
But it turns out into a very interesting vehicle to get some of that very transactional, very simple data into just a very simple pipeline. So you always have that and it frees up a lot of time for us to get more into that anecdotal information, to get more into the analysis and to get more into the creation position around what we could do to boost business in the given location or otherwise. And so the data piece, I would say is an ongoing effort, right? So we pass along, opted-in email addresses, all these sorts of things. So for the consumer, they end up being able to hear from these brands not by default, they have to opt-in, right? But it allows for that connection. And then obviously for the brands, it can operate in a similar way to the run stores where they can understand a little bit more of the customer. So that’s certainly been a key component but there’s always more you can extract and there’s always more you can analyze as well.

Julia Raymond Hare:
Sure. And it sounds like, as you said, it grows over time and to be able to truly get the insights about the creative atmosphere, how things are laid out, what attracts people will take a bit of learning over the years to tweak it. And I wanted to ask, and by the way, actually, I had a conversation with Chris Breen from Public Goods, he was on the podcast the other week and he mentioned you guys and he’s like, “I love working with them, really easy to partner with.” And so it’s cool to hear that perspective from the brands you work with. Is it shared data in terms of, if I’m a customer and I come in and I buy something from Public Goods, am I opting in to all of the brands you work with or is that optional? What’s it look like?

Matt Alexander:
No. So if you come in and shop with Public Goods for the first time and you’ve never been to Neighborhood Goods before the conversation would generally go, “Would you be interested in receiving email from us and Public Goods?”

Julia Raymond Hare:
Okay.

Matt Alexander:
And yes or no. And then if you say, yes, we’ll pass that along in a secure way. If you say, no, it obviously just goes nowhere and nothing really happens from there. Some people may just want to hear from us. Some people may just want to hit from the brand. So there’s a little bit of nuance there, but pretty simple. And then obviously there’s a certain amount of sensitivity there as well because we may have some brands come into the space for a year, for two weeks, whatever it is, it really varies. And one of their most fierce competitors might come in a few months later and so the last thing these brands want is that we’d be passing data around.

Matt Alexander:
So we look at it through much more of an anonymized lens so we can understand that our given demographic comes in and behaves a particular way versus another. And that’s very useful and we can understand from a very high-level perspective, of course X, Y, Z cash group performs particularly well and resonates with certain types of people. But we’re not passing one brand’s customers or data to another and so it is quite siloed.

Julia Raymond Hare:
Sure.

Matt Alexander:
So there’s no way to get blanket opted into all brands unless you happen to come in and try from every single brand at once.

Julia Raymond Hare:
Right. And you opt into all of them. And Matt you’re a young guy and our team was like, what inspired you? That’s something we really wanted to ask. Was it you wrote down on a napkin when you were at dinner? How did the idea come to reinvent brick and mortar essentially?

Matt Alexander:
Yeah, so I met my co-founder Mark in 2017. He’s very prominent in the world of retail real estate and knows everyone in that weld and has helped a lot of great brands get into physical retail, anything from Warby Parker to these days, Lululemon, Apple… all sorts of others. And he was working on a mixed-use development in Plano called Legacy West, which we are now opening.

Matt Alexander:
And he was working on the food hall at one under the development and was thinking about the opportunity to have something that echoed a little bit of that thinking at the opposite end of the development from a product perspective. And so excited to think about as he was working with more of these digital brands that they clearly resonated well with the customer but it was still really difficult for a lot of them to get into physical. So he was thinking a little about that. Meanwhile, for me, back in 2014, I launched a non-profit of sorts called Unbranded where we provide free retail and event space every holiday season to all sorts of different brands, office chefs, what have you, just a very small little communal effort here in Dallas that’s really had a groundswell of popularity and real success where it’s really had a great community built around it. It’s always shown up in a lot of different areas. It’s largely run by the city and has been for years or by a nonprofit in Tonko[inaudible 00:14:26] called downtown Dallas stank. And so with that, I’d really seen up close the real impact of having more of a social experience around more modern brands and also around having some of these younger brands that have really fierce and loyal customers allowing for and facilitating that interaction.

Matt Alexander:
And so I’ve been thinking for years about what a more permanent version of that would look like because the more pop-ups or free version has myriad shortcomings where some brands come in they’re really well-capitalized and prepared and have a great session others come along and they have full-time jobs and they can’t be there all day. Others come in just for the social experience not just necessarily for the resale. And so there’s just a lot of complexity. And so I decided to think about what a framework would look like. And so when we met, Mark’s perspective was that there was a huge opportunity and he wanted to see if something like Unbranded could be the solve and I felt strongly that there was a permanent version and there was a concept that could exist here but it wasn’t necessarily exactly Unbranded, but maybe something a little bit different. And so went from there and wrote up this document that my professor was my manifesto.

Matt Alexander:
It is just a department store at the time with a capital D and a capital S around how does it work and all of that manifesto remains very much intact today and it speaks to the philosophy around a changing balance of brands, how we would approach technology, how you would assume you would need a certain level of data to report back to the brands, how you’d think about having a uniform approach to aesthetics and otherwise. And so that was really when it started to take shape. And so that was early to mid-2017 and incorporate the company from there and started rolling along.

Julia Raymond Hare:
Very cool. And it’s a complex proposition you have, right? With all of the different business deals and branding elements throughout the store and all of the privacy that you have to make sure is around the data that you collect. I mean, what has been the biggest hurdle as a founder where you were like, “Wow, I didn’t expect this to be something I’d have to be solving for so long that you learned from essentially?”

Matt Alexander:
I mean, there is a lot of different challenges, right? We’re very fortunate to have an amazing team and Mark having a huge amount of experience and having a very successful company and the real estate space has obviously been incredible. We have amazing investors, they give us great access to brands and media and great potential feature sites for the locations. And then we obviously have an amazing team in our stores. In our HQ and otherwise where people are tackling a lot of different problems all the time and putting their fingerprints all over with the concepts. And so there’s been a lot of things and assumptions we made that we got wrong. So in the early days when I had originally been thinking about how the space would show up in Plano with our architects with Mark with at least different people, there was an initial assumption that we were going to have 10 to 15 brands in that space

Matt Alexander:
So it’s about 14,000 square feet total, we wanted to send them on a social space in between. And then if you break it down into anywhere from 100 to 500 square feet per brand, you end up with a real grid. And we built in fluidity and we built modular fixtures and we really assumed that it was going to be more of a traditional pop-up type experience where you would have his one brand on a very discrete basis is another one. But when we launched, we launched with 26 brands or thereabouts, maybe close to 30 and then these days at any given time, that space has more like 60 brands in it. And then the relative near future, all this space we’ll probably have somewhere between 80 to 100 at any given time. And so what we found is that the consumer that doesn’t necessarily respond to more of these distinct brand moments, it’s certainly an opportunity, right?

Matt Alexander:
But what’s much more interesting and easy to pass and so I am very engaging is if you organize a little bit more by category and a little bit more almost like department, right? In the most traditional sense, and that really allows for more discovery. Then if you find the balance there between brands that come in and show up on a very temporary basis versus brands that you want to ostensibly curate and have that for a longer-term purpose because you really believe in them, there’s real utility in that balance there. So that’s something we’ve been continuing to unlock from the beginning. And I think what we got right was the approach to what brands would be there, the right real estate, the right approach to events, the rights of approach to F&B and those things have been growing like crazy.

Matt Alexander:
But a lot of things whether it’s around how we would divvy up the space to how we thought about how many fishing rooms we needed, how we thought about the floor plan. We had some areas that were elevated, some that weren’t and we just didn’t really need to do that. And we also really thought about modularity in terms of fixtures which has been important, but also not as important as we would have expected in the early days. There were also a lot of things that we really had to sell people on to really build trust, right? So upfront the prospect of ostensibly giving us your products on consignment and then leaving us-

Julia Raymond Hare:
Sure.

Matt Alexander:
To tell your brand story not you and us controlling more of the aesthetic than you would typically, that was challenging for a lot of people to wrap their heads around. And we had so many different, long conversations about it. Us having a website was incredibly controversial in the early days for brands being worried about us cannibalizing their digital channels, which is obviously crucial. And a lot of them had also done some pop-ups with larger departments. So it wasn’t been really ban in those relationships where some of these department stores will commit some of these cardinal sins like taking out ads, they use the same keywords as you on Google, Facebook, and otherwise-

Julia Raymond Hare:
Right.

Matt Alexander:
More extensively drive up your customer acquisition costs. Others would not sell through a full assortment of products and put it in one of their outlet stores. So there was a lot of this bedrock of bad experiences, questions about how it works, concerns about trust that we had to surmount. We did that very quickly, right? And so we started out and there was probably a small smattering of products online. These days just about all of our brands are online. And we’ve really, I don’t know, built more of that trust. And so if you walked into our space in Plano, then into New York, then into Austin, you would see a pretty clearly evolving thesis around design and otherwise and so we’re in the process right now of investing and refreshing our store in Plano and loads of other opportunities there. But in terms of things, we got right, wrong lessons learned.

Matt Alexander:
I mean, what I would say is that the idea and the cool philosophy and what we’ve set out to do some of these cool things that we’ve been opinionated about, about not paying stuff commission but just paying them more in general, providing full benefits and otherwise around how we think about layout and not allowing big walls to bifurcate the space. These things have remained really core to our philosophy from the very beginning and haven’t really changed. What has really changed in grant is just the fact that we’ve been learning a lot on the fly and then you throw in the middle of all that a pandemic, right? Which you-

Julia Raymond Hare:
Yeah. The pandemic thing. Yeah.

Matt Alexander:
As a challenge in learning, right? There’s a lot you pick up and go along the way but even post-pandemic or no, not post-pandemic but more late-stage pandemic, hopefully, we find ourselves in an exciting position now where, I don’t know, we’re charging after a lot of these ideas that remain really core to the philosophy we’ve had from the very beginning. So I think we remain very much there, there are myriad challenges we face certainly in the past year that have been stressful and have really given us a little pause and otherwise, but there’s also been incredibly exciting moments and a lot to look forward to. So it’s just the way it goes in building a business.

Julia Raymond Hare:
Absolutely. And I think it’s fun because if I had to guess, you probably have a long list of brands waiting to get approved and get into your space and to look back just a few years ago, like two or three years ago, and you were trying to convince people, “Just trust us. It’ll be amazing.” And now the tables have turned and I’m sure all of the greatest DTC brands are interested in your space. And because you were named also one of the most innovative companies last year, right?

Matt Alexander:
Yeah.

Julia Raymond Hare:
Is that last year?

Julia Raymond Hare:
Congratulations.

Matt Alexander:
That was about two weeks before we had to close the stores. Yeah. We ended on a real tear until last year and the brakes were really put on for a moment a bit. But yeah, we were very fortunate there, I think. We received that award, another one from Chain Store Age and one to two others, right? All in the same few weeks stretch they early last year and it was right after we had opened in New York. So we’d just been open for 13 months or thereabouts or maybe 14 months. And so really exciting to get that ratification of the thinking and to have… Yeah. I think a lot more brands start to really wrap their head around it. One of the coolest things from the very beginning was the each of us spaces would be different and then our philosophy around real estate was very particular where we thought about probably five different types of real estate and what feature set you’re unlocking with each one and how that might suit different brands for different reasons.

Matt Alexander:
So brands like Dollar Shave Club, we were the first set of physical retail. They opened up with us in Plano to accomplish very particular goals versus what they were doing in New York with us versus what they were doing in Austin with us, very distinct from one to the next. And I think as we were able to really demonstrate that and show more of this ecosystem mentality and more of what we’ve been talking about in terms of events, how we would really cultivate this feeling of community, how we would follow through on a lot of the value systems we had talked about. Yeah, it really fostered a really loyal group of brands and a really exciting mix of brands that apply through our site every day or show up in our inboxes wanting to do something or us obviously reaching out to loads ourselves that we get really excited about.

Julia Raymond Hare:
Absolutely. And you mentioned events, are there events that are in the near future? What were some of the ones that were really successful pre-COVID?

Matt Alexander:
Yeah. I mean the first really most notable one even was Serena Williams is an investor ours, she launched her size-inclusive product lines to reintegrate with us, two weeks also, we opened in Plano and did it as a live podcast with Ashley Graham.

Julia Raymond Hare:
Wow. Big names. Yeah.

Matt Alexander:
Yeah.

Matt Alexander:
It’s a really amazing thing to have happened for a brand new store, right? And got us a huge amount of attention and since then we’ve done some amazing things. We’ve launched a collaboration with a local streetwear brand By Way of Dallas, we’ve done conferences with groups like Create & Cultivate and Amex, we’ve done pitch competitions with incubations like RevTech. We’ve had many little communal events like kids writing lists just to center and otherwise and then we’ve had just so, so, so many different things. And so the real tragedy for us was that we were really hitting our rhythm in terms of those events in the back end of 2019 and we had just opened New York and that was obviously going to be this amazing vehicle. And so we never have really been able to fully explore what events will look like that and in Austin, and we’ve certainly been doing a few safely outdoors otherwise that don’t require crowds.

Matt Alexander:
But that’s something we’ll be bringing back in the relativeness. And so like for Austin in particular, we had this amazing lineup of initial events with some amazing partners, some exclusive collaborations we were developing and all of those got put on hold and so those are all coming back now. And so-

Julia Raymond Hare:
Good.

Matt Alexander:
We are joined to the first house in Texas, for example. And so we have a lot of partnerships bringing with them in our Austin space and lots of others that are there that have been in our minds for a long time and we haven’t been able to do. So it really varies. I mean, right before the pandemic shut everything down, Salesforce had just bought out our space in Chelsea to do a panel event that evening or one evening. We’ve had all sorts and so that was something that had really been getting momentum for us and will certainly come back. And so we’ve got a few coming up and we’ve been doing a few since and we’ve certainly had during the pandemic, the primary vehicle for it has been using what kitchens as ghost kitchens for delivery only concepts and popups, which has been incredibly cool in a whole new aspect of our business that we never really thought about before, where we’ve brought in groups like Sandoitchi and 8 Miles Pies and Chop Chop come in and do these restaurant activations that have brought out hundreds and hundreds of people to line up in a safe way.

Matt Alexander:
And so we’re all in trying to get back into it but we have to wait until it’s safe. And most importantly, even now that CDC guidance has evolved around vaccination people not needing to wear masks indoors, that’s great and obviously really exciting, but the critical thing is making sure our teams feel okay about that. And I think for them, they’ve been having to wear a mask all day every day to work for the past year. And that’s hard, really hard and-

Julia Raymond Hare:
Yeah.

Matt Alexander:
It’s really easy to just say, we’re not doing anymore, but there’s a real human and psychological and emotional cost there. And so we’re trying to be really thoughtful about how we stage back into events and make sure it doesn’t-

Julia Raymond Hare:
Feel too soon. Yeah. Yeah. That’s great. And what about the comments? I just want to touch on that for a second because that was a program you guys launched during 2020.

Matt Alexander:
Yeah. So we opened Austin on March 13th and then we closed all the stores on March 14th and on a Monday, so two days later, I was back in Dallas working from home and we started to dig into various different opportunities we saw them in front of us. And so we quickly turned on charitable donations with all transactions online, we improved buy online pickup in store, we turned on same-day delivery and all sorts of other new initiatives that really drastically grew our digital business which was really exciting. Alongside it though, I was thinking about what the opportunity was going to look like when we were able to reopen the stores. And even in those early days, there started to be a lot of conversation about how the pandemic was going to probably accelerate a lot of the problems the more established retailers and could potentially accelerate some of the positives for a younger retailer like us and really rush first on that thesis.

Matt Alexander:
And so we had started to think about, “Hey, what can we do that would be a great way to give back to the community and support local brands and local makers and artists and chefs and otherwise that were really hurting? But also what could we do that would be really localized and relevant and interesting for our customers that would really give them something to rally around that you wouldn’t really be able to do if you were allowed to retail it. And so we went from idea to branded, named and launch in under a week and it was this notion of creating… Essentially what had been a precursor to Neighborhood Goods for me Unbranded, it was essentially a grown-up version of that, where we want it to just provide free space to anyone that had been particularly hard hit by the pandemic. And so we ended up having a huge amount of applications and had different groups come through with lots of different brands and each lots of different categories represented some very local brands, some much bigger where they came in for free essentially. We took a tiny, tiny percentage of sales from some of them just to help fund a little bit of it but nothing meaningful, under 5% in most cases.

Matt Alexander:
And with that, it just gave us something really exciting to look forward to and rally around as a team and had been a really hard stretch right there. And then for a lot of these younger brands, it gave them something to be really excited about and proud about and get that audience out to see it and shop it online in person otherwise, for some of them, it was this opportunity to show up in a store in New York for the first time ever and to really dabble with this ecosystem, a lot of them ended up becoming permanent for us, brands like SoCo and a number of others. And so yeah, it was a great little initiative and it was a fun one to work on and in that time and I gave everyone something to… A real focal point. But yeah, now we’re excited to see how we bring it back to California on a different basis. So that’ll become more of a permanent initiative for us but, yeah.

Julia Raymond Hare:
And it sounds like it was coming back to your roots a little bit with the pivot with Unbranded and how that operated and launching the comments to help your fellow retailers. And when I hear the story, I’m like, “Wow, Matt, that’s impressive.” Do you work so hard to open a new store and then have it closed the very next day is super defeating. I think some people would just head straight to the bar and say, “I’m giving up. “What was the motivation to quickly create something else and say, “I’m not giving up, we’re just going to do something different and we’re going to do it fast.”

Matt Alexander:
Yeah. I mean, it was a real roller coaster ride then we’d come into that year on a real high. In New York, it just opened and was doing ridiculously well. Plano had just turned a year old and was doing incredibly well year over year, Austin was on the horizon. The mix of brands we were working with was amazing. We were winning some awards and then abruptly it stopped and then we had to go into layoffs and furloughs and pay reductions and all sorts of very challenging things. We did an announcement when we closed saying, “We will be closing for two weeks.” it was the same thing everyone said. And going into conversations of the next couple of weeks, it quickly became clear that we weren’t going to make[inaudible 00:34:10] a list of two weeks it was going to be more like months. Right? And so we just had to really adapt. And so we went through this really tough stretch, right? That just in a very condensed period of time and coming out the other side of the furloughs and layoffs and all those tough decisions, right? We needed something to really rally around and we needed something to give us a bit of a guiding light and something that would push us a little forward, right?

Matt Alexander:
And so we landed on this prospect of a lot of brands were going through something similar at the time. A lot of restaurant says we’re losing their spaces. A lot of artists and musicians that really rely on live events and otherwise suddenly lost that platform and there was this collective moment that we were all in right there. And so we just really rallied around the idea of well, maybe this is something we could do that would give back a little bit and it’s not going to change anything for anyone on a massive scale but it was the right human and emotional thing for us to begin thinking about and doing and it helped us reorient ourselves, right? And so there was all the work we were doing digitally which paid off, there was a huge amount of creativity going into the restaurants and otherwise but we needed that thing to really look forward to and to really build towards and historically that had always been store openings for us. And so we found it in the comments and then from there I think we had expected just this really depressed demand for the rest of the year.

Matt Alexander:
And we certainly saw a lot of traffic but conventional was way up and performance blew away our expectations. And we ended up having a real growth year and that was not on the cards at all. And so there’s plenty we got wrong, there’s plenty we could have done better. But ideas like the comments and experiments like that, that’s always been really cool to who we are. We always want to keep trying new things and testing new ideas. And it was the right thing for that moment and it was the right thing that we’ll keep doing, right? But it was also just a great thing for all of us to really rally around and just see what we could do in some small way that might help some people or might give people a way of getting to know some new people in their cities even from a distance or otherwise. And so that’s really where it came from, I really would give us a little shape around it.

Julia Raymond Hare:
I like that point you made about being the guiding light to reground everyone and give you a path to head towards and congratulations that it has been successful and it’s worked out, sounds like you have great teams. And Matt, before we wrap, I know we’re running close on time. I did have to ask you and you don’t have to answer it, but if you were a big department store right now, Macy’s is doing some weird stuff, I think it’s called the Backstage shows and the other day it looked really bad. What would you do? I mean, is there a chance for them anymore or what change would you make?

Matt Alexander:
Yeah, I mean my philosophy is relatively simple on this sort of thing in as much as I think a lot of resalers have drastically overcomplicated the problem at hand, which is ultimately whether or not you have relevant product to sell to people in the stores and are you presenting it in a relevant context, right? So no one can really beat the utility of buying toothpaste online. I can order it right now, it’ll be here in a couple of hours. If I know what I’m looking for, it’s amazing. If I don’t, it’s not as great. That utility piece breaks when you don’t know exactly what you’re looking for or if you don’t have built in trust, right? So this on-ramp into discovering new brands to having a different identity and dimension around these products is massively important and it’s a huge opportunity and physical is the ideal mechanism for it.

Matt Alexander:
And so departments were, as they were 100 years ago, were localized smaller format, really built around a curation mix and saying, no, your [inaudible 00:38:45]farm on them and they say, yes. These days the old minimum 100,000 square feet have thousands and thousands and thousands of products and they’re speaking to everyone and no one at the same time. And so much time is spent on smart mirrors and the right camera technology and all these other sorts of ideas. But it’s all just window dressing, right? Having digital, better digital signage or smart mirrors, I don’t care as the consumer, that doesn’t make me go to your store, what makes me go to your store is A, if there’s something convenient about it that really does tramp something digital for me.

Matt Alexander:
But really B is, if I can get something there that I might I’d be interested in buying online or otherwise, but I can get it in a radically different context. And I can really understand it and I can see it in a socialized way, which is ultimately how most products that we purchase exist, right? And so I think, I think it really comes down to a simple premise, which is how do you have the right products in the room? And all retailers are capable of doing that. It’s just a reset. So I think Macy’s has been doing some smaller format stores like the Market By Macy’s which Rachel Schechtman put together before she left and it’s great. It was when I saw it pre-pandemic. And North stream has the most from local and some of these other concepts but for most of them, the irrevocable problem right now is that they were attached to moles. And there are great holes that will continue to do amazingly well, but there is a lot that won’t and the US inescapably is over retailed and there will be a correction there.

Matt Alexander:
And so it’s not to say that physical retail is dead, although that often becomes the narrative. It’s really more that there’s just an overdue need to simplify and really understand the place of physical retail in context with a more digital universe. And so for us we just launched the marketplaces of a new category for us. We just launched CPG and we launched it in Austin and it’s not just about throwing a bunch of CPG products in the room and then calling it a day, there are great concepts that have a really small format, grocery concepts out there and convenient concepts. Ours is more about how we socialize them. So how we introduce those products on the menu, how we see that in a world in which that discovery piece we will pass it and whole foods is insufficient for building a relationship with it and really forming and understanding and what it is and the potential of it. And that more direct personal interaction with it is really the crucial thing from my perspective. And so I think all retailers are capable of really building an interesting way the… But-

Julia Raymond Hare:
That was a keyword you used, you said just being relevant to the consumers is a core challenge that a lot of the department stores are facing in your opinion.

Matt Alexander:
Yeah. I mean, I’ve said it a million times before about us, but I believe our core currency as a business, and certainly as an industry, is relevance, right? That if we have an irrelevant product, why would someone show up? And we can probably mask that for a while by just hosting loads of events or doing really cut-rate stuff and just throwing more and more product in the space or putting loads of technology in there, whatever it is, making it hyper experiential. But the consumer is smart, smarter than all of us and they know when they’re being sold to. And so as soon as you lose that reason to really be talking to them it’s a struggle. And so that’s why you see a lot of these brands that really grow off the back of email marketing for argument’s sake.

Matt Alexander:
It’s a really slippery slope because everyone forgets that everyone hates receiving. And so as soon as you lose track of customer behavior and preference it’s really hard to come back from that. And that’s the problem that a lot of these department stores face is that they made a pretty outset specific decision probably two decades ago that this digital thing that was happening wasn’t that relevant to them. And then they also have made decisions around evolving customer preference where if you talk to someone in their early to mid-20s let’s say about what they see to be a luxury product, it’s going to be radically different than what someone would tell you that works inside of a larger luxury department store. And that’s a massive problem and discrepancy, right? And so the resolution there is just by listening.

Matt Alexander:
And it’s also about recognizing that you’re never going to be a finished product. And so I think for us, what has always been core to our identity is that we see ourselves as being a fluid and that we are going to keep trying ideas. We are going to get some things wrong, that weren’t trying to be the shiniest object in the room, we’re trying to be a group of people trying to contribute something interesting. And sometimes we’re going to get that right, sometimes we’re going to get it wrong, but as long as we’re really in orbit around this idea of relevance, then ultimately we’ll probably be going in the right direction and we’ll be able to find our way. But as soon as you lose track of that and you lose track of the ability to have a point of view and you lose track of the ability to be able to speak to people, it’s really tough. And so that’s the challenge for a lot of these larger retailers these days, I think.

Julia Raymond Hare:
Well said, Matt, and I know that you’re a busy guy and I want to be respectful of your time. So I’d like to wrap up by asking what’s next for Neighborhood Goods. What’s on the horizon?

Matt Alexander:
The most near time I’m having a baby-

Julia Raymond Hare:
Congratulations.

Matt Alexander:
So I’m going to take a little bit of paternity leave this summer, which is exciting. Big things for us I mean, we’re back into expansion as I mentioned it, but March, April last year, we really didn’t know what to expect. We really thought we were… We knew that we weren’t going anywhere as a business but we didn’t know what customer demand was going to look like and we thought we were just going to have to be in this position to weather a storm for a really long time and that just wasn’t the case. Demand came back very quickly and the business has been doing really well. And so now for us coming into this year with… We just launched a collaboration fairly recently with the arrivals, just launched the Marketplace and CPG, our restaurants have been doing really, really well and we’re just on a really exciting path. There were lots of big new stuff coming probably this Summer.

Matt Alexander:
And so we’ve been really organizing ourselves around this idea of reintroducing ourselves to the customer and so more brands, new categories, new ways of laying out the space, a new digital experience for us as well in the cards, but most crucially is new spaces. And so nothing to share there quite yet, but we will be and are signing leases and taking advantage of the opportunity we see there and really looking to see what we can do to shift back into more of that mentality of growth and more of that mentality of experimentation rather than being a more of a defensive mentality as we had to be last Spring Summer. And so lots of opportunity we see and plenty of concerns still about the pandemic and plenty of things to be thinking about societaly and all sorts of other considerations that could slow things down and change plans otherwise. But generally, we’re looking ahead coming off the back of a really exciting few months in our stores where traffic is now meaningfully above what we were seeing over holiday just organically.

Julia Raymond Hare:
Excellent.

Matt Alexander:
We just see a lot of reasons for optimism looking ahead. So lots more to come.

Julia Raymond Hare:
Lots more to come. And if I’m a brand listening in to the show, how would I get in touch with you or Neighborhood Goods to learn more about how I can get into your store?

Matt Alexander:
Yeah. So if you go to Neighborhood Good dot com there’s a work with us page that applies to both restaurant concepts as well as brands, you can always drop in an application right there that blasts out via slack to our whole team and everyone has a look. Otherwise, you can always just reach out, hello at Neighborhood Goods or all sorts of other obvious mechanisms to find us and we always get to chat there.

Julia Raymond Hare:
Great. Well, Matt Alexander, co-founder of Neighborhood Goods, it was wonderful having you on the show today. I hope to have you again and congratulations on both your personal life with your baby coming this Summer and then your professional life. It’s good to have you.

Matt Alexander:
Thanks so much.