Building For Growth
New book helps retailers of all sizes define strategy and focus on growth.
Interview by Randall Shearin

If there's one thing that's consistent in today's business world, it's rapid change. So how do you not only stay steady but actually grow — and quickly enough to stay safely ahead of your competitors?

Arthur Rubinfeld.

Shopping Center Business recently spoke with Rubinfeld about Built for Growth: Expanding Your Business Around the Corner or Across the Globe (Wharton School Publishing), his just-published book on growing a brand in the new age of retail.

SCB: What inspired you to write Built for Growth?

Rubinfeld: At the highest level I really saw a need by retailers of all sizes for help with strategy, branding and the business model. At the ‘street level,' people need help with design, site selection, construction, operational issues and expansion. I founded AIRVISION to help bring great retail ideas tangibly to life, and the book is part of making that happen. Every day we see clients who want help starting a retail business, or who need help with a retail operation that has stalled during growth, or who need to refresh a retail brand that has begun to stagnate. People need support throughout the entire process of creating a viable retail business, but many consultants help with only part of the process, or they hand off advice and leave the real work to the retailer, with no accountability for the results. The book is intended to provide a baseline of knowledge for retailers as well as to give them a better idea of how and when to bring on the resources they need at a particular point in time, whether the resources are in-house or out-of-house. Our secret sauce at AIRVISION is to help with all aspects of the business at all points of the retail life cycle, in implementation as well as strategy. The purpose of the book is to codify the best practices from my experience, and the experience of my team. We wanted to make the best practices available to the thousands of small retail enterprises poised for growth. The book covers all the major issues that retailers will face, poses the right questions, and provides a framework for obtaining the answers. And of course we give a lot of specific examples from great retailers. It's a book that combines principles with real-world practice.

SCB:   Who is the audience for Built for Growth?

Arthur Rubinfeld's recently published book, Built For Growth.

SCB: What is the biggest challenge to growth facing the retail industry today?

Rubinfeld: Mediocrity. As an industry, we lack the passion to be the highest quality, to spend a little more, to invest in being a leading-edge, innovative company. Even when retailers sense that change is in the air, they too often falter before the task of understanding the growth opportunity and improving their brand positioning. Retailers are just too conservative, and then they wonder why their brand fades. Sometimes it's a lack of risk-taking vision by the owner or management. Other times the failure is with the retailers' own organizational structure and the inadequacies of their own senior management. Organizational drag too often ensures that retailers act in safe, conventional and self-defeating ways. They're afraid to change the formula. They do not see that the ‘formula' is what limits their future.

SCB: What is your point of view on the Federated/May and Sears/Kmart deals?

Rubinfeld: They are emblematic of the problems facing all department stores, which are being squeezed by luxury brands at the top and value retailers at the bottom. They need to differentiate, to upgrade the customer experience, to offer more lifestyle products and to strive to make a more direct connection with their customers. Like the small retailer just starting out, they need to begin with the basics, evaluate their core values and determine what they can provide customers that no one else can, and reinvent themselves accordingly. Take Sears. At one time the brand was indispensable to Middle America. That's where the middle class bought its clothes, its appliances, its tools. What were the traits that made Sears indispensable, and how do you translate those values into today's consumer expectations? These newly merged companies need to ask those questions with all of their brands. The answer will determine their future. The lesson for the general retailer is that you cannot survive as a ‘general' retailer. You need to differentiate and find a successful niche based on your core value and your core business proposition.

SCB: What are some examples of retail brands that work, drawing in customers?

Rubinfeld: There are many, many great retail brands. We mention a number of them in Built for Growth. IKEA, P.F. Chang's, Oakley, In-N-Out Burger, Apple Computer, Potbelly Sandwich Works, Starbucks, to name a few. They all provide a unique, customer-oriented experience. They create a sense of place — a place where customers want to come due to the unique positioning in their respective categories. They understand that if you draw customers because of the experience, they will come more often, stay longer and spend more money.

SCB: Location, location, location is the mantra for all real estate and all retail. But in the book you talk about thinking of location as more than just the ‘X and Y coordinates' of the site. What do you mean by that?

Rubinfeld: There is more to a good location than just where a property sits, ‘the site at the corner of so-and-so.' I use the word ‘locationing,' which defines real estate in terms of branding. Locationing is the combination of the street site itself and its physical layout and characteristics — the specific feel of the surrounding area, the physical presentation of the building to the street, and the way the building and the site present your business to the customer as they approach it. Locationing encompasses all the components that enable you to create something physically unique and special for your concept. Retailers need to look for the right combination of physical and aesthetic attributes of a specific piece of real estate that will shape the consumer's reaction and establish the retailer's brand positioning.

SCB: What would you say is the future of shopping centers? What are some new concepts and trends that are shaping up?

Rubinfeld: Shopping centers need to evolve with consumer tastes just as individual retailers do. When they first came into being, shopping centers were utilitarian, practical and convenient, but also for the most part they were boxy and plain. Today, shopping centers need to be on the cutting edge of design. They need to provide a higher-quality experience than in the past. Shopping centers and malls have proliferated to the point of over-saturation. Successful ones will become different. The standard design of an anchor tenant on each end and a typical set of national retailers in between will give way to more sophisticated tenancy. In addition, the sensory experience needs to become higher end. Someone walking the center should meander through a pleasant landscape, not march down a straight, undifferentiated sidewalk. Shopping centers and malls will be more closely integrated with entertainment and with life. This means co-tenancy integration with everything from movie theaters to grocery stores to fitness centers to bookstores. Anything that is a community gathering place. It means integrating shopping centers with residential properties, more mixed-use to create a better sense of community. In the old days, if you put a shopping center or mall in a certain location, it would succeed just because it was there. Today, shopping centers have the same challenge in differentiating themselves as individual retailers do. Internationally, shopping centers are becoming increasingly imaginative in their designs and mix of concepts. A ‘general shopping center' can no longer succeed any more than a general retailer. The most important thing is just realizing that you have to be different. Knowing you have to be unique will trigger the thinking and planning to keep your center vital and relevant.

SCB: What shopping center concepts have you found to be innovative and aligned with your vision?

Rubinfeld:   The Grove in Los Angeles. It's a great example of what I'm talking about. It has a unique combination of high-end architecture, great co-tenancies, and consistent high-quality retailers and restaurants. Aesthetically, The Grove is a wonderfully pleasant experience, lots of greenery and fountains. The center is in a dense urban area with lots of people nearby. It has a sense of place and a sense of community. It's a place you want to go to. Once you're there, you want to hang out. As a result, the center attracts shoppers from very far away.

SCB: If a small retail entrepreneur with a limited budget were to ask your advice, what would be the three priorities you would tell him or her to focus on first?

Rubinfeld: The first is to have a unique proposition. Every concept has been done, and re-done, many times. You can't have just a generic pizza parlor, coffee shop, clothing store, sports store, or shoe shop anymore. You have to do something different, something that improves the customer experience, that makes an emotional connection with the customer. You have to be able to show exactly how you're different, and how you will maintain that difference over time. The second is to understand the business model and make sure yours will work. Too many people enter retail without understanding how close the margins are or how to improve margins. In addition to an entire chapter on economics in Built for Growth, all the other chapters examine every decision with an eye toward the impact on the bottom line. Finally, you've got to have good emotional support from your family. The first 2 or 3 years of a retail operation are incredibly hard, incredibly trying. Without the support of your family, you're going to have difficulty surviving. With a unique idea, good financials, and moral support, the rest of the steps become relatively easy.

SCB: What do you think are the most important attributes of a savvy, successful retailer?

Rubinfeld: The successful retailers are the ones who pay attention to every detail, who have an ability to adapt and change, who are constantly looking at the market, and at consumer and retail trends. The great retailers have extreme customer focus — always trying to predict the next thing the customer needs or wants. The great retailers have the ability to move fast, staying just ahead of the changing needs of the customer. Great retailers never relax. They never rest on their laurels.