Foxtrot Raises $100M for Expansion
FoxTrot thinks convenience stores and corner markets need a makeover, and now it’s got more cash to make that a reality. The retailer announced today that it has raised $100M to help expand into new markets and to invest into its ecommerce business.
What is Foxtrot?
Launched in 2014 by founders Mike LaVitola and Taylor Bloom as an ecommerce play. It has since expanded to launch 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, ” said VP of merchandising Ashley Alden at NOSH Live Winter 2021. While 40% of its offerings are locally sourced, the goal is to offer both low and high end items, Alden added. The retailer has also garnered customer attention for its co-branded or private label offerings, which often are produced in collaboration with cult or previously direct-to-consumer only companies, and account for 30% of its assortment.
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 still mainly consists of “gift” offerings.
What Are the Raise Details?
Foxtrot raised $100 million in, what the company is calling, its 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, Instacart, as well as e-commerce software company Shippo.
What is the Raise For?
Foxtrot has big plans for expansion and that square footage doesn’t come cheap, particularly since the retailer prioritizes high traffic areas. Over the next two years, the chain has 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 a particular 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,” Vitolla said in a release. “Our investments in technology will enhance our retail experience and drive omnichannel growth.”
What Does this Mean and What to Watch?
Younger consumers have grown up in a world where 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, and not just a cookie-cutter retailer trying to appeal to everyone.
The ecommerce 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 brick and mortar 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.
