Why We Buy (31 page)

One guy in particular sticks out. His name is Tony Trout. Our destination was Paris, and we were working with the French bank Crédit du Nord. It took Tony about an hour and a half to realize,
Hey, this is fun!
We rode in from Charles de Gaulle airport on the train, switched over to the
métro,
bought our
carnets,
and on the first day of the job, Tony felt completely at ease ordering a coffee at the café next door.

When you arrive in a new place, fold up your old glasses and put on those
gafas, megane, occhiali
or
óculos,
I tell you—doors pop open. Windows appear out of nowhere. I've seen it happen again and again. Traveling someplace new improves your processing skills. It helps sharpen the old tacks. It reminds you that no matter who you are, you'll probably end up coping just fine.

Our next flight is leaving tomorrow afternoon at four—I'll be there waiting at the gate.

A
s I said before, if you're looking for the cutting edge of retail today, you've got to go to places where money is young.

Young as in just hatched, freshly minted, just plain…
young.

In cities like Dublin, Moscow and São Paulo, among others, the retail world belongs to people under the age of forty who have just come into their money, and they're spending it on stuff left and right. By 2010, the vast majority of growth in the retail marketplace will take place in emerging markets, where well-trained merchants are serving emerging customers.

Dubai is a bright and shining example. Maybe you've seen those images of the city's mirage-like skyscrapers and sandy beaches. But did you know Dubai has also transformed itself into a twenty-first-century shopping crossroads? New shopping malls are sprouting up across Dubai like exotic mushrooms, and some are like nothing you've ever seen before. The new Mall of the Emirates has a ski slope, for heaven's sake. Ten bucks' admission gets you a parka and the chance to sip hot chocolate in what must be the world's largest deep-freezer. Seventy bucks rents you
skis or a snowboard, a truly hallucinatory experience in midsummer, when the temperature outside hovers around 115 degrees. My favorite new Dubai mall is named after Ibn Battuta, the legendary Islamic traveler. Each section of the mall celebrates a different architecture of the fourteenth-century Islamic world, from the Silk Road to Andalusia. Truly breathtaking, with a history lesson very softly thrown in, too.

In the coastal town of Durban, South Africa, stands Gateway Mall, where among the other retail offerings is a surfing school with a wave machine, as well as a Tony Hawk skateboard park (after all, it is a beach town). So as you're eating your lunch, you get to watch people learn how to re-create
The Endless Summer
or do crazy-eight leaps and spins. My client Old Mutual, a life insurance company, is investing in commercial real estate across Africa and the Middle East. With a dynamic CEO, its young crew of architects, marketers and managers have millions of square feet of malls and town centers both under construction and on the drawing boards. One of its South African malls offers an innovation that's breathtaking in its simplicity: a stadium for high school sports adjacent to the food court. It's secure, it's protected, it's extremely well maintained. And in a sports-mad culture, does it ever drive traffic. It also makes the mall a cool destination for teenagers. For parents it's a winner, too; they can drop their kids off in a sheltered environment, do a little shopping, retrieve their spawn and drive home. Please add South Africa to your global retail tour, and plan on a little wine tasting, too.

After apartheid's cruelty, the new South Africa is an example of the curative properties of economic growth. While crime, corruption and AIDS are a part of any objective portrayal of twenty-first-century South Africa, no one can overlook the growing prosperity, either. I would wish that same prosperity on Kabul, Gaza, Darfur and Baghdad.

Grafton Street in Dublin is the epicenter of Ireland's red-hot retail industry. Thanks to the country's skyrocketing economy, sad old Danny Boy has given way to exultant, stomping Riverdance. Practically everyone you meet in Dublin seems flushed with success. For a long time Grafton Street's anchor has been the venerable department store Brown Thomas, mecca to dowagers and dukes, who make a seasonal pilgrimage there for shopping, lunch and a dose of fashion worldliness beyond
the home-grown uniform of tweeds and brogans. And just as Dublin has become one of the hippest, most happening cities in Europe, Brown Thomas has gone through its own transformation. A few years ago, it moved across the street to a bigger, brighter, sleeker location, so today, it's an upmarket, cutting-edge, spanking-new department store, as opposed to, say, a thoughtfully renovated one. As a perfect emblem of Ireland's new prosperity, the new Brown Thomas all but hollers with taste, joy, opportunity and sheer fashionableness. They're selling to thirty-year-olds rather than forty-five-year-olds, and the younger demographic gives sections of the store a nightclub-like vibrancy you'd never find in Bloomingdale's. Do whatever you want to Saks—tear down walls, rejigger the lighting, pipe in Amy Winehouse—but the population base will remain stubbornly conservative. Whereas Brown Thomas is a truly
modern
department store.

But for a store that really takes my breath away—and as a globe-trotting retail wonk, that's never happened until now—I'll take Daslu, in São Paulo. While the owners are presently experiencing tax problems with the Brazilian government, Daslu for the past two decades has been the preeminent purveyor of luxury goods in the world. The new store is a mammoth one-hundred-fifty-thousand-square-foot colossus that functions like a series of artfully linked mansions. Stand back, Louis Vuitton. Too bad, Neiman's. Eat your heart out, Harvey Nicks. You ain't even playing in the same arena, much less the same game.

A Daslu membership card and a no-exceptions valet parking–only policy control access to the store. For cardholders, parking is free; for non-cardholders, parking is exorbitant. The average wait for your car is less than three minutes. Most shoppers are greeted by name, and a concierge positioned in the doorway calls their very own longtime personal shopper to help guide each guest through the store. While the main entrance leads into international fashion labels, guests can also opt for the second entrance, where they can find the Men's Store and a restaurant. If you're a real high-flyer you can also arrive by private helicopter. Walk-in traffic? There is none. A uniformed guard checks the cars off at the end of a gated driveway. But non-cardholders and the curious can take heart. In the past year, within sight of the flagship location across
the Rio Pinheiros, Daslu has opened a smaller version of itself in a new luxury mall. There are no female-only floors, and a much smaller men's section, but it's still a sumptuous store.

With its coffee bars, champagne bars, two restaurants and major luxury brands, Daslu feels more like an air-kiss-filled private club. Parts of the store are also strictly gender segregated. Large ceramic Great Danes sit frowningly at Women's Fashion entrances, with no men allowed signs hanging from their necks. Fall in love with a blouse in the women-only parts of the store? You can try it on there at the rack—go right ahead.

The shopper can also shop by assembling her own dressing room. Point to a pair of Manolos and a Chanel suit, and they've instantly found their way to your dressing room in the right size—after all, the store personnel
know
you. The women's dressing area comes equipped with jewelry displays of all the major brands represented in the store, so accessorizing is natural. Want more-more-more? Included in Daslu's suite of services are a plastic surgeon, a salon, an upmarket drugstore, a vacation planner and a real estate department selling homes across the world.

For the guys, apparel and male toys mix and match. Model cars and trains, radio-controlled helicopters and Ferrari-branded laptops. But that's just the small stuff. Enter men's sports apparel and the toys are supersized, from Volvo SUVs to full-sized helicopters. Hey, while we're on the subject, do you happen to like boats? Buy, charter or rent one in any vacation market in the world.

As magnificent as Daslu is, it also serves as a perfect metaphor for the dichotomies of Brazil, where a wealthy population roughly the size of Belgium's is surrounded by poverty on the scale of India's.

 

In the past ten years, retail innovation is far more likely to have taken place outside of North America than here at home. From Migros in Switzerland to the new Mega Mall built by Ikea outside Moscow, international merchants are applying the lessons learned in North America and outdoing them in the process.

From the perspective of retail design, two critical differences separate American and non-U.S. retailers.

One is how the merchant fits into the culture. Depending on where you live in the world, the merchant's role holds differing degrees of status. In the U.S., retail is mostly a lower-middle-class profession, the price of admission being a little money to get started and a lifetime of hard work. Mr. Bloomingdale was a former schmatte salesman who succeeded beyond his wildest dreams, not a member of the WASP establishment. Sam Walton was a local Arkansas guy. Calvin Klein and Ralph Lauren? Bronx boys, born and bred. Even today, a merchant may operate a successful store, but that doesn't turn him or her into a pillar of the local country club. Not a whole lot of MBAs leave business school, or an Ivy League college, with full-steam-ahead dreams of launching a career in retail. Our business history is largely the story of immigrants who gravitated to retail as one of the few career choices open to them, which, looking back, was key to making American retail as brash and innovative and vibrant as it once was. As the immigrants moved on, however, retail drifted close to its current mostly stale state.

Across the Atlantic and Pacific, it's a different story. The retail merchant enjoys some social respectability. The British and the Dutch, for instance, have long traditions of merchant banking, or of being the middlemen in the buying and selling exchange—thus tying retail into a comfy wealthy establishment. In France you have a merchant class that for five hundred years has been selling to the aristocracy, and that rich history shows up in many different ways. LVMH, the luxury goods company that owns Louis Vuitton, Sephora and some fifty other brands and stores, operates a business school in luxury goods management and hands out the most prestigious MBA in retailing in the world. In Paris, Galleries Lafayette's marketing efforts are light years ahead of any other store in the world. The store starts marketing to you the second you board the plane heading to France. Touch down in Paris and the marketing immediately picks up steam. Arrive at your hotel and you'll be handed a map with Galleries Lafayette prominently placed among the City of Light's innumerable attractions, as well as a reminder that it's a great place for tax-free shopping. Three hours later, you walk through
the doors. Do you speak German, Japanese, Dutch? Galleries Lafayette will hook you up with a personal shopper who speaks your language. They'll even change currency for you on the premises, if need be. In short, the store has anticipated every single one of your retail needs, and it does one helluva job of compelling you to shop there.

The other key difference between U.S. retailers and those abroad is topographical: Where does the store sit? Historic and densely populated urban centers create their own retail art forms, from the small to the oversized. The models of operating expenses, margins, staffing and even fixturing costs are well-concealed behind a shroud of history and fierce independence. Italy, for example, has more points of sale per unit of population than any other country in the world. There are a few streets in Milan where one goes specifically and single-mindedly to window-shop. Whenever I do just that, I'm always reminded of the French expression for going window-shopping that translates roughly to “I have to go lick the casements.” The closest comparable experience may be the red-light district in Amsterdam. I'm never altogether sure what I've learned from the experience, but I sure feel privileged to have looked. Goods are sold at full price and the service can be professional and intimidating or warm and familiar—it all depends on the store. But overall, the union of window and store is unique, in part because the women on display in the windows are interacting (or at least attempting to) with the people in the street. They're active mannequins—beaming, pouting, gesturing, waving. And because the alleyways are so narrow and pedestrians are so physically close to the windows, window-shopping becomes an intimate, almost voyeuristic experience.

North America has no population concentrations where the social classes historically mix and merge. New York, Boston, Toronto, Philadelphia and Washington, DC, are as close as we get, and even those five cities have historically been in transition, with changing land and population and real estate values. But urban retailing is hot and is only going to get hotter as the American urban core gentrifies. Our American merchant class is also transforming around us. If we've given Europe giants such as McDonald's and Starbucks, well, they've got something to show us, too.

 

All across the world, developers are taking a long hard look at what makes a great shopping environment work. Along with entertainment, the shopping mall is one of our most successful U.S.-born-and-bred exports. You can now find malls all over the world, from Kuala Lumpur to Dubai, from Tokyo to Lisbon. On the surface, some of them may look the same as ours, but don't be fooled for a second. Every country faces and has to cope with its own local manners, cultural codes and personal boundaries. In South Africa, Brazil and Mexico, malls face security issues that we don't have here in the U.S., so in these countries, a mall isn't just a place to shop and ogle other people, but, as in the high-end case of Daslu, it also serves as a protected fiefdom, a super-insulated private club.

Iguatemi in São Paulo is a great example of a hybrid mall—one that links the malls we're all familiar with in the U.S. with local roots and solutions. São Paulo is a dangerous place, so it's no surprise that one of the first things you notice when you step through the doors of Iguatemi are the security guards. These aren't first-timers or retired, sore-legged guys on mall-rat patrol. These hard-eyed hawks have a martial edge about them, and they mean business. The second thing you notice is how inexplicably joyful you feel simply observing the human circus on parade. It's a social setting that no American or European mall could ever replicate. I'm glad I've come here at my age, because if I'd been a regular visitor to Iguatemi when I was in my twenties, I know I would have fallen crazy in love every ten minutes. It's not the stores at Iguatemi that are so interesting or special, it's the physical environment. Within the context of Brazilian culture, most adult children live at home until they get married. If you want to go out on the town, your choices are limited—a restaurant, nightclub or, yes, a shopping mall. Thus, a trip to Iguatemi offers Brazilian twentysomethings a setting in which they can see, meet and otherwise hang out with contemporaries of a similar social class, and in a safe place that's open day and night. U.S. malls may provide social opportunities for the under-eighteen crowd, but it's the rare twenty-five-year-old guy who hangs out in front of J.C. Penney or
Hollister hoping to chat up women. But in Brazil, if you're twenty-five, and you can't entertain at home (Mom and Dad are lurking nearby, ears cocked), the mall is a logical place to go.