Illustration: Lazaro Gamio/Axios

As once-thriving retailers like Gap, Victoria's Secret and JCPenney announce almost 5,000 store closings in just 2019, three retail startups have hit valuations of $1 billion or more — and entered the exclusive "unicorn" club.

Driving the news: In the past 10 days, Rent the Runway, Glossier and Casper have all topped $1 billion valuations. The success of the three charts the future of retail — a landscape peppered with tech-infused startups that begin online then go to Main Street.

Why it matters: These are physical product companies that, arguably, are being valued like software companies, notes Axios' Dan Primack.

All three companies have capitalized on a trend we've dubbed "the Instagramification of retail": New retailers are conducting most of their business online but building out a small number of shops in the glitziest parts of big cities to function as profitable billboards.

  • Shoppers — the majority of them Gen Zers and millennials — can swing by Rent the Runway's swanky D.C. showroom or Glossier's beautifully designed New York flagship to take a selfie or browse dresses and lipsticks as if walking around inside an Instagram post come to life.
  • Casper's stores, which are called "Dreameries" and include giant beds for patrons to take naps on, are also trying to sell the lifestyle instead of the mattress — in hopes the customer will eventually buy into both.

But, but, but: Such startups should beware the competition, says Moody's lead retail analyst Charlie O'Shea. "One of the key risks to the innovator is the copycat phenomenon whereby a larger, better-capitalized company recognizes the opportunity and decides to compete in the space," he says.

  • This is already happening in the mattress industry. Amazon has Casper and other mattress sellers spooked with its recent entry into the industry.

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