Michele Varian and Jay Norris are forging a path—and a platform—to revolutionize the relationship between stores and brands.
Stress in the retail market is no secret. Landlords want 10-year leases at sky-high prices; meanwhile, many retailers are returning to a consignment model because their rents have made it harder to buy inventory. At the same time, brands have gained direct access to consumers online, minimizing the margins for retailers, whose curated points of view may help a customer discover product but whose shops are no longer the guaranteed point of sale. Enter Guesst, an online platform developed by Michele Varian and Jay Norris that brokers pop-up opportunities between retailers and brands.
Norris was working in New York real estate as a tenant representative when he reconnected with his Detroit high school classmate Varian in SoHo, where she has run a retail store since 2001. After a collaboration that created retail opportunities for product designers micro-manufacturing in Detroit got them talking about the barriers to brick-and-mortar success, the pair set out to create a platform that would alleviate the pain points of the retail journey.
Guesst acts as a matchmaker between retailers and brands (and sometimes landlords) by leveraging existing retail space to host branded experiences in exchange for a placement fee. The result is a reframing of the classic retail-brand relationship: Retailers can count on a guaranteed monthly payment (which helps alleviate rent), and brands can get into the brick-and-mortar game without having to mark up their product. Guesst launched to select partners in New York in late 2018, with plans to expand to D.C., Los Angeles, Chicago and Atlanta in early 2020.
In addition to connecting makers and vendors, Guesst also eliminates the extra bookkeeping a shop-in-shop would otherwise require by handling inventory management and sales and tax reporting; it also creates transparency for all parties through weekly updates—and perhaps most notably, ensures that brands get paid weekly for their portion of all sales. “We wanted to build something that gets under the hood and makes it easier for people to access retail as a whole,” says Norris of the two-year process of developing the platform with Varian and their small team.
Varian’s insights into the challenges retailers and brands face shaped the functionality of Guesst’s tools, and she beta-tested the platform in her own shop. One of her priorities was creating access for brands that didn’t fit into the existing retail model. “Direct-to-consumer brands and independent makers who started as Etsy shops both want to move into physical retail, but have not built their businesses to accommodate wholesale margins,” she says. Many were only able to provide 10 percent of their retail sales, not the 50 percent she typically requires. On Guesst, brands pay the host retailer a monthly fee—starting at hundreds of dollars rather than the tens of thousands that a stand-alone storefront can cost. In exchange, the brands pocket a much larger percentage of their sales. Using the platform also means brands don’t have to sign leases or hire and train staff, but they still get the weekly reporting—and the weekly paycheck. “Guesst creates opportunity and balances risks for all parties,” says Varian. “Our product allows them to do an activation in one city for three, six or 12 months, then take the same inventory to another city to build brand awareness.”
Norris compares the platform to Airbnb, in that it delivers underutilized real estate to an interested party. But from a functionality perspective, he says it’s more like Uber: “You can get in the car, but then the driver takes you to your destination,” he explains. “With Guesst, we’re helping you drive retail. We’re assisting you in the journey.”
Photo: Courtesy of Michele Varian