Garage, a Canadian fashion brand, is opening 20 profitable stores annually, according to Glossy, with recent launches in London and Manchester following U.S. locations in Louisiana and Hawaii since November. The brand is riding Gen Z's documented return to physical retail, executing a deliberate expansion into malls where competitors retreated.
The company targets Gen Z women with trend-forward apparel at accessible price points, opening locations in high-traffic malls where foot traffic has recovered. Garage's parent company, Groupe Dynamite, owns both the real estate strategy and the supply chain, allowing faster inventory turns and location-specific assortments. The stores function as both transaction points and brand amplification: customers photograph outfits in-store and post them, generating organic reach the brand does not pay for.
This works because Garage solved the unit economics problem that killed mall retail for a decade. The brand operates with lower occupancy costs than predecessors paid in 2015-2019, negotiating favorable lease terms as landlords prioritize occupancy over peak rents. Inventory moves faster because the customer visits in person, tries on, and buys same-day rather than ordering online and returning half the shipment. The store becomes the acquisition channel: a 16-year-old sees the brand at the mall, follows it on social, and returns with friends. The lifetime value starts in the physical location.
The mechanism is location arbitrage plus demographic timing. Malls cleared out. Rents dropped. Gen Z, per multiple retail surveys, prefers trying on clothes in person. Garage entered when the cost structure aligned with a customer cohort that actually goes to malls. They are not opening flagships in SoHo; they are opening 20 stores a year in secondary markets where teenagers spend Saturday afternoons.
A small physical-product brand runs the same play by testing one location in a market where rent dropped and your customer demographic still visits in person. Identify a local mall or shopping district where anchor tenants left and landlords are negotiating. Approach with a 6-month pilot lease. Stock the location with your top 12 SKUs, the ones that photograph well and require tactile evaluation. Use the store as a content studio: encourage customers to post, offer a 10% discount for tagging your brand in-store. Track cost per acquisition against your online channels. If the store generates customers at a lower CAC than paid social, and those customers buy again, expand to a second location within 90 days. Negotiate rent as a percentage of revenue, not a fixed cost, so the landlord shares your risk.
The broader pattern is that physical retail works when the rent, the customer, and the product all show up at the same place. Garage did not reinvent retail; they waited until the cost structure made sense and then moved fast. A brand with the right product and the patience to negotiate can do the same in 2025, one lease at a time.
The takeaway
Open a pilot store where rent dropped and your customer still shops in person, then expand only if CAC beats digital.
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