Neighborhood Goods, which positions itself as the "modern alternative to — and evolution of — the department store," on Thursday announced $8.8 million in expanded seed financing, according to a press release emailed to Retail Dive.
The company also has plans for a location in New York later this year, which follows the opening of its first in November in the Dallas area, according to the release.
The latest funding round, which brings the venture's total to $14.5 million, was led by previous investor Global Founders Capital and included previous lead investor Forerunner Ventures, along with Maveron, NextGen Venture Partners, Revolution's Rise of the Rest Seed Fund, Ground Up Ventures, Capital Factory, Dollar Shave Club CEO Michael Dubin and others.
The departure of Lord & Taylor from New York and of Macy's from several U.S. cities has served as a signal of the decline of the U.S. department store, but Neighborhood Goods insists that the model just needs an upgrade. The latest infusion by investors indicates the potential of that, according to Co-Founder and CEO Matt Alexander.
"Since we announced Neighborhood Goods last Spring, we've been fortunate, probably undeservedly so, to be subject to a significant amount of excitement about — and interest in — our concept," he said in a statement. "As a reflection of that, in the Fall, ahead of our launch, our investors saw an opportunity to capitalize on that excitement and to accelerate our expansion plans for 2019 by driving additional seed funding."
The company's existing location, in a 255-acre open-air shopping center, Legacy West, in Plano, Texas, showcases a series of cult and pure-play e-commerce brands, including sneaker marketplace Stadium Goods, Walmart's online mattress brand Allswell, Reese Witherspoon's Draper James, Hers, A. N. Other, Hook + Albert, Le Specs and others. Some brands, like fragrance company Otherland and framing e-retailer Framebridge, provide elements for the store itself, according to the release. Cookware from Made In is found in the retailer's restaurant, for example.
While Lord & Taylor has appeared to throw in the towel, selling off its iconic New York City flagship and chasing sales through Walmart's e-commerce site, Macy's has worked to reinvent itself. Like Neighborhood Goods, Macy's last year partnered with DTC brands through its new Market @ Macy's, invested in retail-experience startup b8ta and acquired retail concept Story.
Neighborhood Goods, however, has the advantage of working outside the scrutiny of Wall Street and without the albatross of a massive brick-and-mortar footprint. Its ability to attract up-and-comers is part of what prompted investors to continue their support, according to Global Founders Capital's Don Stalter. Expect more expansion in the future, he also said.
"After investing in Neighborhood Goods' initial seed round, we were excited by the quality of brands they began to sign, in addition to the trajectory for their first opening and beyond," he said in a statement.