The Craziest Bet In Retail

A Little startup called Le Tote recently bought Lord & Taylor, one fo the country's oldest brands. What happens next may say a lot about the future of shopping

- Andrew Leonard

THIS YEAR DID NOT START WELL FOR BRICK-AND-MORTAR CHAINS.

In January, Pier 1 Imports announced it was closing up to 450 stores. Later that month, two other prominent retail brands—the high-end audio manufacturer Bose and the paper-goods chain Papyrus— reported their own significant closures. And yet, on the same day that Macy’s announced it was laying off 2,000 workers and closing 125 stores, I was arriving at the San Francisco offices of a startup called Le Tote…where a very different kind of thinking was going on.

Le Tote is not a brick-and-mortar business. It’s a fashion-rental company. Users subscribe by the month and can rent and return (or buy) entire wardrobes. But last November, seemingly out of nowhere, this eight-year-old startup purchased the 194-year-old department store chain Lord & Taylor for $100 million. The move raised many serious questions, most of which boiled down to: What?!? In 2018 alone, Lord & Taylor lost more than $100 million. Why in the world would a digital firm want anything to do with a floundering mall cornerstone?

THE DIGITAL WORLD, IRL Le Tote’s rental studio, at a Lord & Taylor in Yonkers, N.Y., lets customers interact with both brands in person; the store’s exterior (far right).

That’s why, when I sit down with Le Tote’s founders, Rakesh Tondon and Brett Northart, there seems to be only one question worth asking: “Are you crazy?”

“You’ve got to be contrarian,” Northart says jokingly. Tondon smiles and says, “That’s where the outsize returns are!”