Retail Traffic: How does today rate as a time for developing new concepts? Is there demand for new retail?
Tesler: It's very dangerous to answer a question that broad. If you've got all your stuff together, if you have the right concept at the right time in the right place with the right customer, it is a good time. There are voids in the marketplace for sure — certainly, there are opportunities in and around food and there are also opportunities for clothing. Our American brands are locked into very specific, very predictable looks and the ones that are filling the void are from Europe, stores like Mango and Zara and H&M. There is opportunity for fresh merchandise — everyone is tired of wearing the same thing as everyone else — that's what's killing the Gap.
RT: Retailers have put a lot of emphasis on creating stores that are all about the shopping experience itself. Is this still an important aspect for new concepts to consider?
Tesler: It's very important to have an environment that pulls people in because there is a direct correlation between how long they stay and how much they buy. What some stores fail to understand is that none of those experiential things matter if you don't have the right product at the right price. People are coming to stores to buy products — the experience is an extra, it's a marketing tool, but if the store doesn't have the right product for the customer they are targeting, the experience is irrelevant.
RT: Where are new concepts coming from? Are they from established players or from entrepreneurs starting new concepts?
Tesler: Things are happening on both ends — the larger, publicly traded companies are under a lot of pressure to grow. Their stock prices are so important. They are driven to open new stores. But there is also a lot of backlash against big companies and a lot of talk in cities and towns about supporting local businesses. People like to shop in stores that are owned and operated by the locals, as long as those stores are done well.
RT: How receptive are shopping center developers to concepts from relative unknowns?
Tesler: They are not. The bigger centers — the lifestyle centers, the malls, the downtown hubs — all pay lip service to supporting smaller businesses, but in the end, they like big names because those make them feel important. And they also feel there is less risk in bigger ventures, even though their money is guaranteed by the lease.
RT: What helps a developer take a chance on a new concept?
Tesler: If they have a business plan that's professionally done, that's a convincing document. That, in essence, is the first marketing tool of the business. And the start-up entrepreneur also has to show a lot of understanding of retailing and the marketplace.
RT: Can you name some retailers you admire, whose strategies you seek to emulate when advising your clients?
Tesler: Crate & Barrel, Whole Foods, the Container Store and Apple. Apple has done more business on fewer products than any other retail store I can think of. They understand the consuming public — the products in their stores are displayed in a way that's user-friendly and accessible. They are not afraid to break the rules. They've taken something that for many people is complex and made it easy. Retailers are great followers and everyone wants to be like Apple right now because they are setting records on square footage sales.
MICHAEL TESLER
Partner and principal with Retail Concepts, a Norwell, Mass.-based firm that helps new businesses establish their chains.