The week before Appear Here shut its offices back in March, $14m (£10.7m) worth of investment landed in the company bank account.
The timing, says founder Ross Bailey, was “sort of poetic”. Days previously, the retail marketplace – which has seen triple-digit growth year-on-year since its launch in 2013 – was celebrating the close of a funding round more than triple the value of its last Series B raise with investors including JLL Spark, Octopus, Forward Partners, Meyer Bergman, Matthew Freud and Concrete VC. A week and a half later, everything Appear Here represents became precisely what the world was suddenly shying away from.
“There wasn’t a single question from 100 staff globally about Covid at our meeting in early March,” says Bailey. “A week-and-a-half later I had shut down our offices and we were facing a situation we could never have imagined. What we do is about shops, city life, the tangible; and suddenly everyone was escaping cities and shutting physical retail spaces. Everything we stand for – human connection, the real world, offline experiences – was at odds with the rest of the world.”
To make matters worse, Bailey contracted Covid-19 himself and was in bed for five weeks trying to come up with a workable strategy for a business that, for the foreseeable future, would not be operational. All of this with a sizeable investment sitting in the company’s bank account, waiting to be deployed.
Times were tough and the usually optimistic Bailey concedes he felt like a failure and found himself wondering if life would ever be the same.
“Suddenly finding myself alone in my house, in bed with Covid drawing up lists of who needed to be furloughed made me so ill that I got to the point where I could barely breathe,” says Bailey. “It was exhausting. I remember one day when I felt so awful and like such a failure, it didn’t matter who I spoke to or how inspirational they were, I still felt the opposite.”
Now, six months on, the world looks very different once again and Appear Here is gearing up for what Bailey believes will be one of the most exciting periods of opportunity retail has ever seen. So how did he turn it around and what can we expect to see from him and that $14m pot of investment next?
Exciting times for retail
Bailey firmly believes that not only will physical retail play a major role in post-pandemic life, but that it will be a crucial element of a future that people have realised they need. A future that includes real-life interaction. But he wasn’t so sure a few months ago.
“At the height of the initial peak, when people were sanitising their shopping and 1,000 people a day were dying in the UK, I had moments of wondering if life would ever go back to normal and if people would engage in the real world again,” he admits. “What was so amazing was that by June, we were seeing people hugging on the street and kissing each other on the cheeks and now, in many ways, people are longing for what was taken from them; going into a café to get a cup of coffee, browsing in a shop.
“In many ways Covid has just accelerated a pattern we were already seeing, the move away from traditional retail towards more flexible, creative space. That means this is actually a really exciting time for us.”
Values are being reset, he adds, to allow more people to enter the retail market and he would go so far as to say that what Appear Here offers – at its core, space for ideas – could become a “vital service”.
“As we move from this humanitarian health crisis into an economic one, we are in a position to be a central service,” he says. “In all these previous downturns we’ve seen more entrepreneurial activity in the aftermath. And right now we’re in a situation where, here in the UK for example, we’ve got half of young people unemployed or furloughed. There are going to be a lot of young, creative people who, sadly, aren’t going to have jobs soon and I think a lot of these people might want to create stuff. And they will need spaces to make that happen.”
He makes a good point. ONS figures released this week revealed nearly 700,000 British workers have disappeared from payrolls since March, with 156,000 fewer young people in employment in the three months to July.
From London to Somerset?
Bailey’s predictions around widespread unemployment mean that Appear Here’s future strategy goes beyond the markets it has been known for up until now: the big cities like London, Paris and New York. Bailey says despite the fact the business is bouncing back much more quickly than he had anticipated it would – “we are back to 80% of pre-Covid demand in Paris and more than 50% in London already” – changes do need to be made to reflect new trends and patterns.
This will be key both for the business and for those investors who will no doubt be waiting to see how their capital – the capital that landed in Appear Here’s account a week before the world changed – will be deployed. Bailey says there are some obvious shifts in behaviour that the business is already investigating.
“We have noticed that young, creative cities have bounced back very quickly – places like Stockholm and Berlin – so we are actively looking at those markets now,” he says. “And as people have got more used to working from home and have got to know their local areas more, we are now looking at places like Somerset and Connecticut; basically we are looking at a lot more commuter towns in the UK and the US.”
And as for the traditional markets and cities? “Most of our demand now is for the peripheral areas of cities, out in the villages, so to speak. Whether it’s New York, Paris or London. It’s the Hackneys and the Brixtons where demand is rising.”
On the subject of the $14m of investment, Bailey is more than optimistic. The timing now, he says, is arguably even better than it was before the pandemic. “We did a strategic deal with those investors with the aim of going out and doing more stuff.” The time for doing that “stuff”, he says, is now. On top of the plans to expand into fresh areas, cities and commuter towns to target a more dispersed population, Bailey says that as big real estate companies get more on board with this way of thinking, the opportunities will skyrocket.
“There was a changing of the guard at a lot of these big companies anyway,” he says. “People looking at our model saying: ‘let’s go for this, what do we have to lose?’ Now there is arguably more to lose if they don’t go for it. The view from most of our investors was that Appear Here is a good hedge in difficult times because, actually, this business will make more sense when values start to decline and there is a reset. People will start to think ‘we pushed that concept away for a while but now maybe the time has come to change’.
“We need to make sure we really deliver for our landlords on more flexibility, the best tech stack, the right space and the right products to work with tenants of the future, who are now suddenly the tenants of the present. If we do all of that then, from a VC perspective, we make more sense as an investment now than ever before.”
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