Startup Q&A: Shlomo Chopp, Founder and CEO, Anchor Shops

RTIH: Tell us about Anchor Shops

SC: Anchor Shops is the retail-facing component of the ShopFulfill ecosystem, which provides a brand or retailer with a complete retail infrastructure as well as a cost-effective e-commerce fulfilment and logistics solution. 

It is a curated environment whereby exciting and covetable brands, both up-and-coming and those with a loyal following, can coexist and support eachother side-by-side. 

Each brand’s unique identity is emphasised and is put in the best position to shine – whether that means a merchandise display or a dedicated shop within the store. By being part of Anchor Shops, brands also gain access to its last-mile retail and fulfillment infrastructure, which is key to its localised ecosystem. 

ShopFulfill can facilitate the delivery of e-commerce orders up to 60% quicker and up to 40% cheaper than alternative systems. This is in addition to the inherent benefits of locating within a well-located retail environment, but built on the premise of utilising one pool of stock for both online and in-store purchases.

RTIH: What was the inspiration behind setting the company up? 

SC: Being a veteran commercial real estate professional who has not only acquired and operated properties but also turned around and restructured distressed assets, I always took to reviewing potential investments with a very close eye and relished problem solving. I was particularly disturbed by the underlying credit of available retail and industrial assets. 

For retail assets, tenants were not doing well and losing market share, and quite often going out of business. Bottom line, we were not going to acquire properties with such credit risk, and I don’t understand why anyone does. On the industrial real estate front, rents and values have seen tremendous growth due to the increased demand resulting from the popularity of e-commerce. 

The challenge is that these e-commerce brands have been unable to find profitability. Accordingly, we developed and filed a patent application for a concept that is a mixed-use retail and logistics infrastructure allowing for constant reinvestment into new technologies by leveraging the power of the many. Anchor Shops powered by ShopFulfill is very much a version of this model.

RTIH: What has been the industry reaction thus far? 

SC: The industry reaction has been absolutely spectacular. On the brand front, in addition to established concepts, we’ve received a tremendous amount of incoming inquiries from brands we never knew existed. 

One such example is a brand that was launched this past November. These brands have really cool product but just don’t have the ability to roll-out a store programme due to the expense and undertaking involved. Brands have also been very much attracted to the e-commerce benefits that are found by combining the online and offline channels. 

Industry commentators also have lauded our approach with one even saying, “file this under ideas I can’t believe I did not come up with.” However, as with any new concept, I expect there to be constructive feedback on areas for improvement, which is something I welcome. Our goal is to create a platform that is highly scalable and value-additive to brands and the retail industry as a whole.

“The challenge is that brands look at e-commerce and physical retail as two separate, distinct channels. The real power and opportunity is in finding a way to bring them closer together to create a more efficient infrastructure”

RTIH: What has been your biggest challenge/setback? 

SC: Anchor Shops is a new, innovative concept, and it will take time for people to accept and appreciate our model. When this idea was conceived four years ago, I knew people would think I was crazy for suggesting valuable retail real estate should be used for logistics. 

However, to me it made perfect sense given the rapid growth of e-commerce and the challenges plaguing the retail industry. As time went on, the market and the industry started inching in our direction, which gave me further confidence that this model was going to be a winner. 

The first major indication of this was when Target transitioned its e-commerce fulfillment to their stores. The most recent was when Sam’s Club decided to add a retail component to one of its fulfilment centres. Co-locating retail and fulfilment and localisation is absolutely the way of the future, and we are out ahead of it with two patents pending and the intent to grab an early and significant market share.

RTIH: What are the biggest challenges facing the omnichannel retail sector right now?

SC: By definition, the word omnichannel means one combined channel, but the challenge is that brands look at e-commerce and physical retail as two separate, distinct channels. They haven’t yet realised that the real power and opportunity is in finding a way to bring them closer together to create a more efficient infrastructure. 

Fusing the two is the holy grail of retail and I feel like Indiana Jones. Physical retail has become a dirty word, and the death of the mall has been widely prophesised. The problem with all this is that it’s not just a demand issue; it’s also the supply. Consider why many of the really cool products that you can find online cannot be found instore. 

The reality is that pureplay e-commerce doesn’t work, and physical retailers who are not integrating e-commerce into their physical retail, like Target is, are literally wasting away their final days. Brands need to do away with the distraction of perfecting a broken e-commerce business model and focus on something that solves the equation. We believe that Anchor Shops is the solution.

RTIH: What's the best question about your company or the market asked of you recently by a.) an investor and b.) a customer?

SC: Do you want to undertake a speedy expansion or do you want to undertake a steady and slow expansion? The question is a very deep one as time has shown that an aggressive expansion strategy can take down a company (e.g. WeWork and arguably others) that may otherwise have solid underlying unit economics. 

The answer for us is a slow and steady expansion until the right opportunity presents itself. That opportunity probably arrives in the form of a mall portfolio available at a very attractive price – we would backfill entire malls with a scale version of Anchor Shops.

As it relates to the customers, they have been asking how soon we plan on expanding to other markets. The answer is never soon enough. However, in line with our desire to scale responsibly, we are being very thoughtful and pragmatic to ensure everything goes smoothly. 

RTIH: What can we expect to see from Anchor Shops over the next 12 months?

SC: A dominant new retail model that changes how brands lease space – in fact, they no longer lease space, they buy into a business infrastructure. You could expect to see brands that you’ve never heard of take market-leading positions as a result of their participation in the ShopFulfill ecosystem. 

You can expect to see layer upon layer of innovation and thinking outside the box that often disregards conventional, unprofitable glitz and glamour in favour of providing our customers and their shoppers with a superior experience that results in profitability for the brand.