Showfields and the bankruptcy of the ‘most interesting store in the world’

US-based retailer Showfields, the self-described “most interesting store in the world”, filed for bankruptcy this month and will be restructuring through a form of Chapter 11 bankruptcy created during Covid to help small businesses continue operations, reorganise, and maintain control of finances without creditors taking over.

The news came after a prolonged decline in sales post-pandemic that left the retailer unable to pay back increasing debt.

Showfields entered a loan agreement with the US Small Business Administration for US$500,000, and with financing firm Pipe Technologies for US$1.4 million at the onset of the pandemic in March 2020. A court filing shows that at the time the bankruptcy was put into place, Showfields had a little over US$3,000 in cash on hand and owed as much as US$10 million. 

Showfields closed its Miami and New York City locations in July and September, respectively. It has three remaining bricks-and-mortar locations, in Los Angeles, Washington DC, and Brooklyn. The Brooklyn store will be expanded by 2,500 sq feet, to 14,000 sq feet, to accommodate brands relocating from the two stores that closed. 

In the meantime, Showfields has secured an undisclosed amount of funding from existing investors to pay its outstanding bills, help complete the closure of the Miami and New York stores, and further the company’s restructuring.

How Showfields veered off course

Showfields was co-founded in 2017 by Katie Hunt, Tal Zvi Nathanel, and Amir Zwickel. It acted as a platform for consumers to interact with and learn about a rotating variety of omnichannel and digitally native brands, by way of QR codes. 

The retailer used RetailNext’s software-as-a-service (SaaS) platform to measure consumers’ shopping journeys through the store anonymously, gathering data such as sales figures, traffic figures, customers’ gender and more. 

Showfields opened its first bricks-and-mortar location in 2019 in NoHo, a trendy residential neighbourhood in Manhattan, before opening stores in Brooklyn, Miami, Washington DC, and Los Angeles. 

CEO and co-founder Nathanel told Women’s Wear Daily the pandemic played a role in the business’ collapse, accelerating the inherent lack of flexibility in retail, but he also said it was important for the management team to take responsibility for what happened.

“Did we execute everything perfectly? No. But I am very proud of our business model and our investors. We have learned so much.” Nathanel said. “The leases in Brooklyn and DC reflect what we learned from signing the other leases. They have better terms because they offer us flexibility, price components based on performance, and exit windows for both the tenant and the landlord.”

However, Steve Dennis, president and founder of SageBerry Consulting, a firm that provides strategic advisory services to the retail, fashion, and luxury industries, is skeptical of the impact that Covid had on Showfields’ financial situation. 

“The notion that the pandemic drove the bankruptcy is a distraction,” Dennis told Inside Retail that virtually every retailer with a compelling offering and workable economics has a much larger business this year than it did pre-Covid. Showfields made the mistake of over-paying for real estate and then expanding a concept that had rather limited appeal. 

“While Showfields captured a lot of industry attention, it’s always been a concept in search of a strong value proposition. On the demand side, it’s far from obvious that a lot of consumers see unique and significant value in having a collection of largely unrelated, mostly unknown brands all under the same roof. 

“On the supply or tenant side, from an emerging retailer perspective, as we’ve seen with many successful digital-native brands, once critical mass is achieved, it’s far better to operate your own larger, more prominent, stand-alone or shopping centre-based locations.”

Can Showfields make a comeback?

While Showfields may have scaled a bit too quickly and under unfavourable real-estate agreements, the concept of a modernised experiential shopping remains popular with the Millennial and Gen Z consumer base. 

For smaller companies like Pop Up Grocer, which opened its first permanent bricks-and-mortar store in March in New York City’s West Village, that includes curating a well-rounded selection of independently owned food, beverage and lifestyle products for consumers to explore through in-store shopping and events and via a monthly subscription box.

For department stores like Neighborhood Goods, which operates a similar physical retail model to Showfields, it means inviting omnichannel and direct-to-consumer brands to purchase temporary shelf space to display merchandise or curate interesting product activations for consumers to explore. 

Where Showfields struggled to recover from sales lost during the onset of the pandemic, Neighborhood Goods was able to power through by selling online. In doing so, the department store experienced a 1,000 per cent increase in digital sales from 2020 to 2021, CEO and co-founder Matt Alexander said. 

With the constraints of the pandemic lessened and more Millennials and Gen Z consumers interested in exploring interactive shopping experiences, Showfields could very well achieve a full, if modified, comeback.

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