"REPATS" AND SHOE SALES
by Virginia Postrel • Dec 29, 2003 at 12:42 am
This article by the WSJ's always-interesting Joel Millman and Ann Zimmerman is the most fascinating piece of business reporting I've read recently. The link should work for the next few days, but here is an excerpt:
As unintended consequences go, the spectacular rise of Payless in Latin America must be counted among the least foreseen: As inner-city U.S. barrios swelled with Latin American refugees throughout the 1980s and 1990s, a no-frills retailer based in Topeka, Kan., quickly blossomed into a household brand for these new Americans. When they started going back, they took Payless shoes with them.
In 2000, Payless opened five stores in Costa Rica, its Central American staging area; then in Guatemala, El Salvador and Nicaragua. Just three years later, Payless has almost 200 stores in the tropics, adding Honduras, Panama, the Dominican Republic, Trinidad and Tobago, Ecuador, Chile and Peru to its roster.
Cannibalizing sales doesn't appear to be a problem: Ms. Orellana's Sonsonate store is one of 24 Payless outlets in El Salvador, where a new store opens almost every month. Company officials say that in the countries where they operate, there is room for at least 300 more outlets -- and many more, should Payless enter Brazil, Argentina, Colombia and Venezuela.
Nor is Payless unique. U.S. chains, from rival footwear vendor Stride Rite Corp. to Home Depot Inc. to hoteliers like Marriott Corp. and Hilton Corp., are discovering that Latinos, as well as being great customers in the U.S., are among the leading disseminators of brand loyalty to countrymen back home.
Home Depot has grown quickly in Mexico, deploying Spanish-speaking veterans of its U.S. stores to recruit and train a local staff. Stride Rite entered eight countries ringing the Caribbean basin -- including the hemisphere's poorest, Haiti -- by leveraging its strong brand recognition with status-conscious expatriates in U.S. cities.
Brand acceptance is certainly apparent at Ms. Orellana's store, where traffic is steady from the moment she opens until she closes at 8 p.m. And why not? Prior to Payless's arrival, Salvadorans bought shoes mainly in street markets, where cheap synthetics dangle from hooks strung over piles of used clothing or baskets of fresh produce. Nowadays, an air-conditioned Payless store offers heretofore unheard-of luxury. "They have all the sizes in order," marvels Zulema Aragon, 29, as she scans displays of pumps, work boots and dress sandals, priced from about $5 to $40. An older woman, Luisa Hernandez, chimes in, "They have styles no one else has."
Shiny gadgets with metal slides that let customers measure shoe sizes, and benches with mirrored panels to inspect shoed feet, also are new here. For returned émigrés, Payless is a reminder of their time north of the border. For those who only dreamed of emigrating, Payless is a taste of the glamorous life relatives are forever bragging about. "A lot of [expatriate] Salvadorans send Payless shoes home as Christmas gifts," Ms. Orellana says. "People here see the brand as special."
Millman, like me, is fascinated with the complex and unexpected interactions of immigration, trade, and business. But, unlike me (or me most of the time), he does the hard work of tracking down the details. If you liked the story about Cambodian doughnut shops in TFAIE, you can thank his reporting, which I cited in the footnotes.