Those who step inside any of the 13 Shinola stores across the U.S. and in London will discover quite an eclectic mix of merchandise: luxury watches and leather bags are right there next to bicycles and paper journals. Such a mix may seem to have been thrown together on a whim, but it all makes perfect sense to the executives at Bedrock Manufacturing Co., the Plano, Texas–based private equity firm that conceived Shinola in 2011. Among the drivers behind this upscale retailer was a desire to manufacture high-quality products in the U.S. and create jobs.
Inspiration for the concept came as several trends were converging. People seem to care about where their products come from, Bedrock executives began observing, even as consumers revealed a growing preference for products made in the U.S., all of this combined with a demonstrated desire to shop locally, according to COO Heath Carr. “The brand appeals to many people for many different reasons,” he said.
Shinola set up its headquarters and manufacturing base in Detroit, and then worked with Swiss watchmaker Ronda AG to begin making its core product: luxury watches that go for between $475 and $1,500 each. Production was up and running by 2012, and sales were humming by the summer of the following year, through wholesale and online channels and at the first two stores, which opened in Detroit and New York City.
Growth continues across all three channels, and the merchandise lines have expanded, though watches remain at the core and account for most of the sales. Shinola is researching potential partnerships with the aim of introducing eyewear and jewelry to the lines. Bicycles may certainly seem a most unlikely choice for an accessories retailer, Carr concedes. “It’s not a situation that we think we are going to be the next Trek, or anything like that,” he said. “It was creative, and it was additive to the brand.” Then, too, he points out, there are people who do view bicycles as an accessory as well as a mode of transportation or form of exercise.
The one thread that ties all this together continues to be that concentration on U.S.-made products. “The American-made story and the quality behind it really resonates with customers,” said Steve Ferris, a JLL executive vice president based in Boston. Ferris is part of the JLL team that provides real estate consulting services to Shinola in the U.S.
Shinola also keeps building up its wholesale business, which includes the likes of Bloomingdale’s, Nordstrom and other major department stores, along with its network of stores. The company has plans to open about 10 stores in North America this year and roughly a dozen per year going forward. “We think at maturity this has somewhere between 75 to 100 stores in the United States,” said Carr. Shinola prefers urban high-street locations in major cities, notably areas that are trendy or seeing revitalization. The chain has committed to a lease within the redevelopment of the former Shaker Plaza shopping center, in Shaker Heights, Ohio, set to open in mid-2017. This mixed-use redevelopment project in that upscale Cleveland suburb will comprise roughly 100,000 square feet of retail space, 60,000 square feet of offices and 102 apartments in its first phase.
Shinola stores can be as large as its 11,000-square-foot flagship in Detroit and as small as 500 square feet, with -designs intended to fit the particular neighborhood and the building. “The goal is to find buildings where we can highlight the design or architecture that is already there,” said Carr. “We don’t want any two to be the same. We want them to feel like they are part of that community.” The store in Washington, D.C., was once a Studebaker showroom. Some of the original features were repainted but otherwise left intact, Carr says.
“What is important to them is that their stores are part of the community,” said Ferris. Shinola makes a point of including other uses within its stores to encourage customers to spend more time there. The Ann Arbor, Mich., store includes a community room, while the New York City store, in the trendy Tribeca neighborhood, features an in-store café. “They want their stores to be an integral part of each community, not just a store that someone comes in, buys something and leaves,” he said.
Expansion into Europe and Asia is on the radar too, but for now the focus will remain on wholesale and retail expansion in North America. “We believe the opportunity in the U.S. is very real and right in front of us, and we need to execute that flawlessly before we begin a serious international rollout,” said Carr. That said, though, Shinola has made a start at expanding internationally. The company opened a business office in 2014 in Amsterdam, the Netherlands, to help build its wholesale business in Europe. Early the following year the company opened the London store, in Soho, and its first Canada store is set for later this spring, in Toronto.
Meanwhile, the company is still in infancy with particular regard to distribution in the U.S., Carr says. “We’ve got to further that penetration here before we really expand abroad,” he said, “but we get requests daily for expansion around the world.” SCT
For leasing, contact Michael Timlin, real -estate manager, at mtimlin@shinola.com.