Naked Retail Group Has Always Championed Retail Experiences. The Industry's Just Catching Up

Let’s say you run a D2C brand that’s ready to open up shop...in a shop. How do you ensure your store experience leaves a lasting impression on customers—but not the type that’ll send them to retail therapy?

Justin Kerzner, president of the Naked Retail Group, has the answers. Naked Retail Group operates two NYC flagships with rotating brand partners, and it creates one-off experiences for brands going offline for the first time. So for today’s Fall Founders Series, I went deep with Kerzner on bringing brands back to (real) life: How to find the right space, which brands work best together, and why brick and mortar retail certainly isn’t dead.

Run me through the story of how you founded Naked Retail Group. How did the idea come to you, and how long did it take for you to get it up off the ground and running?

Kerzner: It was originally a need from a different brand I had created, a direct-to-consumer leather goods brand. We wanted an opportunity to show our customers the product in person, give them an opportunity to try on, feel the quality of the leather, experience it properly, maybe host an event or two. And the biggest challenge I had aside from figuring out how to execute it was the cost. It was just too expensive to take a standalone retail space, even if it was for a week or two.

I had this notion to collaborate with a couple of other brands, share the space, and in turn charge a fee for doing so. So say if something costs $20,000 a month in rent, the initial idea was we wanted to cover all of our rent in collaboration. So if you charge a brand or a couple brands to be a part of it, we would give them that amount in value between the space, the design, the build, and the staffing.

About a year ago, I partnered with one of the co-founders of Naked Cashmere to basically take this thing a little bit further. He had been a brand popping up in the space. We got it to a point where his brand was actually profitable each time it popped up with us. He would come in and spend say $20,000, but he would do $100,000 in sales.

So we partnered up to make Naked Retail, branded it, found a longer-term lease—not a crazy lease, only two or three years. Which in this market is I guess relatively long, but traditionally that’s unheard of.

At what point did you start to incorporate the one-off brand consulting and client work on top of the flagships?

Kerzner: Right around the time that we founded Naked—keep in mind, we were operating the business under my other brand name for the time being, all the way through February. Prior to that it was still under the leather goods brand although we were running it together. And we just had this plan to change the name at a time where it made sense to us, so post-holiday.

We started to get some interest from brands, the first one was Brooklinen and the second one was Cosa, the cosmetics brand. And they were like, okay we like what you’re doing in the collaborative setting, but we want something to be our own. So can you design a standalone store for us, for two to four months? So we sort of just tested it and it worked. We opened on time, we found them a great space, we designed it for them professionally, we built it, and it wasn’t really anything that we intended to do in the beginning but now we’re realizing that’s a huge asset that we have, just because we have the experience now and it’s something that comes quite naturally.

What types of clients typically come to Naked Retail Group for your services? Are there ever times that someone approaches you that you don’t think is necessarily a good fit for the flagship?

Kerzner: Curation in the collaborative space is the most important thing that we do. It’s not always about the location, it’s not always about the design. It’s absolutely always about what’s the curation of the brand. If brands don’t fit well together, it’s usually noticed if a brand is not suitable for the space or our concept in general. It’s definitely noticed. And our customer really sees that and I’m afraid the brands see that too.

If we bring in an amazing new shoe brand and then a clothing brand that isn’t completely up to par, maybe it isn’t branded so nicely or has a different aesthetic, or it’s too expensive, it’s too cheap, it doesn’t have the right manufacturing story, maybe it’s not sustainable and that’s our approach that month, it just seems like it doesn’t fit. We have an aesthetic, we have a tone, and we just have to be careful to maintain that.

Across the projects you’re working on, understanding the DNA of the brands is so essential so you can make a real life experience that embodies their products. Walk me through the strategy that you and your team use when you’re doing an activation for an individual brand. How do you make sure you’re capturing its tone and mission?

Kerzner: The general standalone timeline is anywhere from two and a half to four months. The realistic one is four to six weeks, almost always.

Everybody in pop-ups is looking for the absolute best experience ever. The most perfect design, the best fixtures, the best everything. And the funny thing is, the customer doesn’t see that. Half of what is looked at in a retail store, like if you went to a Cartier store versus our own, the way those guys work, they’ll put millions of dollars into a store and there’s nothing you can do after that. They’re designing and building these super advanced spaces that the customer doesn’t recognize. So they’ll put a million dollars into marble and you look at it today and you’re like, why don’t we just use a natural plywood? The product looks amazing on it, it shows sustainability, it’s handmade. It also costs $20,000 as opposed to $1 million.

I think our designers’ ability to really be smart about material and efficiency and timeline and actually being able to execute is really, really valuable.

So once you’ve decided to partner with a client, do they really lean on you to ideate the look and feel inside of the store? What does the conversation sound like behind the scenes in terms of getting all of the details sussed out?

Kerzner: It’s definitely a brand-by-brand situation. Most brands really do listen to us and understand that our designers are well-versed in experience and know what we’re talking about. At the same time, we always talk to a brand for quality on how their products are best suitable for a customer reaction. If you’ve got an amazing eyewear brand that uses different types of material, and it should be experienced differently and you know that, we need to understand that. And that’ll very much help our execution and make things better overall. We’re noticing that most of the brands we worked with in the first four to six months were a little bit more hands-on with us. And in all fairness to them, we had no experience. We were just a team of cool designers who have great ideas and we had confidence. And fortunately it worked out really well, but unfortunately to actually execute a store design and build when you’ve got another business that’s micromanaging, is difficult. Whereas today, we’ve done 15 standalones to this point, and the case studies we have to show for it are really helpful and they allow for a lot more trust.

So back to your question, we usually control at least 80 percent of the process, but it’s always case by case.

Can you outline a recent Naked Retail Group project you’ve been especially proud of? What made it successful in your view?

Kerzner: In May, we built a store for Supergoop!. It was only open for four days, but it was a full store build. We only had 5 weeks to get it done. We had the whole store designed with two revisions. All of it was done remotely because the space wasn’t fully selected. All we could basically give our designers as a base framework was just assume the floorplan is a rectangle.

Fortunately enough we found a space that was close enough to a rectangle so it worked. The challenge we had, which was kind of funny, was we had a lot of advanced materials to source and fabricate. We basically had to build a schoolhouse. It kind of looked like Saved By the Bell in the interior. But it was like a very experiential thing. It was not revenue focused at all, it was purely to educate the customer, what its sunscreen does and why it’s the best at it. And in terms of delivering the right quality of experience, and organized process, I was actually pleasantly so surprised that the brand trusted us so much that they didn’t even look at the space until the day before we opened it. So the entire time we’re building it, we would send photos like hey come by if you’re around. And they were like oh no we trust you.

Well I guess that’s a testament to how good you are at putting these activations together.

Kerzner: Who knows? It’s either that or they simply didn’t have time to check it out. But it worked. And it’s nice to understand that we both have the same goals here and we’re here to help.

In this example, you mention not being sure of the space’s shape until very close to the deadline. I’m curious about the space selection, the real estate component of the service you’re offering, in general. What sort of criteria do you and your team think about when a brand needs you to pick a space?

Kerzner: If it’s a revenue focused concept, regardless of how popular a brand is, they need a great location. And in New York, the biggest challenge is you could go one block south, east, west, north, and be in no-man’s land. And totally ruin the experience because it’s the wrong placement.

At least half the brands that ask us for standalones help are already partway through the real estate process, like choosing a space, and we don’t make any money on that part. We simply say we want to advise because no matter how great we design a space, if the location sucks it might not work. Location is a huge component to how this stuff works.

Where do you see Naked Retail Group fitting into the larger narrative of omnichannel retail experience? How do you think it will last in an increasingly digital online shopping landscape?

Kerzner: Traditional brands are now starting to realize the value of this stuff and how it’s all changing. What we’re doing properly, or at least considerably better than most, is that it’s really about experience in general. The customer has to be able to walk in and understand what’s going on. They have to feel welcome. And they’ve got to feel like they can relate to it.

In traditional settings, part of the reason why a lot of old retailers are struggling and closing their doors is because they’re not considerate of experience. I think an experience in retail is really what it’s all about. It’s not just selling something to a customer, it’s about making them feel like they can be a part of this lifestyle, this brand, and this space. We get customers who come back all the time just to hang out. We get coffee with them, we’ll chill, we have a ping pong table. It’s a very different approach and I think it’s kind of like what a lot of the luxury brands used to do, but in a much less fake way.