Issue #49: NYC Membership Club Boom

After weeks of thinking, writing, and iterating, on May 21st, 2024, I hit send on the first piece of Retail Is Not Dead?, outlining my personal connection with retail, what I am excited about in the future of this sector, and how this newsletter would be structured. This Wednesday will be the one-year anniversary of that piece, and I am very grateful for the journey so far. Thank you so much for all the support thus far. Could not have done it without all the support. Excited to keep building this together! As always, any feedback is much appreciated.

On a separate - but equally exciting note - NYC Tech Week is coming up. This is a time when the startup community comes together to host events and learn from one another. There are 1,000s of events, unfortunately mostly software based, and not much retail. In light of that, I combed through all the events and wanted to share three that I am very excited about. What are your favorites? Send them over! Maybe next year a “Retail Is Not Dead?” event?

• Tuesday, June 3 at 6:00 PM - Franchise Pitches 

• Tuesday, June 3 at 6:00 PM - Fashion and Retail Tech Kickoff Mixer

• Wednesday, June 4 at 7:00 PM - The Future of AI & Restaurants

Over the past few weeks, this article and the subsequent graphic above have been circling around about the rise of members-only clubs in NYC. For those unaware of the trend, with the shift to more working from home, people are searching for third places to spend some of their time. Coffee shops, gyms, movie theaters, etc., that were traditional gathering places are not as popular, which has allowed the members-only clubs to rise to the occasion. Some of these new clubs have sprung up as stand-alone, specific to just being a membership club (like Zero Bond). On the other hand, many of the clubs have connections to hotels, like Aman NYC, food, like Crane Club from Tao Group, and premium grocery stores like Casa Tua. Hospitality and membership have some nice synergies. Plus, the continued drive towards social media posting of what you are doing has helped spread the word and get people to apply. Social media + desire to interact in person = boon for membership clubs.

While this trend has been happening, it is fascinating to see that one of the leaders in the space, SoHo House, is struggling mightily. Here is what I wrote a couple of months ago, and it still holds true:

These concerns still hold true several months later. Part of what people love about premium experiences is the exclusivity and curation, without too much headache or lift on the members’ part. For any retailer, this is all that the experience should be defined by elements of curation, exclusivity, and limited effort required from the member. It may be too late for SoHo house, but it is pretty clear these establishments are here to stay, with overwhelming positive responses from their members. Looking forward, it will be interesting to follow along in the space. How do these companies scale, if at all? How many different types of clubs can be supported? Regardless, the human desire to spend time with others remains undefeated!

Service Is A Defining Trait of Retail

On a similar note to the reason behind the rise of membership clubs, I had some experiences this week that I wanted to share on how small things can really define a person’s experience in retail. This week, I was listening to a podcast with Will Guidara, author of ‘Unreasonable Hospitality,’ and David Chang, a celebrity chef and restaurateur. Will has written a whole book about hospitality, but one anecdote really stuck out. At Five Guys, the fast food burger chain, it views the customer experience as the entire experience from when the customer arrives to leave - similar to many other places. Five Guys stands out with an elevated experience by making waiting for the food as painless as possible. They give you some peanuts so you have something to snack on. That intentionality is one of the reasons Five Guys is able to drive such an amazing total experience. After listening to that podcast, I kept my eyes open for some elevated hospitality at scale and found a cool example. As illustrated in the picture above, Chipotle hand-draws a little smiley face on your receipt to incentivize you to fill out the survey. What are your favorites of intentional hospitality?

Who Is Sweetgreen?

I remember when I first had Chipotle in late middle school / early high school, and that became a defining moment for me - one of my favorite go-to fast-casual spots. Similarly, I remember when I first had sweet green in late high school / early college. A different type of food from Chipotle, but I loved it! Over the years, I have been a Sweetgreen loyalist, but my loyalty has dwindled as more competitors have emerged. On the salad/bowl/wrap front, Just Salad and Chopt have come in with better format options and better value for the price. On the bowl side, Cava and Chipotle are more exciting from a flavor profile. Sample size of one for the reason, but you can see the struggles in the financial reporting (Stock is down 53% YTD). One specific issue I found interesting, as a troubling indicator, was the share of orders by channel. In 2024, the share of orders by channel dipped below 75% for their in-store and owned digital channels. This trend has continued in Q1 2025. Not ideal for a company struggling with profitability to have to give away 15% plus commission on a growing portion of their orders. On the other hand, it is very interesting to see that people are gravitating towards In-Store rather than the Sweetgreen app.

TJ Maxx Continues Growth

TJX Companies, the owner of Marshalls, TJ Maxx, and other value-based retailers, is on a tear this year, with the stock price up 12% YTD amid other retailers struggling. One of the reasons of this growth has been customers seeking premium items for value as well as customers enjoying the treasure hunt. TJ Maxx, in particular, has those traits, which have helped contribute to the overall growth of the TJX Companies. Despite economic uncertainty, they are seeing increased foot traffic and higher average basket sizes. On the operating side, margins have increased by carrying less inventory, which also helps avoid markdowns. These efficiencies, plus enhancing the in-store experience, show what doubling down on experience and value can do for a retailer. It will be exciting to follow along and see where the growth comes from next

Skechers Going Private?

3G Capital does not do many investments, however, when they do, it tends to work out well. Here are some of the companies they have taken private in the past, before improving them and reselling them or listing them for IPO: Anheuser-Busch InBev, Restaurant Brands International (Burger King, Tim Hortons, Firehouse Subs, and Popeyes Louisiana Kitchen), Hunter Douglas, and Kraft Heinz. Not too shabby a list. In a $9.4B deal, Skechers is now private. One of the first challenges facing 3G is that China accounts for the bulk of imports for the brand’s US business, however, there are talks of shoe companies receiving an exemption. Regardless of how the tariffs play out, Skechers will have to redefine itself to outcompete newcomers like Hoka and On, and refreshed incumbents like Nike. In the most recent earnings report, sales were up 7% and wholesale sales were up almost 8%, a good start to build upon. What do you think Skechers should focus on?

• Summary: K9 Resorts is a luxury boarding and daycare experience for cats and dogs. It currently has 47 locations across the United States, with the goal of expanding to over 100 locations via franchising. Its current locations are mostly in top metro areas across the country. According to its website, “each K9 Resort is custom-designed with hospital-grade ventilation systems, antimicrobial flooring, cage-free luxury boarding and world-class, professionally trained staff members.“

• My Take: The pet market has been exploding over the past couple of years, in particular, the premium pet market. It makes a lot of sense, given that people want to spend a lot of money on their pets, especially when they are not around to care for them, that this business will be successful

• Founder(s): Steven & Jason Parker

• Funding: $10M

• Number of Locations: 47

• Social Media Following: none

Additional Links:

1. A deep dive into Jacquemus, the French fashion retailer taking the industry by storm (read more here)

2. The case for doubling down on brand marketing during an economic downturn (read more here)

3. Connecticut government, City of Hartford, and private developers are coming together to transform unused, no longer needed government office buildings into apartments (read more here)

4. Westside Market has purchased retail space across from Zabar’s, currently occupied by Staples (read more here)

5. The Dallas City Council voted to eliminate many of the street parking requirements typically associated with building housing (read more here)

6. Bonside, a startup providing capital for retailer expansion, announced a scorecard product to evaluate businesses (read more here)

7. Gopuff launches partnership with Amazon UK to power Fresh Grocery fulfillment (read more here)

8. DoorDash expands partnership with Wing to do food drone delivery in Charlotte (read more here)

9. How is PopUp Bagels thinking about its growth? (read more here)

10. CookUnity, the meal delivery platform, has announced it has acquired Fraiche, a premium fresh vending machine/fridge (read more here)

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