The founder of a trendy new retail startup explains how she’s creating a business for the TJ Maxx shopper of the future

• Cara Cara is an LA-based online off-price store that sells indie brands at a 20% to 60% discount. 
• The concept is similar to any off-price store such as TJ Maxx or Ross Stores, for example. However, the idea is to offer what these stores have traditionally lacked – an easy way to shop for off-price goods online.
• Founder Rachel Gannon told Business Insider that she believes her new company is in a sweet spot to appeal to the next generation of shoppers because of this. 
• Visit Business Insider’s homepage for more stories.

Rachel Gannon is the 29-year-old founder behind Cara Cara, a trendy new startup that’s selling indie brands at a 20% to 60% discount. 

The premise of Cara Cara is similar to any other off-price store – TJ Maxx or Ross Stores, for example – though the brands it sells are different. However, Gannon’s main objective is to offer a shopping experience that has long been ignored in the off-price world – that is, an easy way to shop for these deals online.

Off-price stays offline

Off-price stores are known for being some of the brightest spots in the retail sector, reporting quarter over quarter of sales growth, and increasingly taking market share from department stores.

These stores have not only survived but thrived in the age of Amazon despite having, at best, severely lacking online platforms or, at worst, no ecommerce platform at all. 

TJ Maxx is perhaps the most established in this area. It launched its online store in 2013 and its sister company Marshalls followed its lead in 2019 but both Macy’s Backstage and Ross Stores are still strictly brick and mortar. 

Analysts say that these chains haven’t been impacted in the same way as department stores by the rise of ecommerce because off-price retail lends itself well to brick and mortar shopping; customers are happy to make the trip to a store to rummage through racks of designer clothes and get a thrill from this treasure hunt shopping experience, which can be harder to replicate online. 

Moreover, the off-price stores’ relationships with vendors generally don’t lend themself well to online shopping; designer brands don’t want customers to be easily able to find lots of deals and discounts on their products online as it devalues the brand. 

TJ Maxx circumvents this issue by making it impossible for its customers to search by a brand on its site. But while this might keep vendors happy, it doesn’t necessarily make for a slick online shopping experience. 

‘We really just want to jump in and grab that opportunity’

But Gannon and her team, which includes her brother Johnny, a software engineer at Google, and friend Danielle Adams, want to change this and believe that their new online off-price store is in a sweet spot to appeal to the next generation of shoppers. 

“The major players in this space are not spending a lot of money on ecommerce,” Gannon said in a recent phone conversation with Business Insider. “For the younger generations, there’s really not a great place to shop off-price online…so we really just want to jump in and grab that opportunity.”

Since launching in September, Gannon has added 15 brands to the site, including items from New York-based designer Rachel Antonoff and trendy bag brand, Baggu. Levi’s Premium collection will be next to join.

So far, around 15,000 shoppers have browsed the site, amounting to around 500 purchases.

Gannon acquires all the inventory and photographs each items for the site in Cora Cora’s signature quirky style – she also ships each item out to customers. “I wanted to be able to control that…so it is the best possible customer experience,” she said. 

Before Cara Cara, she spent several years working as a buyer for Macy’s and Rue La La, which means she has a good sense of what works and what doesn’t. And it hasn’t taken much convincing to get these brands on board.

“They were all very excited about the idea…I think there was definitely a need for this,” she said.

“It frees up their cash flow, and some of them are smaller brands so that’s a really great perk for them. By the time these products are going into the sale section, they don’t have the energy or the money to devote to these products…  we are taking that merchandise and giving it a new treatment and making it feel fun and new again,” she added. 

But some analysts still aren’t convinced that ecommerce is an area that the off-price channel really needs to crack. 

“Off-price can be difficult to execute online for a variety of reasons so I’d say the new entrant has its work cut out to succeed,” Neil Saunders, managing director of GlobalData Retail, wrote in an email to Business Insider.

One of the biggest challenges is that off-price is a volume business that relies on customers loading up their baskets, he said. Moreover, shipping costs and the expense of returns would quickly erode its margins. 

Still, “the launch of such a platform might put some pressure on the main off-price players to develop an online proposition,” he added.