Can this startup reinvent the corner store without killing it?

In the midst of what analysts have called the retail apocalypse, and the accompanying technological changes reshaping the shopping experience, few types of stores are safe. Even the traditional corner store, or bodega, has been the target of reinvention and Silicon Valley-style disruption.

Amazon Go, a high-tech experiment from the retail giant, seeks to eliminate cashiers and bring the company’s analytical might to the world of convenience stores. And Bodega, a widely panned concept from the tech world, aimed to replace the shopping experience with what amounted to a glorified, app-controlled vending machine.

A startup out of Chicago named Foxtrot sees the same opportunities in today’s shifting retail and technological environment. The small chain of upscale convenience stores focused on local products, which started in 2015 and now has four stores, believes it has an answer for making retail more efficient, profitable, and enjoyable. After a new $6 million funding round, it’s poised to expand to more locations this year, adding three to four more locations in Chicago as well as its first in another city.

But instead of totally reinventing the shopping experience, it looks to make it more curated and “experiential” (and expensive). It’s less revolutionary, and more about simply adapting technology and bringing more analytics to bear on an everyday shopping experience.

“We want to infuse the corner store with hospitality and a sense of place,” says Foxtrot CEO and co-founder Mike LaVitola. “Bodega came from a Silicon Valley approach; their idea was a piece of furniture. Of course we need people in stores. That’s how everything works. You can leverage technology, but there’s a lot more to it.”

Foxtrot

Foxtrot’s approach, focused on stores that LaVitola describes a having a “coffee shop vibe,” comes from a different approach. When LaVitola first explored the idea of creating a new retail startup a few years ago while attending business school at the University of Chicago, he saw a few trends pointing at the value of local, approachable retail.

Amazon and e-commerce had taken away the power of the big box stores, so to survive this shift, retailer needed to provide a better experience. While many stores were suffering, retail in walkable neighborhoods that helped people get out of the house, have a coffee, and explore, could survive and even thrive.

A smaller format, he decided, was better situated to succeed.

One of the best models for that was the existing corner store. They had the right locations, and had figured out exactly what products people wanted: beer and wine, coffee, snacks, and daily essentials. Foxtrot would just deliver a better version of these items, more local, artisanal items such as fresh pastries from local favorite Bang Bang Pie, locally brewed coffee from Metric, and microbrewed beer.

Initially, Foxtrot existed as an online delivery service only; users downloaded the app for free, and paid a $5 fee for each on-demand order, which included a tip for the courier. DiViola saw that services like Amazon Instacart were designed to scale up and satisfy everyone, while restaurant delivery could easily provide meals. Nobody was offering a pared-down, simple service, the 3-4 items that everybody needs.

Since Illinois law made it illegal to deliver alcohol out of a warehouse, Foxtrot set up a staging location near the fast-growing Fulton Market neighborhood, where they began operating. As they started delivering and paring down their menu, the founders realized the model worked: people liked the idea of an updated corner store where you could get a nice bourbon, ice cream, and a toothbrush for the night. They also realized they could utilize the delivery staging area as an updated corner store.

Over time, the walk-up traffic matched online sales. Now, Foxtrot’s sales are split 50-50 in-person and online across all their stores, which include locations in Lincoln Park, River North, and Wicker Park. The locations, all trendy, high-rent neighborhoods in Chicago, speak to the company’s strategy of targeting high-income shoppers in dense, walkable, commercial corridors. Each location, in effect, is two businesses in one.

Foxtrot’s hybrid model supports both parts of the business in a virtuous circle. Walk-up traffic leads to more deliveries, online customers enjoy browsing in person, and increased data from both customer groups can help the company update inventory and scout out new locations. Since expanding to the second store, Foxtrot has invested in the retail experience. The startup hired Studio K Creative, a local design firm best known for working for Chicago’s Boka Restaurant group. The result is a series of open, airy spaces, ideal for browsing. In the same way that many clothing retailers have reimagined physical stores as ways to inspire online purchases, Foxtrot has done the same for more everyday items.

“Instead of stark, fluorescent lighting, our stores are really comfortable, with good music,” he says. “They’re place to explore, as opposed to somewhere you get in and out as quickly as possible.”

By selling high-end spirits and fancy coffees, LaVitola and his co-founders aren’t creating the same affordable, egalitarian type of shopping experience that bodegas and corner stores provide. But unlike many other new examples of retail startups, Foxtrot isn’t trying to eliminate or automate the shopping experience.

“Many tech firms look at this and ask how we can scale it, and traditional companies have an old-school retail perspective,” says LaVitola. “I think you need both angles to make it work. We want to infuse the shopping experience with hospitality and a sense of place.”