9 brands come together in Brooklyn to test new retail format

9 brands come together in Brooklyn to test new retail format

HiO is owned by Direct Brands Group, a business formed in 2017 to serve as an intermediary for international businesses and e-commerce brands that are looking to open bricks-and-mortar locations in North America. A group of top, former retail executives came together with the idea of opening up collaborative stores within some of the best shopping centers in the U.S. HiO had been running “The Edit” at Simon Property Group’s Roosevelt Field Mall, for example.

The co-founders are Larry Meyer, former CEO of Uniqlo USA and executive vice president of Forever 21, Garcia, founder and CEO of SGN Group, David Zoba, former global real estate head at Gap, and Herb Kleinberger, a lead retail consultant at PwC.

“There are concepts in the Middle East and Asia … making it easier for foreign brands to come into the country, but that hasn’t existed in the U.S.,” Meyer said. “Our goal is to provide that background, making it easier for retailers to get a start and facilitating incubation as businesses evolve, and as the margin structures are more clear.”

The first HiO space to open in the U.S., in Brooklyn, is about 1,900 square feet in size, but Garcia said it’s more ideal for their shops in the future to be closer to 5,000 square feet. He said the company is already working on additional locations in other states across North America, primarily in urban markets, that could open as soon as this year. HiO is receiving a lot of interest already from top real estate landlords like Taubman and GGP, according to both Garcia and Meyer.

“The consumer is hungry for newness,” Garcia said. “We think we are resolving an issue and creating a platform for brands that want to get into bricks and mortar.”

With the amount of retail square footage set to go dark this yearat a record pace, landlords are actively looking to refill empty boxes, which is where HiO hopes to step in and fill the gaps.

“There are a lot of headwinds, still,” Acadia Realty COO Chris Conlon told CNBC. “But I do think there is a lot of enthusiasm to make retail centers more of a social element of communities.”

The goal of HiO, according to the company’s co-founders, is to offer an element of discovery and surprise when people shop. More and more, those are the only reasons consumers opt to get off their sofas, where they could otherwise place orders online.

“We have found more success in our real estate projects when we add more surprises — brands shoppers can’t find anywhere else,” Conlon added. “If we put in a typical [tenant], we would have disappointed Brooklyn and disappointed ourselves.”

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