Even as consumers increasingly opt to shop from the comfort of their own home, and the ongoing "retail apocalypse" claims new stores seemingly every month, Chicago startup Foxtrot is doubling down on physical retail stores. And it just raised $17 million to bring its corner stores and cafes to more cities.
Foxtrot launched in 2013 as an online-only food and alcohol delivery service. But the startup quickly found that brick-and-mortar stores could serve not only as warehouses for online fulfillment, but they've become bustling centers for neighborhood shopping.
Foxtrot now has seven retail stores in Chicago and two in Dallas, where it sells everything from craft beer, wine, gifts and everyday essentials, along with offering coffee and prepared foods. The new $17 million round of funding will allow Foxtrot to open three new stores this spring: two in Washington, D.C. and another in Chicago's Streeterville neighborhood. The startup said it plans to announce additional openings later this year.
The funding round was co-led by Imaginary Ventures and Wittington Ventures. Other investors include Fifth Wall, Lerer Hippeau, Revolution’s Rise of the Rest Seed Fund, M3 Ventures, The University of Chicago, Collaborative VC, Wasson Enterprise, Bluestein Associates and Barshop Ventures.
Foxtrot doubled its revenue in 2019, CEO Mike LaVitola said in an interview, and its breakdown of in-store sales versus online is about 50-50. Many of Foxtrot's customers shop both online and at its corner stores, something LaVitola attributes to the startup's loyalty program that offers free delivery for online shoppers and free coffee while in-store.
Foxtrot has grown its corporate office to 35 employees and expects to double that by the end of the year, LaVitola said. The startup employs another 200 across its retail stores.
Foxtrot's physical retail growth puts it in competition with big-name brands like Starbucks, 7-Eleven and Amazon's cashierless "Go" stores. But unlike Amazon's take on reinventing the corner store, Foxtrot doesn't believe high-tech cameras and sensors are what shoppers necessarily want.
"Overall, we’ve gone for that warm, hospitable vibe versus the overly techy, camera-infused [store]," LaVitola said. "I think when customers are leaving their house, that's what they're looking for. They're staring at their screens all day, so if they’re going somewhere in real life they want it to be warm and inviting. Not just this cold, tech-focused environment."
Foxtrot, which last raised a $6 million round in 2018, focuses instead on providing shoppers with knowledgeable staff and friendly baristas, LaVitola said. And its "omni-channel" approach to reaching customers both online and in-store has investors betting that Foxtrot may be building the corner stores of the future.
"Foxtrot has built a brand that redefines the perception of what convenience stores can and should be for today’s consumers by marrying its digital roots with brick-and-mortar, focusing on community, and bringing people into the stories around their product,” Nick Brown, co-founder and managing partner at Imaginary, said in a statement.
