It would be too easy to say this is a story about Detroit. Rather, it’s the story of urban incubation with Detroit at the center, a prime example of what can happen when retailers take risks, partner with challenged communities and invest heart and soul in bringing troubled areas back to life.
“Urban Incubators: Fueling Accelerated Retail Growth” highlighted Shinola, Whole Foods Market and Detroit Denim Co. during NRF 2018. The session was moderated by Ken Nisch, chairman of JGA, who gave a brief overview of Detroit’s history, a city that once was the richest in the world, thanks to manufacturing. Its residents had more disposable income than anywhere else on the globe in the 1930s, and those residents enjoyed spending that income with retailers such as J.L. Hudson — with about 1.2 million square feet of space — Crowley’s, Kresge’s and Kern’s. By the 1950s, the city had roughly 300 million square feet of space in its urban core, and Hudson’s alone was doing the equivalent of $1.4 billion in sales in today’s dollars.
But times changed; fortunes shifted, and by 1983, all of the city’s department stores had closed. The population had dwindled from 1.8 million in the city limits to 675,000. Detroit was in need of renewal — in addition to retailers who could dream.
Jacques Panis, president of Shinola, is one such dreamer.
The company began in 2012 specifically with the intention of creating jobs in the United States. “Why build a watch factory in Detroit?” he asked. The question instead was, “Why build one anywhere else?”
In the early days, Shinola brought Swiss watchmakers Ronda AG to the city to train workers. “It was unlike anything else in the United States, and remains unlike anything else in the United States,” Panis said. And, he said, it’s the only instance worldwide where watch, audio and leather operations live within an institution of higher learning. Shinola — which now offers watches, journals and other leather goods, bicycles, headphones, turntables, speakers and other items — is headquartered within the College for Creative Studies.
Panis told the story of Willie, formerly the building’s security guard, who now oversees a team of 40, building watches “guaranteed for life.” Then there’s Krystal, the former nighttime janitor who decided she’d like to try her hand at watchmaking, and now leads a team of about 10.
The company’s heart has hit home with consumers, too; the plan was to bring in $180,000 in sales in the first six months — and it did $3 million. It has gone on to surpass $100 million in annual revenue “in an area of town that was once a place of urban decay and crime and drugs and nasty things I won’t get into,” Panis said. “Detroit is an opportunity, a city rich with life, rich with history, rich with heritage — and a city that has a great future ahead of it.”
Whole Foods Market also has seen success in the area; the Detroit store opened almost five years ago. “When we talk about people and urban incubation, what better fuel is there than food?” said Christine Sturch, Midwest store development, design and branding coordinator for Whole Foods. The company discovered in 2010 that the city had the fewest number of grocery stores anywhere in the country — and three times the national average being spent at convenience stores. “It was obvious that fresh, healthy food needed to be part of the Detroit landscape,” Sturch said. “But we’re a business first. We really needed to look inward.”
Whole Foods representatives went to Detroit and began asking questions. They discovered “amazing people doing amazing things, and we sat back and listened to their stories.” Then, rather than come in solely as a competitor, Whole Foods altered its strategy to form partnerships instead; local bakery Avalon International Breads began supplying the store’s breads, with area farms providing produce. In addition, more than 70 percent of the team members are from the area. The store opened in 2013 to great fanfare — and the Whole Cities Foundation has now partnered with numerous cities across the U.S. in such a manner. “Our goal is to make an investment that matters,” Sturch said. “By working together, we created a stronger environment for everyone.”
Meanwhile, Detroit Denim Co. founder Eric Yelsma was building a company based on the idea that consumers were still interested in creativity and handiwork. After being fired from another job in 2008, he made an entirely emotional decision rather than a strategic one; he knew the vast majority of apparel was not made in the U.S. — and even less in Detroit. He moved into a 1,200-square-foot incubator space in 2010 and began making high-quality jeans. The year after, the store opened in the same space, because he desired more control in the customer experience; in 2016, it moved into a larger location.
“The people of the city, the spirit and the soul of the city were remarkable,” he said. “They shaped and formed this business.” Growth has been organic, he said. As might be expected in such an economic situation, there has been little local government support. But Yelsma continued to plow profits back into the business, and 2017 was the first year the company could look toward “more of a controlled growth model.”
That year Detroit Denim produced roughly 20 pairs of its handmade $200-$250 jeans a day; the plan is to scale up to 250 a day within the next few years.
“One thing I see is that a lot of people want a connection,” he said. “They want to know what the product is, and where it came from, and how it was made. I see that hunger and interest and appreciation. And they also want a story.”
And here, that story is about so much more than Detroit.