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What Business Are You Really In? Miller/zell Inc.

Reconceptualizing, strategic planning, challenging assumptions -- call it what you will, it describes the process of adapting to change, a process in which a company continually asks itself, first, "What business are we in?" and then, "What business would it be useful for us to think we are in?"
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Sandy Miller has spent 25 years figuring out what business his company, Miller/Zell Inc., is really in. He knows he is on the right track, but he knows he isn't there yet, wherever there turns out to be. The lack of finality in Miller's thinking hasn't retarded the company's growth. Last year's sales of $15 million were 40% higher than 1981's, and sales for the first half of this year were up an additional 38%. What is striking about Miller/Zell is not how far along the company has evolved, but the many points at which it might have stopped evolving but didn't.

It might have stopped, for example, in 1959, the year Miller, fresh from the Army and college, bought a small silk-screen-printing business. Miller/Zell might today be a large silk-screen-printing company.

Or it might have stopped a few years later when Miller developed innovative point-of-purchase displays for gasoline retailers. Miller/Zell might today be a large retail graphic-design firm.

Or it might have stopped with Miller/Zell's manufacturing of modular store fixtures or with its architectural design work for retail chains.

But it didn't stop. It just kept evolving and today Miller/Zell is all of those things, which taken together add up to something else entirely -- an innovation, something that is genuinely new. You might say that Sandy Miller has grown a company whose principal product is reconceptualization itself.

Miller/Zell creates and delivers retail environments to its clients -- large chain merchandisers of everything from food to automobiles, from tires to clothes. If Miller/Zell's people have done their jobs well, this new environment will not only reflect recent changes in consumer buying habits, it will also anticipate still latent trends. If a company can capture trends before the competition has recognized or even spotted them, it has an edge.

Take cars, for example. You may have noticed that most of the subcompacts, imported and domestic, look very much alike. Miller/Zell thinks they have become commodity items, which means, the company says, that consumers are going to put as much or more value on where they buy as what they buy. Miller/Zell convinced Mitsubishi Motors, the Japanese auto maker, which only recently entered the U.S. market under its own name, that it should control as much of the selling environment as it does of the manufacture of its cars. "McDonald's does it with hamburgers," Miller notes. Mitsubishi bought the concept, and Miller/Zell designed a dealer facility that, according to the theory, unifies showroom, service area, and parts sales so that a customer gets the same feeling no matter what part of the business he is dealing with.

The Gap Stores Inc., a retailer of men's and women's jeans and tops, has grown by selling to the baby-boom generation. Its stores were first designed to appeal to the 15-to-21-year-old crowd. But those folks are over 30 now, and to keep them coming in the door, Miller/Zell created a new interior for the chain that, if the theory holds, will help The Gap hold on to the same customers that powered its growth even as those customers age.

Some little tricks, like changing the color of the floor several times from the front to the rear of The Gap's long, narrow stores, can apply in any retail environment. A shopper, Miller/Zell noted, walks only 20 feet into the stores on average. The floor-color changes are supposed to draw that person all the way back.

Likewise, putting the high-margin children's section over by the men's and home-supplies sections in U.S. Shoe Corp.'s new Front Row stores will pull female customers through selling areas they might otherwise never see. The best potential new customer, Miller/Zell preaches, is the one you already have.

Miller/Zell's most comprehensive undertaking to date is the Front Row chain, which is opening its first stores this month. Each Front Row unit will contain five stores within a store. It is a turnkey project. Miller/Zell created the multistore concept, designed the interiors, engineered and manufactured the fixtures, and is performing all the construction and installation work. U.S. Shoe just moves in its merchandise and staff and opens the doors.

Miller/Zell doesn't yet arrange financing, perform site acquisition, or recruit and train staff, but presumably it could, as the next step in its evolution.

The idea that drives Miller/Zell forward is no secret formula. In fact, it is a cliche. "We sell solutions," Miller, the company president, says. Many companies say that, but having solved one problem, they base a business on that single solution. Sandy Miller looks for the next, larger problem.

"We began to learn," says vice-president Jim Matthews, who joined Miller/Zell eight years ago, "that retail success depended on more than graphics or point-of-purchase displays, and we asked ourselves how many of these other things we could affect . . . We didn't want to be like any other company we knew of . . . We didn't want to be a design shop. We wanted to be a purveyor of the products of design. That's where the money lies."

There was no epiphany, no "Eureka!" There wasn't even a formal plan to speak of until only a few years ago. But Miller can pull out of his files a series of short, type-written, year-end summaries that show the progression from silk-screen printer to whatever you call the company today. Informally, and in not very many words, these summaries explain where the company has been during the previous 12 months, where it wants to go, and how it might get there.

"It had to be evolutionary," Miller says, "To have tried to begin where we are now would have been presumptuous."

Last updated: Aug 1, 1983




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