By  on July 4, 2012

On the Fly is upgrading its real estate.

The San Francisco men’s lifestyle store, which branched out in 2010 to start a private club called Wingtip about a block away from its current location at 1 Embarcadero Center, has signed a 10-year lease to put the store and club under one roof inside the historic eight-story Bank of Italy building at 550 Montgomery Street. The new 6,000-square-foot store will occupy the street and basement levels of the building, and change its name to Wingtip. The 13,000-square-foot club will occupy the 10th and 11th floors. They will open in September and December, respectively.

“I had the founder of Crate & Barrel [Gordon Segal] tour the space last year, and he said, ‘As soon as you get them in the same building, you are going to see a huge increase in sales,’” recounted Ami Arad, who founded On the Fly as an e-commerce business in 2004 before heading to brick-and-mortar retail in 2008. “He didn’t have to tell us that, but it was good to have it validated.”

The idea behind Wingtip was that it would provide a place for On the Fly shoppers to hang out. Full members pay a $2,500 initiation fee and then $200 a month in dues, but the dues can be redeemed for merchandise at On the Fly. There are about 350 members now and, at the new location, they will have access to a bar, a 3,000-bottle wine cellar, a business center, a rooftop deck, billiards room, and exclusive parlor and dining rooms.

By attracting customers who find out about On the Fly through Wingtip and by gaining a larger wallet share of existing On the Fly customers, Wingtip has helped boost On the Fly’s sales. Although there are no price tags, everything at Wingtip is available for purchase — and Arad has tried out clever ways to expose members to other items they might want to buy. For example, there is a library of 60 pocket squares that members can borrow. “We have sold more pocket squares in two years to members than we sold out of the store before,” said Arad, who has also begun a cuff link library and wants to do the same for watches.

Arad won’t have to do much to Wingtip’s new digs in the Bank of Italy building to transform the space for the store and club. He’s retaining the high ceilings, enormous windows and extensive marble and brass work that made the building that’s mostly housed banks throughout its 112-year history a national historic landmark. “If you tried to build a store like this today, it would cost you millions,” said Arad.

Sixty percent of On the Fly’s sales come from apparel, but the store stocks an extensive range of lifestyle offerings, including belts, pens, grooming items and home furnishings. Arad described a typical customer as an affluent male in his mid-30s to mid-40s or the woman who shops for him. Among the store’s top brands are Bills Khakis, Peter Millar, Michael Toschi, Agave Denim and Mulholland Brothers.

“Over the last two years we have seen pretty explosive growth,” said Arad, who forecast On the Fly would generate $5 million in revenues this year and mentioned that Men’s Wearhouse cofounder Richard Goldman recently joined the board. “We grew 65 percent last year over the year before, and we grew 30 percent the year before over the year before that. This year, we are expecting to grow 20 to 25 percent. Next year, we expect huge things with the new store.”

Arad isn’t content on keeping the concept in San Francisco. In two years or so, he said he anticipates Wingtip will spread to two more major metropolitan cities, perhaps Los Angeles and Chicago, and grow to six locations in 10 years. “We would love to expand within the Bank of Italy building if we can and figure out the offering that is best and roll that out to other cities,” said Arad.

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