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This Startup Helps High-Growth DTC Brands Like Koio De-Risk Retail

Talk to Leap co-founder and co-CEO Amish Tolia and VP of brand management Jon Levy long enough and you’ll hear a lot about “risk.”

Leap was born out of the need to address the burgeoning crop of brands that grow up online but need a helping hand to manage the complexities of putting down real-world roots. Opening and operating a store is a whole different animal compared to digital marketing or creating a slick Instagram account, skills intuitive to brands that tend to dip their toes into the commerce waters with, for example, a low-stakes Shopify storefront. And that’s where Leap comes in.

“We’re retail operators fundamentally,” Tolia explained during a walk-through of one Leap’s latest stores, the newly opened Tribeca boutique for Floravere, which caters to engaged millennial women. “We build and operate stores in a data-driven, tech-enabled way to mitigate risk for all parties, including landlords.”

There it is again—risk. Leap gives young, digitally native brands an end-to-end turnkey solution to setting up and managing stores, scouting real estate locations, signing leases, brainstorming the intricacies of immersive, modern store design, and training workers on the ins and outs of staffing each shop in a way that’s seamless to the overall brand flavor and experience. Its goal: to make the fairly risky venture of plunking capital into four walls as pain-free as possible.

“From a day-to-day tactical execution perspective, there’s a lot of non-value-add-oriented things you have to do to get it off the ground and profitable over time,” Tolia said of the responsibility of running a store. “Brands that aren’t built to be retailers…are excited about the fact that they don’t have wake up and think about how they’re going to be successful in the store today.”

Since raising a $3-million seed round in October from investors including Equal Ventures and Costanoa Ventures, Leap has had its hands full, launching six stores with three DTC brands in four markets in just six months. Leap met its first brand partner—millennial high-end sneaker brand Koio Collective that makes its footwear in an Italian factory that produces for Chanel—through Brand Foundry Ventures, a New York City-based consumer-oriented launch-phase fund that had invested in both startups.

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Self-professed “sneakerhead” Chris Wichert, who co-founded the shoe label in 2015 with fellow Wharton MBA classmate Johannes Quodt, described the experience of bootstrapping and birthing Koio’s first pop-up, now a permanent flagship in SoHo, as important for surviving the “challenges of retail and what it takes to run a store.”

But as great as it was to interact with customers who liked to appreciate the supple Italian leather in person, Wichert said he was much more interested in focusing on the core of the brand and not so much the nitty-gritty of how to optimize the retail environment.

That’s why today Leap operates three of Koio’s six stores. The footwear firm has a handle on running stores close to home—two of its three are in its home town of New York City—but Leap’s expertise becomes invaluable when it’s time to move into cities farther afield, Wichert explained. “Leap really de-risks it for us going into a new market,” he added.

Leap can draw comparisons to innovative young companies like Neighborhood Goods, Appear Here, b8ta, and Showfields that similarly nurture emerging brands, Tolia said, but Wichert insists competitors “only offer part of the value chain,” citing Leap’s full-service business model as among the key reasons why he felt comfortable handing over store operations duties to a third party. Customers don’t notice the difference between a Koio store operated by the brand itself or one that’s overseen by Leap, and that’s really all that matters, Wichert said.

He’s quick to give credit to the team that Tolia’s has helped to assemble, calling out VP of retail operations Cody Bauer, who previously was a regional manager for Lululemon before serving as VP of retail at Bonobos and director of stores for Michael Kors.

When Koio worked with Leap to open a store in Chicago’s Lincoln Park neighborhood in October, initial conversions rates were good, Wichert said, but he realized that the window displays—essentially walls built to showcase certain shoes—blocked passersby by from seeing into the store. That wasn’t exactly ideal when the goal was to attract attention and lure people inside, so Koio had Leap rethink the display and construct an “inviting and approachable” new window setup, Wichert explained.

Leap executed the switcheroo with a “very quick turnaround,” Wichert added, praising the startup for its willingness to “redo some of the work and the capital we put into the store.”

koio chicago store
Leap worked with Koio to open and fine-tune a store in Chicago’s Lincoln Park neighborhood. Leap

It’s that kind of experimental mentality that makes Leap a helpful ally to emerging companies just getting a feel for what the physical manifestation of their brand should be.

Beyond Koio and Floravere, Leap also operates retail for Naadam, the cheeky cashmere brand that opened its first store last fall. That partnership is a little different, Tolia said, because Naadam found the Bobby Redd Agency on its own and designed and developed the Bleecker Street store before handing the reins over to Leap to take over day-to-day-operations. If there’s one point in Leap’s end-to-end solution where clients might want to have more of a say, it’s often around store design, he added—“a key piece of bringing the brand to life.”

Leap likes to work with brands in the $50-million-or-lower revenue range, startups that are starting to get serious traction and can justify operating stores. It’s even better when they’ve already experimented with a pop-up or other IRL retail experience because then they’re familiar with what it takes to be offline, Tolia added, as well as all the benefits that come with bringing customers closer to the brand. “They also see the need for us if they’ve done it themselves,” Levy pointed out.

Though Leap requires some sort of time commitment, often a year, it doesn’t demand enormous sums of capital upfront. “We make money when the brands make money in the stores,” Tolia said.

Offloading store ops to Leap can be the smart way for a startup to spend its money. “I tell them, ‘I’d rather you take $100,000 and invest it in marketing to make that store successful rather than spend $100,000 just to open that store—and then you spend another $100,000 to get people into the store,’” Levy added.

At Leap, store labor relies on gamification to learn the inner workings of each brand. Each associate-in-training receives a lengthy digital document detailing all there is to know about a brand but quizzes help to gauge whether they’re retaining what they’re supposed to be learning. “All of a sudden that 40-page PDF is a series of 10 modules that are interesting,” Levy noted.

Mock shopping trips, or simulated appointments in the case of Floravere, breathe even more realism into training. “Retail associates are incredible ambassadors for the brand. You’ve got to give them bite-size chunks and nuggets of information that they can easily consume, digest, and really train on and deploy,” Tolia explained. “It’s very tempting to throw the encyclopedia at them because theoretically there is so much they should know.”

Of Leap’s 35 employees, 10 hold positions in headquarters and the remainder work inside the six Koio, Floravere and Naadam stores. Associates share knowledge and best practices across stores, regardless of the brand outpost they’re currently staffing, Levy said.

This non-traditional approach helps new hires see that retail store operations can be a meaningful career path, Tolia explained, adding “part of our pitch is that we can mitigate attrition with associates because they can move across brands and grow in seniority.”

Leap’s putting a lot of thought into the technology that make stores hum and that power its backend platform. Tolia stressed that the goal is to be agnostic over time and accommodate whatever brand clients prefer. Today, most of its stores feature point-of-sale technology powered by Shopify and Retail Next to count foot traffic. Floravere Tribeca, however, installed traffic-counting tech from Dor, one of the many ways that Leap is “trialing different things,” Tolia explained. “We need to test and learn with different solution providers.”

Brands have a say in the kind of tech that’s part of the customer’s in-store experience. Floravere installed mounted iPads in its bridal dressing suites so that young, tech-savvy shoppers can capture photos of themselves from every angle in the gowns they’re considering and share those pictures with their social circle.

In-house engineers built Leap’s proprietary backend platform—a “full abstraction of all retail components,” Tolia explained—to integrate with clients’ inventory management, e-commerce and ERP systems, which tend to be from vendors such as ApparelMagic, Stitch Labs and Shopify. Leap plans to incorporate other vendor software as clients demand, he continued, noting that the point of the platform is to be “flexible enough to integrate with their stacks.”

Tolia doesn’t seem concerned with the increased activity these days in the retail-as-a-service space. If anything, he said, “it validates the notion that there’s the future of retail: retail 2.0.”

In the next few years, shopping districts and fabled, store-lined thoroughfares just might feature more of the Leap signature: engaging, small-footprint boutiques that feel like the physical analogue of brands consumers might only have known online.

“Our job to make the most efficient experiences that underpin how the consumer wants to shop in today’s world,” Tolia said.