Rolling Out Retail: A Strategic Examination
An effective roll out program is a retailer’s most significant aspect of its business model.
Rene Ferandel

The roll outs of large-scale stores, like IKEA, must be extremely organized.

Propelled by many economic and business factors, the nation’s biggest retailers largely pin their hopes for corporate success on their ability to efficiently roll out their outlets to consumers nationwide. Matching brand, business strategy, fiscal forecasts and Wall Street expectations, an effective retail roll out program is, perhaps, a retailer’s most significant aspect of its business model.

Each year, the country’s largest public retailers can roll out hundreds of new outlets across the United States. What explains this insatiable appetite for more and more stores? The old retail adage, “If you aren’t expanding, you are shrinking,” applies.

Like public companies in all sectors of the economy, America’s top retailers are primarily accountable to their investors and other key stakeholders. As a rule, these retailers make revenue and earnings forecasts and these predictions are watched closely by both analysts and the investment community at large. Each quarter, analysts match these projected numbers against actual performance and investors naturally favor firms that are most consistently able to make or exceed their numbers.

And when retailers are meeting or exceeding their numbers, growth occurs and the norm is to add outlets and new square footage to their existing real estate portfolio.

Retailers such as Gap pin their hopes on success to efficiently roll out their outlets to consumers nationwide.

A corporate roll out program is never framed in terms of generalities or abstract goals. The magnitude and timetable of a roll out initiative are guided by very specific criteria that originate with the fiscal forecasts and sales expectations. Retailers know how their financial goals translate into square footage and that is where the roll out services consultant must begin.

But, what do we mean when we talk about retail roll out? How do major retailers structure themselves to manage the roll out process? What are the operating principles that govern the work of America’s most effective providers of retail roll out services? And what lies ahead for roll out and this niche consulting market?

Defining Roll out

Beyond what the self-described phrase means in merely managing the process of adding retail locations to a number of markets nationwide, it is vital to think of roll out as the implementation of a business strategy.

Whether a roll out program is undertaken with in-house resources, with the assistance of an external service provider or through a combination of the two, the effort must be seen as a strategic tool intended to accomplish specific business objectives that significantly impact the firm’s bottom line. More than ever before, top retailers turn to outside firms specializing in roll out execution to assist them in meeting their expansion goals.

Like Citibank, many retailers want their stores to match their branding and business strategy.

This, in and of itself, is a trend that sees no turning back. Within the past decade, most retailers have made a fundamental switch from using in-house talent to hiring firms, which specialize in development, architecture and engineering services for retailers.

Some 10 or 15 years ago, retailers would have vast internal teams in place tasked with roll out execution. The process would be carried out by corporate personnel employed within two in-house units: the real estate division and the design and construction division. The real estate division would refine roll out strategies and timetables, and identify a broad number of prospective sites. It would then narrow down the list of locations pursuant to corporate criteria that vary by retailer. The real estate unit also would assess risks, secure the sites, and finalize planning. Reflecting its name, the design and construction department would oversee just that.

Then as now, these two corporate divisions still exist and they still have the same responsibilities and scope of work. However, they are there to oversee execution of real estate needs and the design and construction teams ensuring all parties are implementing the retailer’s business strategy.

As such, retailers have restructured their roll out mechanisms based on the notion that they are not in the business of real estate nor design and construction; they are in the business of merchandising. Thus, their resources are tightly structured and focused on what they know and do best: retail.

Bucking the Stereotype

Despite the perception, retail roll out programs are not an undifferentiated monolith.

Each specific retailer’s needs range widely when it comes to their business strategy, brand and, thus, their roll out strategy. Strategies may even vary from submarket to submarket. For example, a traditional big box retailer may develop an urban store concept that helps the retailer penetrate an otherwise un-tapped market. Another retailer may have multiple roll out strategies based on the needs of the brands they have in their lineup. In both examples, the real estate, design and construction issues will vary significantly from the other locations.

Also, roll out services include more than just the traditional site, find site, build project and move. One client may be dealing with new locations whereas another may be involved with re-branding or repackaging a number of locations acquired from a competitor. In the latter example, this means anything from new signage and paint to upgraded mechanical and electrical systems to merging two neighboring facilities.

Even when the building type, site and size of project is similar nationwide, local jurisdictions, zoning issues, unforeseen constraints and, at times, an atypical parking solution will cause one or more locations to deviate from the norm.

Best Practices For Roll out Programs

In our experience, following are some best practices or operating principles for successful roll out service providers:

Client and provider must forge a partnership.

Above all, a roll out service provider must have a strong and intimate understanding of its client and its client’s business objectives. We refer to this principle as being able to “think like a retailer.”

It is essential that the provider know what the retailer needs. The provider must understand the retailer’s internal dynamics, its practices and processes, the way it manages scheduling and approvals and the way it implements high-volume projects.

The services firm also must candidly help the client identify its own strengths and weaknesses. It must inform the retailer — as early as possible — of special challenges and hurdles associated with a roll out program. For example, a retail site that is ideal in respect to customer demographics may be a nightmare in respect to local jurisdictional approvals.

Deliver first-rate customer service and communication

In the spirit of thinking like a retailer, providers must remain constantly aware of the huge financial stakes tied to roll out. The roll out provider needs to protect its client by achieving and maintaining a high level standard of customer service.

With multiple projects occurring at the same time and numerous people working on the same projects, typically, in many different cities, every team member must be on the same page. A consistent communication process is critical in avoiding costly mistakes and in dealing with project hurdles.

Technology drives project communication and roll out management demands first-rate technology. GreenbergFarrow, which can be managing development of more than 1,000 locations at any one time, developed a project management application for this very reason. ProjecTrac is a customized, online, real-time project management system that enables retailers and all team members to instantly view real-time schedules, budgets, project statistics and communications for a limitless number of locations.

Thus, at any given time, any e-mail or document sent out related to any location of the roll out program is immediately available for any project team member to see.

Assure quality

As defined in the world of Six Sigma, roll out providers must adopt a disciplined, data-driven approach and methodology that will deliver a measure of quality that strives for near perfection.

Clearly, this means far more than just checking construction drawings. Proper project management — with clear financial and project benchmarks — is key. Successful roll out execution also requires the hiring and training of the right people, who need to take part in a continual process of professional development and education.

In the spirit of partnership with the retailer, it also is a good idea to have retreats for key team members from across the board. Beyond fostering team work, retreats help identify process improvement areas that can lead to tighter construction schedules or eradicating unnecessary steps in the project delivery system.

Of course, all of this goes back to having a partnered approach and strong communications between and among all project team members.

What next for roll out?

Roll out is becoming ever more difficult for several reasons. Thanks to ongoing land development combined with preservationist measures, there is simply less open land available and, thus, less room to grow. This is helping fuel the trend of urban retail and vertical retail but those project types pose a whole new area of project delivery and design complexities. But as vertical and urban retail become more and more required, so will the expertise requirements of roll out consultants. International roll out always brings special considerations, nation-specific techniques and sensitivities.

However, what will remain the same is retailers’ reliance on key consultants with roll out expertise. With the right firm, outsourcing roll out services alleviates a significant burden from the retailer while giving itself an efficient, cost-effective solution.

Rene Ferandel is associate principal and leads the retail design studio for GreenbergFarrow.


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