RetailDive which covers retail industry news and analysis, presented an article recently describing the way coworking is having an affect not just on the workspace industry but on adjacent industries as well. Such as retail.
The first big point the article references is the fact that WeWork purchased the Manhattan flagship property of Lord and Taylor for $850M in 2017.
There are other ways as well that show coworking moving into other areas, as the article points out:
Partnerships are another angle that WeWork — and other co-working companies — have been exploring in earnest. In February 2018, WeWork and LinkedIn announced a partnership with J. Crew that would include panel events, a new work-focus collection and campaign from J. Crew featuring WeWork members, and J. Crew pop-ups exclusively for WeWork members. The partnership comes at a particularly tense time for the J. Crew brand, which saw a 7% same-store sales drop in fourth quarter 2017 and plans to close as many as 20 additional stores in 2018, following the shuttering of 50 stores in 2017.
Certainly WeWork isn’t the only co-working company exploring retail. Upscale co-working company NeueHouse, with locations in New York and Los Angeles, is also exploring its options.
“We think of ourselves as home of the new,” said Jon Goss, chief commercial officer at NeueHouse, an upscale co-working space founded in 2011, with locations in New York and Los Angeles. “Retail is very much a part of that.”
The company recently featured a pop-up shop in its New York location for Australian skincare brand Aesop, which is a NeueHouse member with studio space on the upper floor. “We’re raising money right now, and looking to expand into more properties,” said Goss. “And we talk about how NeueHouse fits as more than just a work space. Work is one of the spaces, and then culture, and then lifestyle. It’s more than just a desk. And providing our customers with the ability to discover new products and experiences is part of that, and part of my vision for our customer experience.”
The article continues by pointing out that the right fit is of paramount importance. An groups putting something together via a partnership or co-branding agreement must ensure that the fir is right, for all sides.
The concept is particularly appealing for online brands looking to get their products in front of customers. “All these digital-only brands are opening pop-up stores anyway,” said Zoe Leavitt, senior retail analyst at CB Insights, a data analytics platform. “So maybe it makes sense to open one in the lobby of co-working space to capture consumers passing by and working.”
But not all retail will work in co-working spaces. “With J. Crew in New York, they need to diversify, so I’m not surprised to see them jumping on a collaboration with WeWork,” said Syama Meagher, founder and chief retail strategist at retail consultancy Scaling Retail. “But if I were at WeWork, I would actually think about more lateral businesses,” such as office or work-oriented products and brands.
WeWork, which is primarily geared toward tech startups, is more technology- than creatively-driven, and Meagher suggests the business might be better served by a retail collaboration more suited to its brand strategy. “Why not host an Apple popup shop,” she said. “Or maybe a Google popup? Give members a discount on those products, and give people access to tools and products they might actively use.”
Shared workspaces are hosting workshops aimed at bettering member’s business or leadership skills, while makers of bespoke suits and work-appropriate apparel are making appearances on the chance that young workers will ditch the athleisure for new duds.
For Meager, adding retail to co-working spaces needs to be not just fun but also practical. “Doing a retail storefront inside a co-working space is somewhat detrimental to people working,” she said. “So how are we helping the people in that space, and what is adding value? Is this adding value or is this just marketing?”
Meagher suggested that finding the best fit may mean looking outside of fashion categories. “As opposed to fashion retail, what if [a co-working space] partnered with SoulCycle or another gym?” said Meagher. “You have to satisfy what people need. Retail can be food, or exercise. There are different ways of selling products. But the first question is, ‘What do customers need?’ Giving them a t-shirt from J. Crew doesn’t seem to be something that a consumer who’s working all day needs. J. Crew is fun, but who actually made any money off of it?”
Leavitt agrees, noting that fitness and exercise classes such as WeWork’s Rise by We program, will be important parts of the co-working and retailing partnership. “I also see household goods that you could pick up at the office and bring home, like pet food and cleaning supplies,” said Leavitt. “But I see clothing coming last here.”
What about coworking and coretailing?
“Mall operators such as GGP and Simon Property Group have built homes and hotels alongside their properties, and have also signed co-working space providers as tenants on less-productive floors of shopping malls,” John Mercer, senior analyst, Coresight Research (formerly Fung Global Retail & Technology) told Retail Dive in an email, pointing to a recent report from his company titled Retail Real Estate M&As: A Sign of Renewed Investor Confidence in US Retail?
Opportunities that provide synergies and benefits clearly exist, and it will interesting to watch how they play out and what becomes the best format to do so.
Further opportunity may even open up for digital retail brands to compete and even beat coworking spaces at their own game by opening up coworking spaces of their own. This will be an interesting space to watch!
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Pictured above is the awesome Thrive Network coworking space – check them out!