How I Did It: Joe Sitt, Thor Equities
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, New York. 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 University and 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 and 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, and 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, Ark., 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 understanding 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.
"The white suburban market was saturated. This was an underserved customer with tremendous disposable income."
By the late 1990s, 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.