NEW YORK—Innovation occurs when the purpose of a concept is changed.
Justin Kerzner, president/co-founder of Naked Retail Group, knows this to be true. He came up with an idea for a pop-up store that would showcase different consumer brands. Little did he know that he’d be making a foray into the hospitality sector.
“About three years ago, we took a retail space and we had a small pop-up there for two months. The idea was to share the space with different brands and to collaborate and get more exposure as well as reduce the costs of doing so,” said Kerzner, who runs the company alongside Bruce Gifford, a partner and advisor. “It was for small brands that didn’t really have the capacity to handle design or build a staff. We handled it ourselves and charged a partnership fee upfront, we designed and built the space, and ran the store. We use individual point-of-sale systems and they connected directly with the brand.”
Kerzner and his team would eventually simplify the model—and since they knew what the upfront costs were, they were able to evolve, and the concept gained traction. Recently, Naked Retail Group launched an inventive retail experience within the 11 Howard hotel.
“We created Naked Shops, which is collaborative. We have two stores—one inside the 11 Howard and the other in Nolita on Mulberry St., which is the flagship with 4,000 sq. ft. of space,” said Kerzner. “The second half of our business is design consultancy, which came out of need. We help with standalone design and experience. Our services range from a pop-up to full-fledged store.”
Kerzner has long been enamored with 11 Howard, which is located in Manhattan’s Soho neighborhood and opened in 2017. “I’ve been following its growth and the events they host there. Between the hotel’s restaurant and club, they do an amazing job from its design aesthetic to the quality it delivers. I’ve followed their retail offerings, including Cotton Citizen, which was on-site for six months. Later, I connected with a real estate broker in our Nolita store who represents the ownership at 11 Howard, and we discussed the spaces he had to offer.”
The retail space at 11 Howard proved to be an ideal fit. With its lobby and on-street location, there is lots of exposure to hotel guests and passersby.
“It’s a small space and easy to grow into and manage with a team of five employees,” he said. “The best thing is the door to the street and double doors that enter the lobby. We are the only thing seen in the lobby. The hotel experience starts on the second floor. With 240 guestrooms and a great customer demographic, it’s a great location. We’re right in between some of the best consumer brands in the area. In terms of longevity, we’re here for a three-year booking and we hope to expand past that.”
The Naked experience is collaborative. According to Kerzner, it’s the company’s bread and butter.
“We really focus on curation. In our opinion, getting a brand to pay a lot of money to be in the space is not the end goal. We can handle a little bit of financing in the short term to grow our business,” he said. “We seek out unique brands and initiatives that our consumer and general consumer would like to discover. In terms of discovery, we’re good at curating big and small brands. We’ve got Bang and Olufsen in our Nolita space coupled with newer cannabidiol (CBD) brands and a medispa for a facial. It’s a good mix.”
Kerzner is also aware of competitors and strive to ensure consumers can understand and appreciate an individual brand.
“Our sweet spot is not putting too many brands in the collaborative space. Other concepts are packing in a lot of brands into one section,” he said. “You’ll walk into a 2,000 sq. ft. space and see eight brands while competitors might have 50 brands. We’re all about brand, product and concept education. When consumers walk into our store, they appreciate the knowledge our associates have; it’s very different from a general retail setting, which is missing out on brand education and storytelling.”
In the hospitality sector, Kerzner and the team plan to expand to other hotels. “We’re interested in boutique properties or potentially going to a larger chain to help us grow and scale,” he said. “With the expansion, we don’t want to sacrifice quality or cheapen the retail experience.”