Why We Buy (32 page)

Iguatemi is loud—gloriously loud. In part this is because the corridors and concourses are narrow, and also because in a hot climate, stone and tile flooring help keep the temperature in check. But the racket itself comes from the echo, clatter, click and clack of female high heels. I could watch Brazilians walk from here to Alaska without getting bored. They seem to have their own internal jukebox, and it's always playing some swaying, samba-heavy playlist.

Amid the high-heeled sandals, spike heels, mules, miniskirts and short shorts, Iguatemi works at being a solution to all your utilitarian needs—something an American landlord might want to bear in mind. Watch strap broken? Need a duplicate house key? Want to book a flight to the States or pick up your dry cleaning? You're in the right place.

Blockbuster Mexico, the video store, offers the same degree of security mixed in with social spectacle, family style. When you drive in, you confront a threefold line of defense: the parking lot, the door and the register. Blockbuster, like a shopping mall, is only viable here because it protects against the insecurity on the street. Latin families tend to be a close-knit bunch—they like to spend time with one another—so Blockbuster Mexico tends to be packed with extended families. In fact, the stores are jammed from early on a Friday afternoon right through into Friday evening. One time, we saw a representative from Philips showing off the company's new home theater inside a Mexican Blockbuster, simply because that's where the people are. Smart idea. Anybody in the U.S. ever considered it?

When Blockbuster Mexico asked me to come down and do some consulting work, I said sure, absolutely, but I had one request—that the executive board visit the stores with me over the course of a weekend. But, but, Paco, they replied, we've never been in a store on a weekend! We're out at our country houses!

Again, this is an issue I run into over and over—top-level execs busy crunching numbers but never even once bothering to visit the actual floor. I remember once leading the top brass of a U.S. carmaker into
the ladies' room of a European dealership, where, naturally, they'd never set foot. The room was gloomy and unkempt and in overall shabby shape. “Would you
really
want your wife peeing in a room like this?” I asked. They shook their heads—no, of course not. The point here is they had no idea. Even at Dublin's Brown Thomas, led by its dynamic, straight-out-of-central-casting CEO Paul Kelly, I stumbled onto a disconnect between top brass and the actual store experience. A dazzling store, Brown Thomas, as I said, and one that, like most good retailers, made a concerted effort to focus on the unique qualities of Brown Thomas people—the staff, which makes any department store special.

Once I'd gotten the party line, Paul Kelly gave me the keys to the store and told me to go poke around and see what he could be doing better. A day later, I escorted him into the store's female employee locker room. It looked like a barracks for female Navy SEALS. Slim green lockers, stark lighting, uncomfortable benches and three narrow mirrors. Just God-awful.

Twenty minutes before the store opens, that grim locker room has literally hundreds of women in it. That's where Brown Thomas people—and Brown Thomas customer service—start. Paul even murmured that the locker room he used thirty years earlier at Trinity College down the street had more amenities. Knowing him, I have no doubt he fixed the problem.

One of the easiest ways to gauge a store's morale is to take a look at the amenities and spaces it provides its employees. This doesn't mean you have to have a paid babysitter or masseuse on staff, but it does require a little care and attention backstage.

At the start of our relationship with our Mexican office, I came face-to-face with one of the most intriguing business models I've ever seen, a consumer electronics chain known as Elektra. Today they operate about nine hundred stores, do roughly a billion dollars a year in sales and have expanded their presence into Guatemala, Peru and Honduras. In the commonly used economic rating system, with Neiman Marcus being an A and Wal-Mart hovering around the C, D and E regions, Elektra serves the C and D markets (these letters refer to the income level of
the shoppers). It targets—and helps give a much-needed boost to—the hardworking poor and emerging middle class.

Bet you've never heard of it. Most people north of the border haven't, and that's no doubt because its consumer base doesn't straddle the top of the economic ladder. But Elektra has come up with an innovative lending-and-buying system I still shake my head over. Why? It's that good. And it dovetails with Mexico's growing prosperity.

In the Latin market, if someone walks in and can prove they have a home, a job and a mailing address, Elektra will lend that person the money to outfit their lives. In return, the customer agrees to make a small weekly cash payment. That said, the entire family takes responsibility for the loan. In essence, it's a bank wrapped up in a consumer appliance and department store.

The storefront is open like a garage, with merchandise spilling out every which way onto the sidewalk. The way into Elektra and the way out are pathways lined floor-to-ceiling with your next purchases, though the payment bunker, which is located far to the rear of the store, is utterly no-nonsense, with insulated walls and bulletproof windows. It's an intuitive system, and as a vehicle for social progress, it's off-the-charts innovative.

The first thing a customer might buy? A refrigerator. The second? A stove. Third comes the TV set, fourth the washing machine. Throw in a boom box, a good mattress and box spring plus a set of nice-looking furniture, and Elektra has outfitted your whole house—and given your whole family a leg up on the social and economic ladder. They've also set you up with a checking and savings account and let you choose among a full line of insurance products. Have a family member who is working in the U.S.? That person can make an online contribution to your Elektra account. Which means you can just maybe pay off your Elektra loan sooner and move up to your next purchase, whether it's that boom box or that bedside table. As you ascend the ladder, Elektra is by your side every minute, holding your hand, pointing the way.

Does the company charge high interest rates? Absolutely. But Elektra is also enabling social mobility. They're lending money not to a single person but to an entire household, including extended family.
The company's bad debt ratio? Remarkably tiny. A lot less than for your typical bank. So it's a win-win for Elektra, for Latin families, and for the entire Latin American standard of living.

Genius.

 

This isn't to say that all the fun is taking place abroad or that retail innovation is solely an international phenomenon.

A few promising U.S. concerns have picked up the slack. A dying mall outside of Fort Worth, Texas, has now been transformed into La Gran Plaza, a Latino mall with its own mariachi band and a former Dillard's anchor that today houses a vast and ever-changing
mercado.
It has a movie complex playing Spanish movies, a school that teaches people how to apply for mortgages and a new industry that marries a dental clinic to a jewelry store so that dental jewelry (known as a “grille” in hip-hop parlance) can be customized. It knows its market, doesn't try to be all things to all people and is an overall knockout.

Fairway on 12th Avenue in Harlem is located in an old warehouse which is shopped by a broad cross-section of New Yorkers—everyone from firemen to housewives stocking up on cheese to local Harlem mothers to businessmen bringing dinner home en route to the Westchester suburbs. Platinum Amex cards appear one moment, followed by food stamps the next. Fairway is a great show, an exhilarating adventure. Visit the coffee section and the roaster yells down to you which blend he just finished freshly grinding. Want a steak or a roast chicken for dinner? Wrap yourself in a quilted silver jacket to shop the refrigerated goods section, where instead of steaming cold cases, an entire room is one big chill.

Which leads me to a point that is always good to remember: Successful retail experiences are run by placemakers, not landlords. Whether it's peacocks, a strolling Dixieland jazz band or mermaids, they have to find a way to make their locations
exciting.
It's no coincidence that most owners and progressive developers across North America have begun knocking on the doors of marketing consulting firms. With the frequency of visits and average time spent in malls declining, they're
starting to recognize that the answers aren't going to be found by crunching census data or looking at sales per square foot. Public spaces, seating, bathrooms and parking lots outside your doors are just as critical to sales as pricing and visual merchandising.

One place doesn't have to serve all people, and I'm not talking about ethnicity, either. You can have a mall that's focused on young families, a mall for teenagers and even a mall that takes especially tender loving care of its elderly. I can almost guarantee that every single member of these constituencies would thank you from the bottoms of their young, stroller-pushing or older, white-sneakered hearts.

 

Since this book came out in its original edition, I have had more opportunities than ever to travel. Today, I'm on the road approximately 150 days a year. One bonus of Envirosell's international licensing agreements is that I get to spend a certain amount of time with each of Envirosell's overseas licensees. Nothing could give me greater pleasure.

Today, I have more than four million frequent flyer miles, give or take a few thousand. Give me a little time off and I'll opt to stay at home. But a few days later, I just can't help it—I start to get itchy. In the world of road warriors there are people who travel more nights than I do, but I know of very few who carry off the roller-coaster time changes. The bags under my eyes are well earned, and that aisle seat over there? You can't have it, it's mine.

W
hen you think about it, people have been selling, buying and trading goods since we left the caves, quarries and campsites of East Africa and set off on our various migrations across the world. A few years ago, I had a humbling experience as I listened to a Turkish vegetable cart operator tell me how he organized and laid out his daily wares. He talked about sun angles, about the order in which consumers readied their vegetables for cooking and about what was going on in their minds when they decided whether to buy eggplants or tomatoes first. He had opinions about where he should stand in relation to his vegetable cart and the best ways to interact with a wide variety of prospective customers. I could have listened to him forever. As he spoke, I could hear echoes of his ancestors, and his ancestors' ancestors. It was an enlightening monologue—all the more so since not one out of every fifty store managers I've ever encountered could have duplicated it.

It reminded me again that the science of shopping is hardly new. Along with fight-or-flight and how our brains regulate the air we
breathe, shopping is practically in our species' DNA. Fact is, it may have been the first way a human could get ahead in the social hierarchy beyond competing based on size, strength or speed.

For a moment, let's consider Istanbul, a city that sits at one of most ancient cultural crossroads in history. Turks as a people come in all colors, shapes and sizes, and as you make your way through the crowded covered streets, you see evidence of a kaleidoscopic genetic mix in people's faces and inhale a variety of crisscrossing smells—body odor, hair tonic, pungent spices and aromas from countless foods, all dusted across an oriental carpet of noise—tinny music, shrill chirping children, the cloying ministrations of the young men at the shop front imploring you to come in. The Grand Bazaar is more than five hundred years old, and it's a challenge staying put in the present. Most of the store windows have elaborate displays of gold jewelry, barrels of spices, boxes of colored henna and signs. Lots and lots of signs, too—from state-of-theart LED, to aging neon, to fly-specked lifestyle graphics that look like they've been around since the turn of the twentieth century. But one common sight you see almost everywhere is an Internet address. Yeah, the Grand Bazaar itself has its own website, which allows you to pre-shop and to contact merchants directly. The merger of bricks and clicks is right in front of you in a city that has hosted traders and shoppers for more than three thousand years.

Looking for far-flung visitors? They're not hard to spot. This city has played host to strangers since time immemorial. Turkey brushes up against many of the former Soviet republics and attracts visitors from what used to be the corners of the Ottoman Empire. Turkey is an inexpensive, go-to vacation spot for middle-class Germans (the two countries date their relationship back to the 1920s).

The Grand Bazaar merchants have also anticipated the needs and concerns of the tourist trade. The food stores advertise Iranian caviar ready to travel home with you in your checked luggage—sealed in dry-ice packages to ensure complete confidence in your purchase. The local saffron vendor even offers shoppers a course in quality, which he conducts several times an hour. He mixes different grades of saffron in bowls of water, then stands back as you coo over the various hues and
richnesses of color. He moves product as well or better than any other salesman I've ever seen.

Whether it's the Grand Bazaar in Istanbul or the Gold Souk in Dubai, the rules and tools of trading are as old as the hills. I once went with a friend to fix a computer at an electronics repair shop in Ankara, the Turkish capital. We walked in, had tea with the proprietor, asked after family, talked about the weather and the local soccer matches. The price for the repair went from the equivalent of fifty dollars as we entered to seven dollars as we left.

Much of what this book is about is the eternals of shopping—and also common sense. Still, if twenty years ago you told me that someday I'd be a generally acknowledged expert on how women shop for cosmetics—and by dint of having spent countless hours observing them while they do just that—I'd have called your shrink. Ditto if you had predicted that I'd become a scholar of the dynamics that govern the fast-food drive-thru line. In fact, I'm still a little discomfited when, in a corporate conference room, I hear myself being deferred to as the senior researcher. Most people who spend their lives in retailing do so thanks to some merchant gene. Still, I'm grateful to have found a path to it. My colleagues and I have been bitten by a strange bug—none of us are businesspeople, and yet we spend an awful lot of our waking hours untangling the problems and issues that beset the world of people, spaces, products and service. We can't walk down a shopping street, read a restaurant menu or walk through an airport without deconstructing the experience and trying to figure out how it could be improved. The merchants in my neighborhood are tired of all the free advice I proffer. When Dreamboat and I go on vacations, she has to remind me to turn off the automatic analyzer device in my brain. Even then I'll end up leading us into a mall, just to poke around a bit. Unlike Margaret Mead, I don't have to go far to perform a little fieldwork.

The science of shopping is a hybrid discipline—part physical science, part social science, and only part science at all, for it is also partly an art. But it is a practical field, concerned with providing information that can improve a merchant's or marketer's edge and cut the odds of making a wrong decision. Our value lies in our ability to go beyond merely
collecting data to make good educated guesses about what it means and how to respond. While I can say that most of the time we have been proven right in our interpretations, we have been wrong sometimes, too. And so we keep searching. Even our most senior management people spend ninety nights a year on the road, devoting their weekends to stores, banks, restaurants and malls all over the world. It's been hell on our personal lives, I assure you.

And even with all that, the truth in the science of shopping is transitory. The basic facts of human anatomy remain, more or less, but the store itself and the tastes and behaviors of the shopper continue to evolve. Just as the farmer of 1900 had more in common with his agrarian ancestors of a millennium before than with his agritechnician grandson of 1950, the merchant of 1900 would have a lot of catching up to do today. If we look back just to the '70s, we see that many of the leading retailers of the period are gone now or greatly diminished. Korvettes, Woolworth's, Montgomery Ward—all are now consigned to the history books, and many others will follow shortly. Might Wal-Mart stumble, will Starbucks fade, will Topshop ever go global? It's a changing world. In the olden days, the adage held that with the right product at the right price, success was assured. Today you need those elements nailed down just to hope for mere survival. Today everybody is competing with everybody else, and so the threat can come from any direction. It is dangerously narrow-minded for a store owner to believe that the only competition is from others in his or her category. In truth, retailers compete with every other demand on consumer time and money. Recently we've been hired to study patrons in movie theaters, which just reminds us that two hours and $20 spent in a cinema are forever lost to the rest of retailing. Likewise, if the experience of spending twenty minutes of unused lunch hour browsing in a computer store is more enjoyable than visiting a bookstore, then it becomes likely that some software will be sold—and impossible that a book will be. The era of the visionary retailer or the manufacturing king is over. In the twenty-first century the consumer is king. Just as fashion comes from the street up, the world of retail is about following shoppers where they are going.

First and foremost, shopping follows social change, and woe to the businessperson who fails to comprehend this. Without a doubt, the major social change playing itself out during our time has to do with the lives of women. In his lectures, esteemed social critic, researcher and futurist Watts Wacker makes the point that, based on the current evidence, men are on their way to becoming exotic household pets. Retail must pay attention to how women wish to live, what they want and need, or it will be left behind. Even the enormous changes in the lives of men and children are merely in response to the lead taken by women. It pays to listen and be humble. Shoppers are fickle today, and their loyalty to brand name—whether of a product or a store—lasts only as long as the afterglow of the most recent shopping experience.

If bad results in one fiscal quarter send shock waves through a national retail chain, two or three sour quarters is lifeboat time. The best defense against complacency is to eliminate the distance between the floor of the store and the men and women who make the decisions about what happens there. The most intelligent management decree today is to push more responsibility and authority down to the store manager level. Senior brass must develop the tools for teaching managers how to make sure the store is serving the shoppers. In 1998, I told a largely male executive group at Wal-Mart that I could tell the gender of the manager in any of their stores based solely on how recently the women's dressing room had been painted. I don't know if I am responsible, but a few months later, I noticed that lots of Wal-Mart dressing rooms had gotten spiffy new paint jobs. Male managers hate the soft goods sections, because like cosmetics, they eat up labor costs and are more likely to have theft problems, whereas hard goods such as TVs and minifridges are easier to get onto the shelf and are much easier to keep track of. Women by nature have a better understanding of how soft goods work and what they can do for the business. Ten years after I made my dressing room comment, Wal-Mart still has an underdeveloped clothing business. One simple way of improving it would be to increase the number of female store managers.

Even with all there is to be learned from the science of shopping,
we recognize that there is room for a creative merchant to throw the textbook to the wind and break all the rules. You'd think a basic tenet of retail is that shoppers should be able to say the name of your store. But I have a friend who owns a highly successful web business, run out of his tiny store. It's called Mxyplyzyk, an intentionally unpronounceable appellation taken from a rather obscure character in Superman comics. It's a crowded place filled with an eclectic mix of products, from bathroom fixtures to books, and the price points roam all over the map. The checkout process is primitive and the receipts are handwritten. But I can't teach Kevin, the owner, a single thing about retail—he's invented a selling machine in his own image, and it looks like he's having a great time with it. For all the science we preach, we realize that if you've got the moxie, you might have the moves.

 

As professional observers, we play a strange role in the world of commerce. I joke that I'm the only person in the retailing industry who's delighted to witness shoplifting. It shows that we're able to confound the Heisenberg principle and observe people in stores without altering their behavior. After all, if someone shoplifts in front of a team of trackers, it means that person hasn't noticed we're there (on the rare occasions we get busted, usually it's by some sharp-eyed kid). Some of my most vivid memories, in fact, involve thievery. I remember studying the video of a well-dressed matron at the fragrance counter of Filene's Basement on Washington Street in Boston. She repeatedly dispatched the respectful clerk on missions to distant parts of the section while she loaded up her tote bag with bottles of perfume from the counter. Actually, we commonly see well-dressed shoplifters buy one product, then steal another. At a drugstore in Spartanburg, South Carolina, our trackers kept finding individual disposable diapers (clean ones) tucked into odd corners of the store. The mystery was cleared up when they saw a shopper filling a half-empty diaper package with large jars of a pricey headache remedy. Our most pathetic shoplift sighting involved a father who tucked a screwdriver set into his sleeping infant's diaper.

But our job is like that of the crew on
Star Trek
—we're there to observe and report but not interfere.

We preserve the privacy of those we videotape, as a way of keeping faith with our ultimate patron, the shopping public. Given that my roots as a researcher are based in public advocacy, I am very sensitive to questions of invasion of privacy in our work. I was appalled when one of the first major magazine stories on Envirosell called us “supermarket spies.” A few years back, BBC radio invited me to appear on an hour-long call-in talk show. Glad to participate, I said. But when I called in, I was surprised to find they'd set up a small ambush of sorts. The other guest? An expert in consumer advocacy. The topic? Privacy.

Now, whatever you do, don't slap the George Orwell
1984
thing on me. If you believe Envirosell's store cameras are intruding on people's privacy, then let's first take a stroll through the streets of London, and we'll find our faces showing up on just a few of the city's roughly five hundred thousand closed-circuit cameras, many of which are hooked up to facial recognition software—just a small portion of the seven million cameras softly clicking away all across the U.K.

If London is outside your reach, we can log on to the web instead. In ten minutes, I can find out how much money you make, your political party affiliation, what books you've taken out of the public library, what your arrest record is, if any, and the names and phone numbers of your neighbors. Heck, I can Google-map your house from a satellite and see if there's smoke coming out of your chimney.

Our cameras are hooked up to a supermarket, department store or bank. I'm not interested in who you are, what your name is, what your phone number is, where you live or whether you own a golden retriever or a guppy or a hive of bees. All I'm interested in is shopping patterns. To me, you're Shopper #X3. You're wearing worn jeans, a Rock and Roll Hall of Fame T-shirt and a well-broken-in pair of boat shoes.