You can’t have too many shoes. Or enough venture capital. At least if you are trying to do what Ben Fischman is trying to do.
Fischman, a serial entrepreneur whose first startup was the Lids baseball cap chain, has raised $16 million for his latest venture, M.Gemi, a Boston-based online retailer that sells high-end Italian-made men’s and women’s shoes at prices far lower than their couture counterparts. The company has brought in a total of $47.2 million from investors.
In addition to Tuesday’s funding announcement, M.Gemi said it plans to open its second “fit shop,” an outlet in the Prudential Center where customers can check out its latest offerings before buying online.
After a career in Boston retail that started nearly 25 years ago, Fischman says he’s come full circle with a brick-and-mortar store.
“You hear so many people blaming e-commerce for the failure of the malls or traditional retailers,” Fischman said recently on the phone from M.Gemi’s office in Florence. “It really has to do with these retailers who thought they would never change and refused to disrupt their own business.”
His new goal: To use the lessons drawn from e-commerce to create a smarter in-store experience for shoe shoppers. He calls it “disrupting luxury.”
Fischman started in the fashion business as the cofounder of Lids in 1993, launching the chain from his Boston University dorm room while he was still a junior. After opening the first Lids kiosk in the Atrium Mall in Chestnut Hill, the brand eventually grew to over 800 outlets across the country. (Retail runs in the family; Fischman’s father is an executive at New England Development, one of region’s largest mall developers.)
It was in Fischman’s next job, at SmartBargains.com, an online clearinghouse for clothing, jewelry, and home goods, where he began to understand e-commerce. The SmartBargains site launched in 2000, but failed to gain traction, and its owners decided to sell in 2008. Fischman, who was working as an executive for the company, scooped it up for $10 million, then used its resources to restructure a new site for an upscale buyer.
The launch of that site, called Rue La La, coincided with the arrival of several flash sale sites, which offered overstocked inventory from high-end retailers at discount prices. In a post-recession era when shoppers wanted luxury without paying full price, the company went head-to-head with Groupon and Gilt Groupe.
Those experiences led Fischman to learn about the importance of brand-building, and using e-mail marketing to add drama and drum-up business. It also led him to appreciate the unique infatuation a shoe buyer has when they’re on the hunt for the perfect pair.
“The word we use is obsession. We love our clients to be obsessed with what we do, whether it’s the 15-year-olds wearing baseball caps, or being daily obsessed with Rue La La sales,” he said.
Fischman launched M.Gemi two years after stepping down from Rue La La in 2013. He established partnerships with Italian shoe factories, many of which had been passed over as larger luxury brands began move their manufacturing to Asia. By tracking trends, the company’s designers and data scientists use a rapid supply chain to gather real time information about what the customer wants, and to then determine what is and isn’t selling.
Now the company is bringing that same data-driven sensibility to storefronts. The Prudential Center store is M.Gemi’s second fit shop; the first opened in New York City’s SoHo neighborhood in December. Like e-retailers Warby Parker, Bonobos, and Everlane, it’s using a physical outpost as a chance to introduce shoppers to the brand.
“Retailers are finding that having an omni-channel strategy is beneficial,” said Jeff Donnelly, the managing director for real estate equity research at Wells Fargo’s Boston office. Research has shown that having both a physical and online presence spurs sales on both channels, he said. “Some people see it as a form of 24/7 advertising.”
But that doesn’t mean shoppers will go home with a pair of M.Gemis, which average $250 a pair, upon first meeting.
“We did not want it to feel like a traditional retail shoe store,” said the company’s president and cofounder, Cheryl Kaplan. While so many luxury stores feel off-limits to shoppers, the fit shops aim to be accessible. “It’s not transactional, it’s a place they like to go.”
That thinking manifests in many ways: There are no cash registers or counters, instead, associates gather shoppers’ fit and style preference data on tablets. Rather than pay rent to inventory thousands of styles and sizes, the stores will have only two of each shoe on-site; should you decide to buy, the company will ship your pair from their warehouse in a few days. Associates use their tablets to place orders, but they’re also noting shopping preferences — a predilection for pumps perhaps, or a fondness for kitten heels — and use that data to steer purchases online later. The store will also echo the online drama of the weekly “drops” of new products in order to lure customers in.
Fischman says the new fit shops and funding — which includes a new investor, Burda Principal Investments based in Germany — will help the company expand its footprint, both in the United States and abroad.
“There are no shortcuts to building a brand,” he said. “I learned that lesson a long time ago and it still holds true.”
Correction: An earlier version of this story misstated the amount of venture capital raised by the company.