Executive Strategies for the Americas: Retail revolutionary: how does a real estate developer become a household name? Being a prolific builder like Salomon Cohen and his Constructora Sambil helps. Naming massive shopping malls for yourself doe

Retail revolutionary: how does a real estate developer become a household name? Being a prolific builder like Salomon Cohen and his Constructora Sambil helps. Naming massive shopping malls for yourself doesn’t hurt either – Constructora Sambil

Christina Hoag

SOLOMON COHEN CAN HARDLY WALK A FEW blocks in Caracas without laying eyes on one of his many projects, including apartment buildings, office towers and shopping malls. As one of Venezuela’s top real estate developers, his Constructora Sambil has built dozens of the capital city’s modem landmark buildings during the past 42 years.

More than 14,000 families live in Sambil-built apartments. Thousands of caraquenos work in Sambil-constructed office buildings. But it’s hundreds of thousands of shoppers who have turned Sambil into a household word in Caracas during the past two years, thanks to the enormous shopping mall that bears the company’s name, Centro Sambil.

With some 250,000 square meters of space, the US$300 million Centro Sambil is reputedly the largest mall in South America. The company claims the mall attracts 400,000 shoppers weekly to its 540 stores. The week the mall opened, crowds of shoppers overran it. The masses proved too much to handle when shiny new escalators, designed to move shoppers through the multilevel mall, broke down. “We never imagined the success we would have with this,” says Cohen, the trim, grandfatherly president and CEO of Constructora Sambil.

Concept Roll-out

Sambil is becoming a byword across Venezuela as Cohen, buoyed by his huge hit in Caracas, pursues an aggressive expansion of his retail concept in the country’s major cities. In November, he opened the US$90 million Centro Sambil Valencia, 120 miles west of Caracas, and May is earmarked for the ribbon-cutting for the Sambil Margarita Island. After that, five more Sambils are slotted for construction. “We plan to do one every 10 to 12 months,” says the 73-year-old Cohen.

Cohen got the idea for Centro Sambil from Venezuelans’ favorite place to shop — Miami. “I saw the malls there filled with Venezuelans, so I thought why not bring that here,’ he recalls in his simple manner.

Cohen and his six children, who all work in the company, traveled the globe to study malls and to select the best concepts for Centro Sambil, which took six years to finish. The mall was developed more as an entertainment center than strictly as a place to shop, an adaptation of the mixed-use real estate concept Cohen pioneered in Venezuela. Centro Sambil boasts cinemas, a bowling alley, a rooftop amusement park and an aquarium, as well as an amphitheater for events. Given the lack of anchor department stores in Venezuela, this was an important feature.

Although malls have long existed in Venezuela, they are closer to strip centers, typically scruffy and anchored around a supermarket. The Cohens chose to make Centro Sambil a sleek American-style mall, both in its orientation to encourage shopping and in its administration. It is open 365 clays a year, from 10 a.m. to 9 p.m., unheard of in the Venezuelan retail business. “Here, stores close at 5 or 6 p.m., just when people are getting out of work. They close at midday for lunch, and on the weekends,” says Cohen as he looks out the window of his spacious office. The panorama affords a view of numerous Cohen projects, including a US$100 million, state-of-the-art office complex under construction a block away, and several luxury apartment buildings nearby.

Sale Strategy

A central part of the company’s retail strategy has been to maintain ownership of the Centro Sambil stores and rent them out, another departure from established practice in Venezuela. “This gives us more control over the stores,” says Cohen. “If they own the store, they can open and close when they want.” It also gives mall administrators more control over what goes into the stores. The mall operates under a “tenant mix” philosophy with quotas for different types of merchants.

Sambil produces its own electricity for the mall through an on-site plant. Cohen notes that this guarantees the mall will have power, is less expensive than buying electricity, and gives tenants extra incentive to pay their rent on time — they face an electricity cut-off.

Cohen’s concept has revolutionized Venezuelan retailing. and spawned a wave of imitators. Now similar style malls are sprouting all over the country, says Pietro Fornino, real estate consultant and editor of Real Estate Venezuela magazine. “Centro Sambil has turned around commerce in Venezuela,” he says. “The idea of the extended opening, and also the tenant mix. This benefits both the shoppers and the merchants.”

It’s also made retailers adapt to the new style of shopping. Carlos Sultan, the country’s leading retailer with his Graffiti stores, says Centro Sambil was largely responsible for his decision to consolidate his chain of small stores, each selling a different line of merchandise, into a department store concept. He opened a prototype in the mall, and it was packed from day one. “With that megamall, the concept of retailing changed in Venezuela,” says Sultan. “From that moment we realized that the mega-store was the way to go.”

Pioneering new concepts in real estate has been a hallmark of Constructora Sambil — and a key to its success — since Cohen founded the company in 1958 with just himself and a secretary. Today the company employs some 6,000 people and boasts annual revenues of US$60 million. It develops five to six projects a year, about two-thirds of them commercial or office, the rest residential.

Cohen and his company enjoy a good reputation in the retail and real estate sectors. Luis E. Velutini, president of Fondo de Valores Immobiliarios, a real estate investment firm that provides financing for big office buildings and other projects, says Sambil is one of the first builders he approaches to construct projects financed by his (Velutini’s) company primarily office buildings. “They’re one of our top partners in projects,” he says. “They’re serious, very hard working. One of the best.” Sambil has not only carved out a niche in the construction of malls, Velutini notes, but has changed the way Venezuelans think about shopping: “They’ve developed that shopping mall mentality here, and they’ve had great success with it.”

A Family Affair

Born in Jerusalem to Persian parents who immigrated to Venezuela in 1929, Cohen grew up in working-class central Caracas, attending public schools and getting a job as a teen-aged salesman to help support the struggling family of 10 children. After graduating as a civil engineer from the Central University of Venezuela, he worked on public projects for the government before deciding to strike out on his own.

Cohen started out as a contractor, building industrial sites. Then, with the advent of a law in the early 1960s that allowed condominium-style home ownership, Cohen immediately saw opportunities in the middle-class residential sector. He soon built his first condominium building, Grano de Oro (Grain of Gold), named for a favorite racehorse. Since then all his residential buildings have Dorado (Golden) or “Dor” as part of their names.

In 1965, Cohen gave up doing work as a contractor and devoted himself exclusively to developing his own projects, which, over the years, has given him a reputation as an entrepreneur and an investor rather than as a builder. That was one milestone for Constructora Sambil, which grew rapidly The next was the company’s first office building, built in 1975, followed by its move into the luxury residential sector in 1985.

The company’s direction changed again in 1992 with the opening of Centro Lido, a modem blue-glass center in the El Rosal district of Caracas that combined office towers with restaurants, shops, cinemas and later a hotel. With that project, Cohen pioneered the “mixed-use” real estate concept in Venezuela.

Centro Lido was the country’s first office-commercial center and the first “intelligent” building, with services controlled by computer. Both ideas have been widely copied since. “This was really the turning point for us,” says eldest daughter Fanny Cohen, who like her four brothers and sister has the title of vice president and sits on the company’s board of directors. “We learned to rent the stores, not sell. The architects learned how to design a combination of entertainment, food fair, offices and so on.” Importantly, Centro Lido started pulling businesses out of the congested, rundown center of Caracas into the eastern side of the city Today El Rosal is an upscale business district where many multinationals are headquartered.

If there’s one thing that characterizes Sambil, it’s that it’s very much a family affair. Cohen’s children run the company, each in charge of a different sector, but there’s a strict rule: no in-laws or grandchildren. Cohen says that could cause his children’s decisions to be based more on sentiment than business sense.

Cohen’s office sits in the middle of two wings — three kids on either side — and boasts a large round table for meetings with the six. Pictures of his family, including old-fashioned formal portraits of his parents, are the office’s main decoration. Mondays are reserved for family — lunch with his children and dinner with his 24 grandchildren.

Cohen manages mainly by delegating, but he’s essential as a decision maker, especially when the siblings are divided on issues. “We all run different areas, but we’re all involved in the macro part of the business,” says Fanny who manages purchasing and the luxury Centro Lido hotel. “If we can’t agree on something, we go to him.”

COPYRIGHT 2001 Americas Publishing Group

COPYRIGHT 2003 Gale Group