On a walk through SoHo a few years ago, Brad King kept asking himself one question: How are all these small brands able to maintain stores in one of New York City’s priciest shopping neighborhoods?
The question went beyond mere curiosity for King. In 2018 he’d taken over as CEO of Stitch, a Cary, N.C., maker of custom leather headcovers, and turned it into a golf gear and apparel success story, growing it 55% annually. The brand had a presence in on-course pro shops, but it had largely made its name in e-commerce, with online sales shooting up 35%.
To stay ahead of the growth curve, King and his team had been studying a move to off-course retail. “As good as digital is, people like to see things in person,” King said in an interview. “They like to touch the items, see the colors, see the full product line.”
King wanted to try Stitch-branded stores, but he didn’t know if the company could afford it. “We looked into to doing it and realized you had to hire a whole team,” he said. “You need real estate and contracts expertise, you need demographics, your HR team needs to scale so you can manage employees working in other states. It’s a lot.”
The risk, weighed against the upfront investment, didn’t make sense, but King didn’t want to give up. He investigated how some of those other small brands had crossed over into “Main Street” retail. “Everyone was partnering,” he said. “Once we found Leap, it was a no brainer.”
When Stitch’s first two retail locations open in Q4, one in Dallas and one in Palm Beach, Fla., it will become the third golf company that rose on e-commerce to open a brick-and-mortar location in a one-year period. Apparel brand Bad Birdie of Scottsdale, Ariz., launched in its home town in November, and L.A.-based Malbon opened a shop in New York City last week.
They are looking to maintain the momentum built during pandemic lockdowns, when golf emerged as maybe the perfect activity: It’s both social and socially distanced, takes place outdoors and eats up a good chunk of time. Rounds played jumped 18% from 2019 through 2021, according to the National Golf Foundation. The sport has held onto those gains so far in 2022, and the companies that have benefited from the boom are looking to press their advantage.
Thus, the charge toward retail, a mini-trend connected by a company called Leap, which takes on all the tasks that make the move difficult, from identifying markets and real-estate transactions to store design, hiring and managing staff, and operations. “We want to make it easy to expand into and get more out of retail,” Jon Levy, Leap’s VP of brand management, said in an interview. “We let them do what they do best, and we deliver a great experience to consumers.”
To further ensure that it’s mutually beneficial, Leap doesn’t take on just anyone with a website and a dream. “You have to go through their application process and make sure the partnership makes sense,” King said. According to Levy, more than 300 companies have applied, and Leap continues to evaluate options. As of June, Leap has partnered with 40 brands on 60 stores, and the company is adding six to 12 new partners a month.
“It’s a profit-sharing arrangement, so you won’t get the same margins you would if you went on your own,” King said. “The trade-off is that it takes away a lot of the risk.”
It’s a classic e-comm story. Five years ago, Jason Richardson got an invite to play golf. When he couldn’t find the sort of hip, funky polo he hoped to wear, he and a few buddies started Bad Birdie, a side hustle that manufactured shirts and sold them online. “A lot of other golf companies are selling tradition and performance,” Richardson said during a Zoom call. “We’re selling fun.”
So much fun that two years later Richardson quit his job in advertising and moved to Scottsdale to run the company full time. The product line grew, and an appearance on Shark Tank netted a deal with Robert Herjavek ($300,000 for 25%). Three employees turned into 20, and a move from pure e-commerce to pro shops raised the idea of adding branded retail stores.
“I always thought it would be cool, then Leap provided a turn-key solution,” Richardson said. “Without them, we wouldn’t have done it as soon as we did.”
To keep costs down and lower the risk even further, Richardson started with a 600-square-foot pop-up store that had a six-month lease with an option to extend. That site has now become a permanent location. “It’s meeting all of our revenue projections,” he said. “We’re going to increase total revenue by 5%, so if we can find more revenue pockets like that by opening more stores, we think we can increase total revenue by 20 to 30%.”
Beyond the numbers, Richardson sees the store as a “curated premium brand experience” that brings to life his vision for an off-course clubhouse with plush couches, coffee and beer on hand, and a big TV airing golf where people can gather after (or during) work. “The community aspect is a big part of who we are,” Richardson said. “We have regular customers who come hang out, and we definitely see more people during the majors.”
That bespoke design is part of what Leap sells. “We pride ourselves on every store looking and feeling different and specific to each brand,” Levy said. “From the colors to the product layout, a customer would never know they were all running on the same system.”
Bad Birdie’s shop has a small selection of product around the outer walls, while Stitch’s store will have its full line spread throughout the space. The Stitch stores will also prominently display the brand’s bright orange, light blue and navy color scheme, which is a “continuation of our e-commerce and on-course presentation,” King said.
The choices are not random. Besides feedback about performance in their own stores, “part of what clients get is detailed analytics of traffic flow and shopper behavior that’s pulled from all our stores,” Levy said. That analysis can be localized, too. Leap has 25 stores in New York City, so clients can look at the subset of data from that locale to drive decisions.
That information, and an understanding of shopper demographics, lets Leap use those concentrations of stores to cross-promote among clients. “We want to help shoppers discover the next store,” Levy said.
The benefits of proximity are part of what Leap considers when evaluating applications. Having multiple outlets in one market delivers efficiencies beyond shared shopper data. “We buy stuff in bulk,” Levy said, “from paints to furnishings to shelving units, so we can get better pricing.”
Of course, the location has to make sense for the brand, too. “They ID’d the markets for us by analyzing data from our e-commerce and on-course sales, to where we were selling well and had a following,” King said. “Then they focused on how to target those niche destinations.”
When it comes to personnel, all the employees work for Leap, and they’re all trained on the same software and operations. “If someone calls in sick, you don’t have to scramble to find a fill-in,” King said. “They can call in someone from one of the other stores who will know exactly how things work. They just need a shirt with a different logo.”
And if the worst should happen and things don’t work out, Leap holds the lease and owns the equipment and infrastructure, so it will try to rotate a new or existing client into the space. That spares the departing client from rent obligations and discarding equipment and allows the new client to save by reusing some of the existing elements.
The process has worked well enough that both Richardson of Bad Birdie and King of Stitch said they’re planning to open more locations in the near future. Levy and Leap see that as a natural evolution.
“Fifteen years ago, if a brick-and-mortar retail brand wanted to go into e-commerce, it had to hire engineers and software developers and build so-called pipes,” Levy said. “Then came a lot of brands that grew up on the Internet looking to plant a flag in their core markets, which required similar investment in the other direction. Now, it’s easier than ever to move between the two, and most successful brands have both working together.”
Some categories are better positioned than others to make the move. “Golf is interesting,” Levy said. “It saw a big increase during the pandemic, and brands are looking for way to continue that growth. A physical store is one answer.”