In this episode of Leaning In, Trademark CEO Terry Montesi sits down with Steve Rouman, SVP of Real Estate at RH, to talk about his journey from the landlord side of the business to leading real estate strategy for one of retail’s most design-driven brands.
They dive into RH’s transformation into a luxury lifestyle brand, the future of retail site selection, post-COVID consumer behavior, and how physical retail and e-commerce can work together. Steve also shares advice for industry newcomers and why human connection still sits at the heart of retail.
🎧 Listen in for a forward-looking take on retail, design, and the evolving role of place.
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Transcript:
Terry Montesi: Welcome back to Leaning In. I’m Terry Montesi. Today I’m joined by my good friend Steve Rouman, Senior VP of Real Estate at RH and a longtime industry friend. His background spans leadership roles at Amazon, Apple, Gap, and now RH, giving him a rare perspective on the evolution of retail and retail real estate. We’ll discuss RH’s shift to a luxury lifestyle brand, the strategy behind their immersive galleries, and what’s ahead for physical retail. From site selection to AI, Steve brings smart insights shaped by decades on both the tenant and landlord side. Let’s get started.
Steve, great to have you on the show today. We’ve known each other a long time, but for those that don’t know you, tell us about your background and how you got to your current role at Restoration Hardware.
Steve Rouman: If I accomplish only one thing today, it’s going to be to get you to say RH instead of Restoration Hardware.
Terry Montesi: Oh, I knew that was coming.
Steve Rouman: But I have to tell you, I still make the same mistake, and I also sometimes do it purposely because not everybody still is in, knows to call it that. But anyway, to answer your question, mine’s a pretty simple story. I’m a career long retail real estate guy. I graduated from college, and I moved to Chicago, which was the thing to do back then with 80% of my graduating class, and that’s all big 10 schools, everybody kind of goes to Chicago. And I did the same without a job. I just had what was in the trunk of my car and slept on a buddy’s couch until I landed a job to pay the rent.
And then I tried to figure out what I was going to do. And I decided that it was probably in my best interest to go to law school. And so I started down that path and taking the LSATs and thinking about it. And while I was doing that, I had a friend who was part-timing for a company at the time called JMB Realty. And you’ll, of course, remember JMB.
They had an opening for a legal assistant in their real estate legal department. And I’m like, well, I needed to work. And what better place at that time? JMB was a giant, and what better place to land while I think about this law school thing. And so, for whatever reason, they hired me, I still don’t know, other than I will say, Terry, that the general counsel had gone to Michigan, the senior counsel had gone to Michigan, two of the other lawyers in the department had gone to Michigan. I think that’s what got me in the door.
Terry Montesi: Go big blue.
Steve Rouman: Go big blue. Yeah. Being my alma mater. So anyway, I land this job as a legal assistant, and I am going to train under one of the senior counsel to negotiate shopping center leases. No idea what that entailed, but anyway, I start down that path. And as I’m doing that, I become sort of the liaison between the legal department and the leasing department.
And I meet all these guys, and I’m like, wait a second, these guys have company cars and they got nice suits and they got expense accounts and they get to… And I’m like, how do I do that? And so, I tabled the whole law school thing and made my wishes known, and then I just worked my tail off, and eventually a gentleman you and I both know named Ross Glickman gave me my shot in leasing and that’s where it all started.
Terry Montesi: The rest is history.
Steve Rouman: The rest is history until a pivot, which I’ll tell you about. I mean, a shopping center leasing agent for 15 years with JMB Urban through all its iterations. And Terry, you’ll remember when Urban was sold and broken up. And I stayed with one of the acquiring companies, Westfield, for a couple of years after that, but really took that opportunity then to pursue a curiosity of mine, which was what would it be like to be on the retailer side?
And so, in the middle 2000s, I jumped to work for The Gap and running their Chicago real estate office. And the minute I landed in that seat, I was home. And I knew that was the right thing for me. And my career took off as a result. I eventually moved to California. The Gap moved me to California for a bigger job. And I just parlayed my work and that opportunity and experience into bigger and bigger jobs, which eventually landed me at RH.
Terry Montesi: You’ve held major leadership roles at Amazon, Apple, Levi’s, Gap, as you mentioned. Help us understand some of the things you learned at each of those places or the major learnings along the way because there’s a lot of variety there.
Steve Rouman: Yeah. Well, first of all, I would say two things. Number one, I never set out to be the big brand guy That was more dumb luck than design. And as I look back on that career now, I’m just like, wow, that sort of seems to… people would look at that and that seems to make sense that that’s kind of what I’ve become. But that was never my goal. Just opportunities presented themselves, and when they did, I was able to take advantage.
But the second thing I wanted to say is that it’s a lot harder to practice real estate for companies whose primary business is something other than real estate. And oftentimes, I think I should have stayed on the landlord side. You guys have more fun and make more money. But I do love it. I do love it. I realized early on that I’m much better being sold to than doing the selling. And so, I’m happy that I did what I did.
But some of the things that I’ve learned is that now that I’ve worked for a traditional apparel retailer in Gap, a wholesale apparel company trying to do retail in Levi’s, a multi-channel computer and phone company, wildly successful at retail, and then an online products distribution company with a very fickle relationship with physical retail in Amazon, all of those have given me a really unique experience on the power of stores, the power of design, the power of online and the power of brand. I’ve also learned that too much process can kill in the real estate world, and especially when that leads to real estate decisions getting too far away from real estate.
But I think the biggest impact that all of those experiences and all those companies had on my approach today is that it’s to focus, it is actually going to sound kind of funny, Terry, because actually to focus less on the real estate itself. Because when you work for brands like that, good opportunities come your way. You’re usually getting shown the best real estate. You don’t have to really search far and wide for it. But I focus more on what will that location say about my brand? And what will it say about my company? Can I build what I want to build there? Will the real estate be as impactful to the customer experience as the product and service themselves? And so that’s a lot about how I think about site selection and real estate, and I’ve learned it from working for those brands.
Terry Montesi: So how do you describe what RH does and who RH is and who their customer is?
Steve Rouman: So, I would say, and I know that Gary Friedman, our CEO, would like me to say that we are a design firm. Basically it’s really as simple as that. And we choose to show people how we think about design and our ideas about design through the sale of furniture and home furnishings. Our physical, RH’s physical locations, first of all, we call them galleries, and for very specific reasons. And having visited many of them, you’ll know that they feel almost museum like.
But RH allows customers to dream what’s possible for their personal spaces. And our customer is really anyone buying or selling a home, to be honest with you, although our quality and our price point tends to lean towards a specific demographic. But RH now, Terry, is more, we are project driven rather than product driven. Whereas RH is servicing the customer who is furnishing an entire home or multiple rooms, as opposed to somebody stepping in off the street trying to buy a lamp or a chair.
Terry Montesi: Great. Thanks. You and I have talked about how RH has transformed from a home furnishings retailer into a luxury lifestyle brand. And I use the word luxury because that’s something that y’all emphasize. How has that shift changed your real estate strategy?
Steve Rouman: Yeah, that’s a great question. Actually, I would tell you there’s two shifts. And you and I are of a certain generation to remember these shifts, which the first shift was from what the original Restoration Hardware was when it first came out with Steve Gordon, which was actual vintage hardware and fixtures for people renovating their home and all of the sort of Chachki novelty items that came along with that and what our stores, what those early stores became known for. The first shift was when Gary Friedman came on and changed all of that and started to turn it into a furniture company and a home furnishings company and got away from that original idea.
The second shift came when he started to build big galleries back in 2011, 2012, and 2013 when our first big buildings came online. And so, that’s a dramatic departure from the types of real estate, from an almost exclusively mall-based company to now really big expressive, standalone, multi-level galleries.
Because now we just don’t do what other retailers do. We have these big gallery locations, we have restaurants, we have hotels, we have luxury jets, we have a yacht. All of these changes have influenced real estate in a very meaningful way. We don’t always go where other retailers go. I’m allowed the flexibility to do everything from taking a vacant department store position in a traditional shopping center like we did in Denver with Cherry Creek to taking an abandoned school for the arts for women in Chicago in a neighborhood, to buying a 50,000 square foot home on a 150 acre parcel in the middle of Indianapolis, and a little bit of everything in between.
Terry Montesi: And wait a minute, a yacht?
Steve Rouman: Did you not know about the boat?
Terry Montesi: No, I didn’t.
Steve Rouman: RH3. We have a yacht available for charter that sails the Mediterranean in the summer and the Caribbean in the winter. All tricked out, completely remodeled by RH. And the boat was just in Monaco for a show, and Robert De Niro, Leonardo DiCaprio, and Scarlett Johansson were all on the boat for some period of time.
Terry Montesi: Of course they were.
Steve Rouman: Of course they were. It’s a crazy world, but that’s part of my life.
Terry Montesi: That’s great. How big a yacht?
Steve Rouman: I think it’s about 170 feet.
Terry Montesi: Perfect.
Steve Rouman: Yeah. Perfect size.
Terry Montesi: Yeah, it is. That’s great. I didn’t know that. That’s fun to know. From listening to you, I’m not sure that there is a perfect location for an RH, but when you are thinking about finding the perfect location for an RH store or gallery, what are you thinking? What goes in to your thinking and how much of that is influenced by data and driven by data via your info from online sales?
Steve Rouman: Yeah. A hard, hard question, but I think it really depends, Terry, on if I’m looking to expand an existing location or if I’m going somewhere brand new. And the beauty of being a company who doesn’t have any cash and carry business, you can’t walk into the gallery and buy something now. Everything is ordered and shipped to your home. So, I have the luxury of knowing where everybody lives. And so that makes it really easy for me to figure out if my current locations are already in the right spot and where I might be able to add a location that we’re not quite servicing as well as we should.
But if I have operating history and I’m in a shopping center that is relevant and powerful, I never look to leave. I would love to, if the myth still exists, I’d like to dispel the myth that RH is anti-mall. We are not anti-mall. We just happen to build a building that’s hard to do inside a mall.
But I always look to the existing real estate first. And we have examples of that here in our backyard in the Village of Corte Madera. We had a small inline gallery and we went out into the parking lot and built a big multi-level design gallery. We did the same thing in Oak Brook, and we’ve done the same thing at other places where we’ve stayed on mall property. We did it in Nashville with Taubman and Cherry Creek and International Plaza in Tampa. We’ve done that a lot of places, but landlords aren’t always able to accommodate that. Sometimes it’s just not physically able to fit that. So I will look to go proximate. I don’t try to ignore real estate fundamentals and try to be a hero. I stay proximate to that gravity that’s created by the powerful center.
But having said that, my brand, the power of my brand and the nature of what we sell allows me, does allow me some license to go a bit off pitch if I want to. But if I’m going to do that, then I’m looking for other things. In addition to retail, I would want to be, I look at hotels, luxury boutique hotels, art galleries, museums, design firms, architectural firms, things that my customer would be inclined to do when they weren’t shopping. I try to be around an aggregation of those types of uses if I’m not going to be in the primary retail node.
And then if I’m looking to go somewhere brand new, then it’s really just how much of a bet do I want to place. But I would typically then go back to sort of real estate fundamentals about visibility and access and some meaningful retail co-tenancy. But there isn’t a script, buddy. There isn’t a script.
Terry Montesi: Yeah. Just trying to help my audience learn.
Steve Rouman: Yeah. Well, I can just give you a quick example. So, we’re opening a new market in July. We’re going to Montreal in Quebec. We’ve never been there before. And we have four existing galleries in Canada, but we’ve never been on the East coast like that. And it was just much easier to place a safer bet and go to a brand new luxury shopping center called Royal Mount that just recently grand opened and we’re about to open.
But conversely, we bought 70 acres in the English countryside and converted a 17th century grade one listed historic estate into a gallery museum library with three restaurants, and that is nothing to do with real estate fundamentals. That was all about making a brand statement.
Terry Montesi: Super interesting. Well, watching you and Gary make some of these bets and do some of this really creative brand work, real estate work, a combination has been really interesting.
Hey, I have my next question I’ve been wanting to ask. What are a couple of the biggest surprises in your retail site selection career? And what do you mean, Terry? Maybe one thing, man, I really didn’t think it would work, but for some reason I did it, and it did, or man, I thought it was going to be killer, and what a surprise. Give us some surprises. And it’s your whole career. It doesn’t have to just be…
Steve Rouman: Yeah, no. You know what? I actually have to tell you, I agonized over this question the most. Because you sent me a few of these in advance, and I’m like, what does he mean by that?
Terry Montesi: Isn’t that a fun question though?
Steve Rouman: It is a fun question because I went super technical on that. I was going to go into this whole big talk about, oh gosh, I just think my surprises are about how cities are still so averse to development and the problems we had with municipalities and planning.
Terry Montesi: I’m too abstract of a thinker.
Steve Rouman: I love what you just said. I will tell you one thing that comes to mind almost immediately and then I can think about some other experiences from past companies. We had never been, RH has never had a presence in Palm Desert, California. But it always had sort of been on the list. But it’s not a huge market, and we’re never really quite sure what to build there. Well, here comes COVID, and places like Palm Desert explode. People who their second homes became their first homes, their first homes became their second homes, people bought second homes, people moved and stayed, the whole narrative.
Terry Montesi: They learned they could work and play at the same time.
Steve Rouman: And so, I’m like, okay, so Palm Desert seems like more fertile ground now than ever. So, I went down there, and I didn’t really know what I was looking for. And I come across an opportunity. There’s a Lululemon store, small Lululemon store on the corner of Main, sort of Main and Main on El Paseo, right across from Taubman’s center. And Lululemon was in the process of moving across the street to expand, and they were insistent on hanging on to their building because they didn’t want the landlord to put in a competitor.
So, they were in the process of subleasing it. Well, along comes Steve Roulman and, Terry, you know with our networks, who do I call? I call my friend Jenny Tang, and I said, tell me about your building. Well, Terry, it was 3,100 square feet.
Terry Montesi: You’ve mentioned that to me.
Steve Rouman: We don’t have anything like that. And it’s fan shaped, but in that weird fan shape, there was symmetry. And I took a flyer, and I sent it to Gary, and I’m like, this is… I could either lose my job, or you’ll elevate me or something in between. I don’t know what’s going to happen. But he liked it. We did the deal. We made it our first ever RH interior design studio, and it’s on track to do somewhere around $2,000 a foot in a small building that has no furniture in it. That’s a surprise.
Terry Montesi: That’s a positive surprise.
Steve Rouman: That’s a positive surprise. So, it’s things like that that not only make our brand unique, but as a real estate person, it’s both validation of an idea and makes you think differently about what’s possible.
Terry Montesi: Yeah. How about any negative surprises – man, I thought this was going to work and it just didn’t – at any of your brands? I’m sure you’ve had some of those.
Steve Rouman: Yeah. Well, there’s the sort of typical stock answer of over-expansion, where one store too many, one store too far. A lot of that happened at the Gap, along with a lot of other companies where you want to keep growing and you sort of test the limits of a brand. And so, I did a couple of small market Old Navy stores that I probably would have called a do over if I could have back in my time there. But just a pure full out unmitigated disaster, I’ll have to say I don’t really, I don’t have any of those to my name, thank God.
Terry Montesi: But you’ve got disappointments that were surprises.
Steve Rouman: There’s some disappointments. Yeah, I think one thing I’ll say maybe is that I’ve learned and we’re learning now the one size fits all mentality just doesn’t work, especially for what we do. We probably wouldn’t have built as much square footage in some markets that we’re currently in, not that they’re not profitable stores. That’s not really the point.
But we did some, when we were doing some of these early on, we just said, hey, here’s our prototype. Let’s just drop it here. And we probably are overextended on square footage in some markets that don’t really need it. And the buildings could be more productive, but they’re profitable.
Terry Montesi: I think for the audience purpose, you’re thinking when we decided we’re going to do galleries, we thought they all had to be big. And now you’re learning you can be 3,000 feet, you can be 60,000 feet, and you really need to tailor everything.
I think that’s a great lesson for retailing in general, from my perspective as I’ve watched. I think that the smartest real estate plays that retailers have made have been in periods where they were just all about dialing in the store size to the market, to the center, to the customer. If they have other stores in the market, they do smaller. If they’re only going to do one, they do more flagship. I think that more flexible mentality, in my view, has been the most successful sort of approach, if you will.
Steve Rouman: Look, I totally, completely agree with you. And I think that’s the other advantage that RH has over other retail companies, particularly in the apparel space. Terry, as you know, once you start to get to scale and you’re looking for speed and for efficiency and consistency, you make it programmatic. And for good reasons, for economies of scale and for cost efficiency and things of that nature.
But if you have the sort of intestinal fortitude to push back on whatever it is, leadership pressure or shareholder pressure or whatever, to just say, you know what, no, that’s not the right thing to do. And we’ll be better for it in the long run is to size our galleries or stores to the opportunity, to the market. It’s no different from you. You have to be very particular about what Trademark, how much square footage you’re going to build, how much square footage you’re going to add, what you’re going to fill it with. You’re not going to build a 1.1 million square foot shopping center in every market that you look at. It’s the same thing for a retailer.
Terry Montesi: Yeah. So, RH currently has 68 galleries, unless there’s been any opened the last week or two, one design studio, a guest house, 40 outlets, a yacht, jet, and across 61 markets, now international. I know you’re in Canada and England. What do you see as the ultimate growth potential? And then where do you see the brand going?
And I have to ask a personal question, and that is what on earth has been, I’ve told you, I’ve been to Colorado a lot and seen this hole in Aspen for a number of years and I hear all these rumors. So, what in the heck’s going to happen in Aspen? Where do you see that business going over the next 10 years? Just use as imaginative and innovative as you could be, because you know Gary will be trying to out think anything that you or I could come up with for sure.
Steve Rouman: Well, that’s for sure. Yeah, it would be silly for me to try to speculate what he’s thinking. But I would make a couple of general statements and then I’ll address your question about Aspen.
Terry Montesi: Yeah, that’s more of a fun little side note.
Steve Rouman: Yeah, I think, and I mentioned this before, and I mentioned it a lot to people, I think, Terry, in a post-COVID consumer environment, people, especially our core clientele, prefer to shop more locally, closer to home. They’re in their home more. They’re not commuting necessarily anymore. They’re picking the community that they want to be in now because they can. Because you’re not tethered to an office or what have you. And that might change a little bit, but I don’t think it’s ever going to swing back to what it was before. So, people are just around where they live more.
And so, I view RH under that context to be understored with 68. Like what other major national retailer do you know that has less than 70 stores? Not many. This is how we learn and adapt and evolve, because this is different thinking than what Gary, his original thesis 10 years ago was like, hey, build a big one, and they’ll just drive to me. People only shop for furniture every five to seven to ten years. And it’s a purpose-driven, intent-driven trip. But we also recognize that familiarity, visibility, frequency, and more customer interaction is important.
And so, I feel we have tremendous opportunity with not just with the Palm Deserts of the world, Terry, but you and I have talked about this before. I don’t really think anybody, including Gary, really believes that one gallery on Knox Street services the entire DFW Metroplex. There’s just no way that you could come to that reasonable conclusion, especially as a real estate professional.
So I feel tremendous opportunity to do infill in the markets where we’ve already built the big solution. And whether that’s going to Fort Worth, whether that’s going back to Plano, whether that’s going even further north, whatever the case may be. And that’s just one market where I could list off a half dozen.
So I think we’re very understored. And I think you’re going to see a lot more galleries out of RH in the coming years. I think you’re going to see a lot of varying sizes. I think you’re already going to start to see sub-concepts being pulled out of the gallery. We converted our first store in Greenwich, Connecticut. We have our first standalone RH outdoor furniture gallery. We’re opening our second RH outdoor furniture gallery in East Hampton, which will live almost side by side to our current indoor interiors gallery, just two storefronts away. I think you’ll see a continuation of that. I think you’re going to see the continuation of new concepts, either bred here in Corte Madera or by acquisition and those rolling into stores.
We opened our very first Waterworks showroom. We own the company Waterworks. We opened our first Waterworks showroom inside our Newport Beach gallery. We have a small Waterworks showroom in our Palm Desert interior design studio. You can see more of that. You can see more collaboration, more partnerships, more offshoots. I just feel like we’ve got tremendous runway for growth being closer to the customer.
Terry Montesi: And don’t you, we’ve talked about it, you still have some fairly large markets in this country that y’all don’t have any stores in, right?
Steve Rouman: Those are lesser now. I’m sort of slowly ticking those off. Really the only, I would say the only US, well, there’s a lot of markets where we don’t, there’s a lot of states where we just don’t have a presence at all. But I’ve addressed Naples. We’re soon to be under construction in Naples. We’ve never had a presence there before. I mentioned Montreal earlier, never had a presence there before. We’re building our first ever gallery on Long Island. We haven’t had a presence on Long Island. But the one that sort of sticks with me is Hawaii. We haven’t cracked the code on Hawaii. Those are fun market tours. So, I’ll be looking forward to that.
But we have a presence virtually everywhere where we want now, we just don’t have enough square footage in some of the key markets. And so, there are a couple of big markets where I continue to work hard, the big rocks, as we call them, the things that really move the needle.
Terry Montesi: Well, this next topic we get into AI and thinking about the future. And that’s obviously a hot topic. How do you see, and I know Gary recently in his newsletter touched on it, how do you see AI and the world of data balancing and combining with the human creativity that Gary champions? And how do you see that unfolding and affecting and impacting y’all’s business?
Steve Rouman: Terry, I wish I was smart enough to speak really intelligently about this topic, but I will tell you, I think it’s got massive implications for the real estate industry. And someone’s going to figure that out and people are going to come to you and they’re going to come to me, especially on the landlord side. I think it’s got incredible opportunity for how you market a center, for how people can sort of virtually visit a center, think about stores in advance of a physical visit. I think there’s lots of applications for AI, and I haven’t quite thought that through yet.
And I don’t really know what it means for RH, although I will tell you where I think it has almost immediate impact is at the gallery level. When somebody can be in their home and they can talk to ChatGPT and they can say, draw me a kitchen with white Carrara marble countertops and a wolf range and a sub-zero fridge and this color palette with this type of backsplash and this type of stone and take it into RH and show the designer, and the designer will be like, well, you just did my job for me. I will help you build and furnish that now. Or conversely coming to RH and RH having a tool that allows the customer to just speak what they want, and in seconds, it shows up on the screen. Incredible application for the design community, I think. And I fully believe that we’ll be at the forefront of whatever that is. But I also will say in the same breath that our competitive advantage, I believe our competitive advantage in the home furnishing and the furniture space is our people. We attract the most talented designers and thinkers around physical space and the combination of those two would be pretty powerful.
Terry Montesi: And with your background at Amazon and Apple, you really had a front row seat of how e-commerce and physical retail were battling and then interacting and then evolving and now working together. So just help us understand what you got to see and how you process that and what you learned and its impact on our industry, etc., relative to the dance between e-commerce, physical retail first, then e-commerce came along. It was going to be the death knell and now they work together beautifully. Give us your observation.
Steve Rouman: Yeah, well, I’m probably not going to tell you anything that you don’t already know or your audience anything novel about this, but I can affirm a lot of things that people believe to be true. And I don’t even need to think about Amazon and Apple necessarily. But I will just say, generally speaking, the two don’t survive without the other, and the two thrive as a result of working in tandem.
But I remember, Terry, when I was at Gap Inc. and we made the acquisition of Athleta. And Athleta was a small catalogue and online retailer based in Marin that had zero stores. And we did a test store for them. It was 2,300 square feet. It was in a little highway fronting strip center called Strawberry Village in Mill Valley, California. And it was anchored by a Safeway grocery store.
Terry Montesi: Isn’t that where you live?
Steve Rouman: I live just north of there. Yeah. And there was a smattering of some local restaurants and shops and successful, but anyway, we planted it there, right in Mill Valley where Athleta was sort of homegrown. And I still remember this, Terry. Athleta was doing about a half a million dollars in online business in Marin when we did $450 to 500,000. And we opened the store, and the store did like three and a half million dollars out of 2,300 square feet. And the online business doubled.
And so that relationship, I think, has borne itself out time and time again across multiple retailers that all boats rise when you do both and both suffer when one goes away. And the real trick is, I mean, e-comm is about speed and selection, convenience. Like on an online store, you can see every SKU. There’s no curation of product that you can only fit into a 4,000 square foot store. You see everything. So online is about speed and selection and execution. Physical stores is about customer engagement, customer experience, and displaying what your brand is about.
Terry Montesi: Yeah. And I think the other thing I’d add to that is appealing to all the senses. And online is really appealing to your intellect and your sight, but that’s it. Engaging your senses, like your stores do a great job of that.
Yeah, so you’ve been involved in and been a student of real estate for a long time. What retailers do you think are doing a great job at brick and mortar today? And how do you think things have evolved? What have you seen, some of the big evolutions that you’ve watched during your career in our industry?
Steve Rouman: Who’s doing it well today? There are a couple that really come to mind. I will admit to you, there are a lot that I see but know very little about, especially relative to the real estate strategies. But I would highlight, for sure, I would highlight Aritzia. I think Karen and Brian Hill have done an amazing job of not only running their business, but staying selective, going slow, being purposeful. I just think… I love the look and feel of their store. Like, to me, they’re bringing everything together that sort of matters. Amazing product, a very distinct point of view, beautiful store environment, great real estate, not doing too much. Like they’re just really doing well.
And I would also tip my hat a little bit to Alo. I know that there’s a lot of people in that space now and they’re all great for various reasons, Lulu having been the undisputed king for a long time. But I think Alo stores are beautiful. I think they come with a very distinct point of view that’s different than everybody else. I really love what they’re doing in the bricks and mortar side. I just love the comeback story of Abercrombie and Fitch. I think their stores look great, but I also love…
Terry Montesi: Are they different than they used to be? Golly.
Steve Rouman: No kidding, Terry. That to me, that’s a lesson for everybody.
Terry Montesi: What’s the lesson?
Steve Rouman: You can remake yourself. You can remake yourself. That brand was completely different. It stood for something different. It was run by different people. And you can take a brand as battered and beaten up as that one and revive it. It’s a brilliant comeback story. There’s other retailers who should look at that as inspiration for what’s possible.
I also love Dick’s, what Ed Stack’s doing at Dick’s Sporting Goods. Here’s a guy who already owns the category. He could just sit back and do nothing, but what does he do? He blows it up and he’s doubling down. He’s creating bigger, more immersive experiential stores. Vince will tell us, Terry, I’m sure he’s told you that Ed said, design me a store that puts my other store out of, puts my existing store out of business. How great is that? And so, here’s a guy… Here’s a guy who owns the category. He’s got no real competition, yet he is evolving and changing himself.
I also tip my hat to Costco. Less necessarily about their real estate, those are just very different types of deals, but just more about I admire what they are able to do. They now have created probably one of the single most successful private label brands in our industry in their Kirkland brand. Their membership model is genius. They too have food in their stores like we do that’s highly curated, and they’ve managed to maintain a level of aspiration that you don’t see in a sort of wholesale, value proposition. So I have a great deal of respect for them. And Trader Joe’s is another one that comes to mind I think in the specialty grocery space, another company that doesn’t try to do too much, stays true to who they are, knows their customer.
And then I would say the Sam Fox restaurant group. I just think any landlord who’s not talking to them should be. And there’s a guy, he’s a tastemaker like we believe ourselves to be. He’s a great concept developer and I think a real add to any retail project.
And then some of these other guys we talked about, like I think Arc’teryx is cool, On Running is cool, Veronica Beard, Jenni Kayne, like there’s a lot of them who I don’t know much about relative to how they think about real estate. There’s just this whole cadre of emerging and even more established brands that are doing cool things.
Terry Montesi: It sounds like you’re pretty optimistic about our industry. And my next question is thinking about looking out the next five to ten years. What are some of the things you see unfolding in retail and retail real estate?
Steve Rouman: So, maybe, Terry, maybe this is… people might accuse me or you of just being too old school about the whole thing. But when you work for a brand as dedicated to the physical space as we are and who has seen the success in physical retailing like we have, there’s just no way it’s going to diminish. There’s just no way it’s going away. And I think it becomes, as technology advances at a pace that you and I can only imagine, it’s just a freight train of where we are technologically as a society from even where we were 10 years ago, certainly 15 or 20 years ago. And so that’s not going to stop. The pace of technological change is going to be incredible.
But I view it, Terry, as this amazing tension point and contradiction where the more you can have access and tools to technology that lead you away from personal interaction, the more powerful personal interaction becomes. It’s this weird thing that having compelling physical spaces for people to congregate, whether they be shopping centers, stores, whatever, is just going to be more, it’s just going to continue to get more meaningful. It just can’t, there’s no way about it. I just don’t see any other way around it.
And companies who are thoughtful about what they provide for their customers to step into are going to win. And then five to ten years, I mean, will there be a department store left standing? I don’t know. Maybe, maybe one or two, maybe one or two. And they’ll certainly be a lot, their fleets will be a lot smaller if they’re even around. And I go back to what I said earlier about the continual development and redevelopment of localized retail. Really cool neighborhood centers, really the sort of Marin country mart model of the world, or even things that you’ve done in Fort Worth and other places, small, bespoke, mixed use, that’s the future.
Terry Montesi: So, along those lines, any other projects around the country, retail places that you think have done a great job creating a compelling place for people?
Steve Rouman: Yeah. I thought long and hard about this. First of all, the powerhouse traditional enclosed regional malls have stayed that way and actually excelled. And most of the ones that I think about, Terry, that fall into that category are privately held. North Park, South Coast Plaza.
Terry Montesi: Aventura.
Steve Rouman: Aventura. So those you cannot help but admire and tip your hat to how those projects have stayed relevant.
Terry Montesi: You’re right. Bellevue. I mean, you’re right.
Steve Rouman: Bellevue Square with Kemper. Yeah. I mean, I just feel like those are, whatever word you want to use, fortress assets.
Terry Montesi: What about your favorite outdoor projects?
Steve Rouman: My favorite outdoor stuff, I think U Village in Seattle is best in class. I love Avalon and Ponce City Market in Atlanta. I’m a huge fan of La Cantera in San Antonio. I always have been. Oak Brook, my hometown favorite from Chicago, has done a great job. Stanford Shopping Center in Palo Alto is a beautiful showcase. Americana Manhasset on Long Island, where I’ll be opening a store, that’s basically a luxury strip center for God’s sake. It’s just incredible what the Castagna family has done there. The Streets at Chestnut Hill by WS in suburban Boston. I love Legacy West in Plano, UTC in San Diego, and then this little project in Del Mar called One Paseo, which I think is super cool. Those are some of my favorites.
Terry Montesi: Thanks. We’re running out of time. And I thought to finish up, if you have one big bit of advice for someone thinking about getting into retail real estate.
Steve Rouman: Well, I tried to think about how I could answer this in a less than boring, in a more remarkable way. And this may also make it sound like I’m going old school. But you’ve got to like people to be in our business. And I would tell young people, because my two youngest boys are thinking about it now, and they see me, and they’re now getting exposed to the industry. And the power of human connection is on full display in retail real estate.
My network, Terry, is my currency. My friendships, my relationships, my partnerships have saved my ass more than once in my career. And I feel like if that’s what you are looking for, if having meaningful dialogue and negotiating and persuading people and forming relationships that last for decades, I don’t know another business. I’m sure there are other businesses that are like ours. I don’t know many though. I mean, I just think it’s the power of personal connection and the power of people is what this industry is all about.
And this past ICSC, I don’t know why it just struck me, Terry, because I was completely energized by the whole thing. And maybe that’s just because of my age. Now I just happen to know a lot of people just because I’ve been around a lot.
Terry Montesi: I felt the same way. It’s like it was way easier than it’s been in the past.
Steve Rouman: It was way easier. But meeting young people, too, it’s energizing. It’s a great business for young people who want that type of experience. And I would encourage anybody in the business, getting into the business to be present at those things, to visit retailers in their offices, to see competing projects, to learn, to understand. It’s a tactile industry. It’s a tactile industry.
Terry Montesi: And I need to let our audience know that if you hadn’t said what you said, I was going to say it for you because you are one of the best in the industry at building personal connection. And you alluded to it a second ago, without getting into it, you and I, we see each other, and our mantra is, life’s too short to have shallow conversations. And so, we’ve become friends through work.
And like you said, a lot of people think of work, ugh, work. I don’t want to work. Why would I work? I can’t wait to not work. And to me, work has been, and you, extraordinarily rewarding, and the relationships are a big chunk of the reward. And kudos to you. You’re right. It is your currency.
One last question, is there anything you’d like to ask me?
Steve Rouman: There’s a lot of things I’d like to ask you, buddy, but I guess I’m thinking about it, if I turn around and I’m interviewing you, your origin story. Just, I’m not sure you’ve ever told me how you got into this business and give me some of your proudest moments along the way.
Terry Montesi: Yeah. Well, my origin story I give to my ancestors. My grandfather, Fred Montesi came over on a boat from Italy when he was, I think, eight. And he ended up starting a small grocery store in Memphis, Tennessee, and was a hardworking guy, sixth grade educated and ended up selling that, or built some stores, sold them and then came back and built the market dominant retail grocer in Memphis, then expanded to St. Louis and Birmingham.
So, I grew up in the retail business watching my dad and my uncle, his twin brother, run a small grocery chain that had the largest market share in Memphis. We were the big guy in Memphis for years and years until they sold out in ’84. So that’s where I got into retail. And then got out of college, and a few years after working in real estate, my brother and I became Blockbuster Videos’ fourth franchisee.
Steve Rouman: No kidding.
Terry Montesi: Yeah. So, we raised the money and became the franchisee and I was a retailer, and what my big active contribution was, was I did the real estate. And so, I used to do retail real estate for Blockbuster franchises. And between growing up around the grocery stores and watching my dad pick sites and then doing Blockbuster real estate, it just was in my blood and just kept going from there and started Trademark when I was, 34 years ago now, when I was 31, 32 years old, and never looked back.
Steve Rouman: Well, I’m not surprised at all now to hear that you were a retailer because I’ve been on both sides and you have, and it just gives you a whole different perspective. You can understand better. Yeah, you don’t always agree, but you understand and you get immediate street cred, like when somebody knows, hey, I did what you did. I did what you did for a long time. I can call David Pratt’s bullshit in like the first 20 seconds. And he knows it. And so, it just creates this. Well, that’s an amazing story. So, let’s take one real quick from Trademark forward, from Trademark forward, proudest moment.
Terry Montesi: Oh, golly. That’s so hard.
Steve Rouman: I know.
Terry Montesi: I think it’s probably, and I’m a little irritated with you because you didn’t mention Market Street Woodlands as one of your favorite projects.
Steve Rouman: Well, because you won’t let me in there yet.
Terry Montesi: Well, I’ll try, I hope my subconscious doesn’t hold that against you. But it’s probably pulling that off. I closed that land out of pocket without any leases signed, took a crazy amount of risk as a fairly young person because it’s been 20 years ago. And then grand opening that and just continuing to participate in the ongoing success and its real impact on that community. It is the heart and soul of the Woodlands, which is one of the great suburban places to live in this country. So, I think it’d probably have to be that. Thanks for asking.
Steve Rouman: And I’m not just saying this because you brought it up. I love that project. I always have. I’ve been trying to do something there for a long time. I think you and I have a line of sight to maybe doing something. But that, again, speaks to amazing foresight by you, a little bit of risk, but that comes from both a gut feel and experience and recognizing that a market is not served by one type of asset. There’s just opportunity. And that’s been replicated across the country and I’m sure no doubt because of people who have studied what you did.
Terry Montesi: Thanks for those nice words. Well, it’s been a blast getting to talk to you and hang out with you for this last hour, Steve. I’m super grateful for your time and for your friendship and hope you have a great day.
Steve Rouman: Right back at you, brother. I’ll see you soon.
Steve Rouman: Steve, thanks so much for joining me today and sharing your unique perspective on RH’s evolution, the power of place, the future of our industry, and what young folks ought to be focused on if they’re interested. From immersive experiences to international expansion, your insights offer a compelling look at where retail is heading and how thoughtful real estate strategies can shape brand identity.
If you enjoyed today’s conversation, be sure to subscribe and follow us on LinkedIn for more episodes of Leaning In. Until next time, I’m Terry Montesi. Thanks for listening.