FoxTrot believes convenience stores and corner markets need a makeover, and now it has more cash to make that a reality. The retailer announced Tuesday that it has raised $100 million to help expand into new markets and to invest into its e-commerce business.
What is Foxtrot?
Foxtrot launched in 2014 by founders Mike LaVitola and Taylor Bloom as an e-commerce play. It has since expanded to 16 brick-and-mortar stores in Chicago, Washington, D.C., and Denver. In conjunction with these efforts, the company has expanded its delivery offerings in those markets, offering rapid, on-demand delivery and 5-minute pickup from its stores, which also operate as “mini fulfillment centers.”
According to a release, orders using Foxtrot’s 5-minute pickup have increased 250% this year, with cafe orders increasing at 375%.
Along with familiar staples, within each store Foxtrot offers artisanal or locally sourced products that can encourage “trend exploration, ” VP of merchandising Ashley Alden said at NOSH Live Winter 2021. While 40% of its offerings are locally sourced, the goal is to offer both low- and high-end items, she added.
Each store also transitions its offerings to reflect where consumers are in their days. For example, a coffee bar in the morning might offer wine and beer at night. The need states are a reflection of Foxtrot’s own customers, Alden said, who are typically between 25- to 35-years-old. The e-commerce roots have remained via its Foxtrot Anywhere store, which primarily offers “gift” offerings.
Details of the Raise
Foxtrot raised $100 million in a Series C round. D1 Capital Partners led the round, with additional participation from existing investors Monogram, Imaginary, Almanac, Wittington, Fifth Wall and Beliade Lerer Hippeau and Revolution.
The raise brings the retailer’s total funding to-date to $160 million.
D1 has invested in other retail plays, including Gopuff and Instacart, as well as e-commerce software company Shippo.
What is the Raise For?
Foxtrot has big expansion plans and that square footage doesn’t come cheap, particularly since the retailer prioritizes high traffic areas. Over the next two years, the chain plans to add 50 new locations, including 22 stores this year (Boston and Austin among them), to be followed by New York, Nashville and Miami in 2023. In conjunction with this expansion, rapid delivery will also grow, requiring an additional investment into engineering and fulfillment.
A press release noted the company plans to “double down” on its private label offerings. In total, Foxtrot plans to add 200 new private label SKUs, with an emphasis on ready-to-eat cafe meals and wine. Alden noted at NOSH Live that the company’s aim is to change consumers’ perception of private label by using data to determine the top categories and then reverse engineering products that are not only differentiated but also emphasize quality.
“With this new round of funding, we’ll continue to accelerate the expansion of our brick-and-mortar presence, enter new and emerging markets and double down on new store formats that answer consumer demand for immersive programming and highly curated assortment,” LaVitola said in a release. “Our investments in technology will enhance our retail experience and drive omnichannel growth.”
Why It Matters for Bev-Alc Producers
Alcohol accounts for 40% of Foxtrot’s overall sales, and beer accounts for 10-15% of sales, which varies by store.
During a Brewbound Live 2021 conversation, LaVitola shared tips for beer industry suppliers looking to gain placement in Foxtrot stores.
“The first one is it has to taste amazing, right? I mean, it sounds basic, but everything starts with tastings and blind tastings,” he said. “Anything that we’re adding now is taking shelf space away from something that’s previously there, and so, it has to have a point of view. It has to fit a niche.”
Foxtrot prides itself on bringing new and undiscovered products to market, and serving as an aspirational retailer for the industry.
“The thing that we spend a lot of time on and try to stay true to is being either the first retailer for a lot of new and emerging brands, or wanting to be the shelf space that all the best brewers and other alcohol providers want to be at,” LaVitola said. “We are very open and receptive to everything new happening out there.”
What to Watch For
Younger consumers have grown up in a world in which the “Starbucks” effect of getting what they want, exactly how they want it, has always been true. When a millennial or Gen Z consumer visits a Foxtrot, it feels like entering a store that has been customized with them in mind.
The e-commerce play is also unique, with Foxtrot itself now an identifiable brand to consumers who don’t live in markets with brick-and-mortar stores. That online expansion can give the retailer greater geographic distribution than simply adding new stores — and is cheaper.
Foxtrot seems committed to the 15-minute delivery offering, but it’s still to be determined if this will remain unique as more rapid-delivery services also expand, and stalwarts such as Instacart and Uber begin to also play in that space. There’s only so much room to decrease that timeframe lower though, so Foxtrot will have to determine what makes their delivery options unique.