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| (David P.)... |
 Posted: Wed Nov 11, 2009 1:39 pm |
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How I Did It: Joe Sitt, Thor Equities
Transforming urban shopping, one skeptical town at a time.
Jan 1, 2006 - Inc. Magazine
As told to Sasha Issenberg
In just the past few years, residents of America's big cities
have finally come face-to-face with some of their favorite
bogeymen: big-box stores. And like a child of the Cold War
who finally meets a Russian counterpart and finds that this
one isn't so bad, urbanites have taken a liking to their
Targets, Home Depots, and Wal-Marts--even if they still damn
the trends that got them there in the first place. For this
staggering contribution to cosmopolitan culture few deserve
more credit than Joseph J. Sitt, the 41-year-old CEO and
founder of Thor Equities, who has spent 20 years trying to
lure the nation's top retail chains into inner cities and
yuppie downtowns. Today he lords over nine million square
feet in 16 American cities. He'll add to that with two
recently announced projects in which he plans to bring
national retail chains to legendary American places:
Chicago's Palmer House Hilton hotel and the depressed
amusement strip at New York's Coney Island.
Born and raised in Brooklyn, NY. Always really entrepreneurial
as a kid. One of my last ventures before college was operating
flea markets. The parking lots of the various racetracks around
New York got converted into flea markets, and it was a fabulous
opportunity to understand inner city commerce. One thing it
showed me was how underserved the market was, how many people
were desperate to buy toys. It's hard to imagine, but back
then there weren't that many Toys "R" Us around.
Thor Equities was founded 20 years ago when I was in college.
I was a comic-book collector and Thor was the Norse god and
the comic-book character that protected planet Earth from the
monsters that were destroying the buildings on the planet.
That fit in with my concept of being the protector of the cities.
I went to New York Univ. & heard about properties being sold
off at tax auctions. My first properties were on East Tremont
Avenue in the Bronx. I raised money from family, friends,
roommates, parents of roommates. I built one-story retail.
They used to be called "taxpayers"--the theory was you'd get
enough revenue from the retail to pay the taxes until you
could build a tower or something there. So I started off
like that.
Historically, inner city retail stores had brick or stone
façades. I guess they thought of themselves as being in a
battle zone--which is not good marketing. Around the country,
people really learned about the importance of consumers being
able to see inside the store, rather than just a showcase in
the window. We did things like use a grill with lots of small
holes--it provided security, but if the merchant left the
light on, the store really shone through.
Going into a strip center, we'd repave it, restripe the parking
lot, nice fencing, lighting. We'd put a music system in the
parking lot. That was nouveau. Play jazz on the weekdays; if
you're in an African American neighborhood, play gospel on
Sundays. I would go out & knock on the doors of these national
chains. One of them called me Preacher Boy. I was trying to
sell the virtues of the inner city and its potential.
I won't tell you who it was, but there was one guy I called--
I'm describing the area, the disposable income. He says, "What
about the demo?" meaning the mix of people. "It's about 90 to
10," I said. Everything went well, & I called him back a week
later. He said, "Boy, are you out of your mind? When you said
it was 90 to 10, you didn't say it was 10 to 90!" I think
bigotry can blind people. Until the color green becomes more
vivid than the color black.
When I was 11 years old, I was in Bentonville, AR, visiting
Sam Walton with my dad. Wal-Mart had about $230 million in
sales and about $6 million in profit. I remember helping my
dad sell his wares there--children's clothing. I'd get lost
wandering in the offices, and Sam Walton would say, "Son,
come on in," and give me a sweet. He was a monstrously big
person, and he's had a lot of influence in my life. He was
altruistic and socially conscious about his business and
making the world a better place, and I've tried very hard
to keep that ethos.
Toward the end of the '80s, I was frustrated that I couldn't
get the quality retailers to come into my projects. I thought
that if I couldn't bring Muhammad to the mountain, I'd bring
the mountain to Muhammad. I hired merchants to study the urban
marketplace to figure out where the biggest void was, with the
ultimate purpose of creating my own retail concept to appeal
to inner city customers. They found that the biggest gaping
hole was the sweet spot in general retail: ladies' apparel.
There were stores, but they sold $5, $10, $15 leggings and
T-shirts. There was no place for a working woman to get a
nice suit, a nice blouse to go out in. What we also noticed
was that a lot of African Americans happened to be fuller-
figured, larger size. We came up with a concept called Ashley
Stewart--the Ashley from Laura Ashley and the Stewart from
Martha Stewart. Both of them were icons of upscale Americana,
and we wanted to bring that upscale shopping experience--the
antithesis of what you've seen in the inner city.
A lot of folks had stores, especially back then, that just
sold stuff. They had the name of the store and then different
brands inside, or brands they made up. The big thing in
America was making up names you could make-believe were some
upscale name. For us, the brand was on the front door and on
every garment in the store. At the end of the day, you're
building a whole brand environment and one consistent image.
If you do it well, you can go to the moon. We'd throw 300 to
350 fashion shows a year to raise money for the community. It
was probably the best example of guerrilla marketing because
you didn't pay anything. You give out discount coupons, which
everyone is so appreciative of--but it drove business back
into the store. Everybody's advertising the event, they're
advertising your brand name. Many times the pastors would be
on the pulpit, saying "Joe Sitt is a guy who's done good by
the community and show your support by spending money at
Ashley Stewart."
The more folks come together culturally and live together,
the more they strive to keep strong their own culture. One of
the things I have become good at over the years is understand-
ing how to micromarket to a particular market segment, and
not just saying, "They're women, they're all the same" or
"They're men and they're all the same."
By 2000, I sold almost all my interest to focus just on the
real estate stuff. Now I have a 360-degree view: I have the
view of the landlord and the developer, but I also have the
view of the retailer. Real estate guys don't think about
consumers; they think about bricks first. Then the ones that
are really different, they think about the tenants. But nobody
thinks down to the next step of who the tenants have to get
into the building. Having operated 380 stores around the
United States, I understand customers and what they want.
By the late 90s, all those guys that gave me a very difficult
time about opening up in an urban location were the first on
line running to the inner city. The white suburban market was
saturated, this was an underserved customer with tremendous
disposable income, and this is where a tremendous part of the
demographic growth is happening.
I can't tell you how many projects where I've visited the
grand opening as a landlord or a retailer. I'm there greeting
everybody, and they hug me and kiss me, smothering me with
makeup and perfume. I have lipstick all over my face.
What drew us to Coney Island? History. We're nostalgic not
just from an emotional point of view, but a return point of
view. Palmer House is 130 years old; Coney Island is a 150-
year-old project. After 150 years, it's been able to establish
an immeasurable brand name. We see Adidas and Izod--all the
old brands are coming back in the fashion world. We realized
that you can find brands in the real estate world.
When I look around the landscape today, one of Home Depot's
highest-volume stores is in Brooklyn. Two of J.C. Penney's
top 10 are in New York. Lowe's just opened in Brooklyn. Today
in Harlem, you've got a Disney store open, you have Old Navy,
H&M. Back then I was considered a crazy man.
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