Retailers to Watch

By Joseph Dobrian

The ancient wisdom states that the three secrets to successful retailing are location, location and location and entrepreneurs from all over the world are proving the truth of that maxim-all in different ways and in very different places! While the principle is universally true, a location that's perfect for one retailer might be useless to another. The right growth strategy is essential, and in the current environment several retailers are pulling ahead of the pack due to thoughtful preparation.

Not all of them got it right the first time, of course. While the storied British reserve hampered the success of many retailers from the United Kingdom when they came stateside in the 1980s and 1990s, several have learned from their mistakes and are poised for a second and far more effective attack, according to Faith Hope Consolo, chairman of Prudential Douglas Elliman's retail leasing and sales division.

Another British Invasion

"British retailers have observed the recent success of other European retailers in America, and have decided they didn't give the U.S. a good chance a few years ago," she says. "They've learned that they have to put themselves forward more, market themselves more aggressively. So now we have Topshop and Zara, which are part of the 'cheap chic' movement; Burberry has re-launched successfully; Pringle of Scotland will have its own store on the street. Another retailer to watch is Rachel Riley, now offering children's fashions in nine U.S. cities."

To build market share, Consolo says, a brand must have its own retail store, and most overseas retailers have to plant their flags in New York City before venturing elsewhere, even if their long-term strategy is to focus on malls and shopping centers around the country.

"Even if I want to eventually take a retailer to every major mall, I start with a New York City location," Consolo says. "A huge company that can afford to flood the malls right away might prefer that strategy. But if you're a 'onesy-twosy' company, you have to start in the city."

One retailer that's following the urban strategy is Pinkberry, the frozen yogurt/fresh-fruit vendor that started as a onesy-twosy in Los Angeles and quickly invaded New York City preparatory to a global rollout. Young Lee, cofounder of Pinkberry, reports that for the time being, he prefers neighborhood settings: strip centers in Los Angeles, and neighborhoods in Manhattan where retail and residential are well balanced.

"We sometimes have problems with mall locations," he says, "because of the hours. Malls often require you to open at a certain time and close at a certain time. We prefer not to open until 11:00 a.m., and in some locations we want to stay open as late as 2:00 a.m. As for the types of retailers we like to be near, we prefer fashionable clothing stores because young women love to shop, and they love Pinkberry because it's a low-calorie treat. "Our expansion plans currently focus on getting the infrastructure in place to support our growth, because we want to position ourselves for fast growth, a sort of 'popcorn effect.' We hope to open in Florida, and we're looking for joint venture partners to help us enter Dubai, Greece, Spain, London, Japan and Mexico."

Why has Pinkberry caught on so dramatically? Lee says it's all about the experience.

"Our customers want an affordable luxury experience over a $5 cup of yogurt," he says. "We provide that with music, atmosphere, and furniture. You'll sit in a $350 chair, at a $500 table, and have top-quality yogurt with fresh fruit even if it's not in season."

Stress The Experience

The urban strategy isn't for everyone, though. Also emphasizing the experience, but focusing on malls and shopping centers, is Ridemakerz, a Falls Church, Va.-based retailer of customizable model cars. The company's "ZEO," Larry Andreini, explains that four Ridemakerz stores opened in 2007-three of them in malls-with eight more slated for this year.

"We're opening at Mall of America [Bloomington, Minn.] and at Castleton Square Mall [Indianapolis], among others," he says. "Indianapolis is a car town, so it's a natural location, and Mall of America establishes us as a national brand.

"Our customer base is 85% to 90% male, and intergenerational, so we don't do well in upscale fashion malls. We like to be where the dads are: Cabela's, Bass Pro Shops and Best Buy are great neighbors, and we chose our location at Woodfield Mall in suburban Chicago because we're directly adjacent to Build-A-Bear Workshop. We'll open two shops in metro Detroit: at Great Lakes Crossing and at Twelve Oaks Mall, because without Detroit there'd be no Ridemakerz."

Overseas expansion is a sure thing, says Andreini. Ridemakerz will probably enter the U.K. first, and is looking at Germany, New Zealand, Australia, China, Japan, Dubai and Canada. The product line might be expanded to include airplanes and boats.

"We're about personalization and customization," he adds. "That is the megatrend of retailing, whether we're talking about jeans, shoes, food or toys. Technology and supply chains have enabled us to get all kinds of products to market in a more customizable way. People want to express themselves, and technology and expectations are coming together at the right time."

Several other retailers are also rolling out experience-driven concepts. The latest mall craze is the medical spa, where shoppers can take a break for a quick Botox fix or laser hair removal. The International Medical Spa Association (IMSA) estimates that mall-based medical spas have grown by about 500% since 2004. Several movie impresarios are developing theater concepts that include gourmet dining with table service, cocktails, reclining seats and even bowling.

Other retailers to watch include U.K.-based Tesco, which is spending $2 billion over the next five years building its 10,000-square-foot Fresh & Easy Neighborhood Markets in the U.S. About 30 of these stores opened in the Sunbelt at the end of 2007; by the end of this year there are likely to be some 200 Fresh & Easy stores in California alone.

"Tesco's foray into the U.S. market will spur other grocery retailers to roll out new concepts," predicts Malachy Kavanagh, vice president of communications and external affairs for the International Council of Shopping Centers (ICSC). "There should be a great deal of innovation in the grocery sector in the next few years."