Hope & Henry is stepping out.
The organic children’s wear collection will open more than 15 stores at Simon Property Group shopping centers through the end of the year. Hope & Henry in 2017 began selling on Amazon, and the following year, bowed at The Edit @ Roosevelt Field, Simon’s incubator platform for emerging brands. The August-to-November stint was so successful, Matthew McCauley, Hope & Henry’s founder, decided to invest in permanent brick-and-mortar.
McCauley’s strong children’s wear credentials include serving as chief executive officer of Gymboree Group from 2006 through 2012. He came out of retirement to launch Hope & Henry with the goal of delivering high-quality, well-designed and affordable clothing that embraces sustainability.
Ironically, Hope & Henry is capitalizing on the opportunity to capture market share in the children’s wear category following Gymboree’s January Chapter 11 bankruptcy protection filing. The Children’s Place subsequently said it would acquire the Gymboree and Crazy 8 nameplates, while Gap snapped up Gymboree’s Janie and Jack brand, but store closures seem inevitable.
“It’s a massive undertaking,” McCauley said of the new stores. Following a test in June, the majority of units will open on Aug. 1, with several locations bowing in September in primary centers such as Aventura Mall, Aventura, Fla., and Sawgrass Mills, Sunrise, Fla.; The Galleria, Houston; Roosevelt Field, Garden City, N.Y.; Fashion Valley, San Diego and Del Amo Fashion Center, Torrence, Calif., as well as properties in Boston and Philadelphia. “The big factor that motivated me to come out of retirement was creating a new business model that treats factory workers differently and can be good to the environment.
“With the launch of stores, we’ll truly be omnichannel,” McCauley said. “We’ve got our own web site and will continue to be sold on Amazon Prime. Our stores will offer a unique customer experience, with a seating area where parents and kids can relax. Everybody will be clamoring to get onto the sofa and the kids will be on the tablets.”
For now, there’s no wholesale strategy. Hope & Henry’s business model was designed to remove costs from the supply chain in order to price the collection sharply.
“We don’t have a corporate office,” McCauley said. “We have a very small team of moms, who work remotely from their homes. We dropship products directly from factories at a small distribution center, which allows us to cut our overhead. A portion goes to Amazon and small portion sits at the distribution center. We’ve also decided to take a smaller margin. We want to be more generous with factory workers and we’re trying to create trust with customers so that they can buy a great quality product at a fair price.”
McCauley said Hope & Henry typically doesn’t do promotions. “Our strategy is to let consumers touch, feel and see the quality,” he said. “Consumers are smart enough to recognize quality, and say, ‘This is fair.'”
While he’s done it before, it seems that operating Hope & Henry as a listed brand with all the attendant oversight and pressure, would be difficult for McCauley. “The challenge with public companies and certain types of investors is the relentless push to grow profits,” he said. “I’ve been funding the company completely by myself. That doesn’t mean we wouldn’t take on investors in the future. At this point, it’s just me.”
Simon chief operating officer of leasing Eric Sadi, said, “Hope & Henry saw dramatically higher productivity when they effectively supplemented their online distribution with their brick-and-mortar experiment at The Edit @ Roosevelt Field. We’re excited to give customers an opportunity to interact with a brand previously constrained by online distribution.”