Goop’s Winning Retail Formula? It Doesn’t Have to Pay for Its Stores

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At Goop’s latest pop-up store in the ritzy Hamptons village of Sag Harbor, you can find a full assortment of luxury goods that Gwyneth Paltrow’s lifestyle brand is known for: marble kitchen accessories, designer seagrass baskets, French Girl beauty potions, those dubious Moon Juice beauty dusts. The pop-up, open for the duration of the summer, is certain to appeal to shoppers who summer (yes, summer as a verb) in the Hamptons.

Goop is no stranger to the pop-up model. It’s been opening temporary stores since 2014 and has plans to execute six more by the end of 2018 — 2018 being yet another year in which the retail environment is anything but stable. Brands are closing stores by the hundreds and filing for bankruptcy at a record pace. The rent for retail space has skyrocketed, especially in towns like Sag Harbor where real estate costs have risen along with its popularity as a seasonal destination.

But Goop isn’t worried. In fact, it has a strategy in place to protect its retail endeavors from losing money: having others cover the cost.

For every pop-up it opens, Goop secures corporate sponsors like Cadillac and Prada to underwrite the spaces. This doesn’t necessarily mean companies write Goop fat checks explicitly to cover the cost of a store, but Goop chief revenue officer Kimberly Kreuzberger tells Racked that these sponsorships ensure the stores’ operating costs are entirely taken care before the doors even open. As a result, all sales from the pop-ups amount to 100 percent profit.

Photo: James Stenson/Goop

“This model covers our overall retail cost and is rare for a brand opening a pop-up,” says Kreuzberger. “There’s safety for the partners because they know the foot traffic will be there, while we’re able to subsidize the overall investment.”

Since its 2008 launch, the Goop business has expanded into beauty, supplements, and conferences. Its website — with its wellness-focused content and curated shop of luxury fashion and so-called “clean beauty” — has helped Goop carve out a rabid fan base (one that’s especially upper-class and largely white). The connection to love-her-or-hate-her A-lister Gwyneth Paltrow certainly helps Goop’s visibility too. (It’s worth noting that Goop has plenty of critics who blast it for preying on hypochondria, exhibiting tone-deaf privilege, and promoting pseudoscience.)

Goop’s biweekly newsletter, the original format Goop launched with, now has 8 million subscribers and an open rate of 30 percent — extremely high as far as industry standards go. Goop wouldn’t share its annual sales figures with Racked but did disclose that year-over-year revenue tripled in 2017, and that it’s on track to double that in 2018.

With the kind of success Goop has been able to achieve in a difficult retail (not to mention media) economy, it’s no wonder brands are lining up to work with the company. Sponsoring its pop-ups means you have access to fans with “a crazy affinity toward the brand,” as Kreuzberger describes shoppers who call themselves “Goopies.” It also means having access to a certain kind of consumer: an affluent woman with plenty of disposable income who is willing to splurge on less-than-essential items like leather joint cases and vagina crystals.

In exchange, Goop opens pop-ups in premium, highly trafficked shopping destinations and hires interior designers to bring the Goopiness to life — think French country antique furniture, Instagrammable statement light fixtures, and lush garden patios. The average Goop pop-up has 10 brand sponsorships, and each comes with a hefty price tag. The minimum sponsorship costs $100,000, while higher-end deals can cost “seven figures.”

The amount to which Goop’s Goopy magic is lent to a brand is contingent on what one is willing to spend. Appearances with Paltrow put the cost into the millions category, along with elaborate sit-down dinners and parties, like the fancy event Goop threw with Dallas pop-up sponsor and French spirits giant Cointreau, where guests were served food from celebrity chef Seamus Mullen and ice cream mogul Jeni Britton Bauer while seated at long farm tables covered in over-the-top flower arrangements.

In December, to celebrate the opening of Goop’s Miami holiday pop-up, the brand threw a party with Grey Goose and Bumble at the home of legendary real estate tycoon Craig Robins, who built Miami’s Design District.

Photo: Amy Karp

Goop’s partners already allocate large parts of their budgets toward media buys, PR efforts, and retail projects, and by working with Goop, says Kreuzberger, they get “the full package.”

“We allow them to tap into all their budgets,” she says. “It’s a full monetization strategy, and no other partner easily touches media and commerce the way we do.”

Still, that some of these partners are retail companies themselves speaks as much to the shakiness of the industry as it does to Goop’s strengths. Saks Fifth Avenue, for example, is one of the sponsors for Goop’s Sag Harbor pop-up. It’s paying to have a fashion closet inside the store, filled with merchandise handpicked by Goop editors and given final approval by Paltrow.

Saks hasn’t been immune to the struggles of department stores. Its parent company Hudson Bay has been hit with declining sales and mass layoffs, so it makes sense to lean on a next-generation retail concept like Goop’s pop-ups instead of further investing in a store model that’s broken. (That said, Saks did recently revamp its beauty department, perhaps gesturing to a dual-pronged approach.)

Another partner is Cadillac, the main sponsor of Goop’s Dallas pop-up that opened in March, as well as the Aspen pop-up opening in June. Shoppers visiting these stores are greeted by Cadillac crossovers and sedans parked outside, which they can take for a test drive. Cadillac, too, is in an unstable industry, as customers have all but abandoned the car dealership in order to shop for cars online, and so auto brands are grasping for new ways to reach potential buyers. Car companies are specifically trying to target women, and Cadillac is currently in the midst of a total reinvention after falling behind in the luxury car market. Who better to speak to the female luxury consumer than Goop?

Other sponsors include Prada (which is now overshadowed by hotter high-fashion brands like Balenciaga and Gucci) and Madewell (which has a dedicated but niche fan base and whose growth its struggling parent company, J. Crew, admits is crucial to its survival). Just last year, Goop inked a partnership to start a quarterly magazine with Condé Nast — a publishing company that’s having troubles of its own.

That’s not to say all partners working with Goop need a lifeline, or that Goop can necessarily provide one, but an association with Goop certainly can’t hurt. And the company’s pop-up strategy could very well prove to be a blueprint for what the future of stores looks like. Then again, few people besides Gwyneth Paltrow can get a company to drop a million dollars on dinner.