Sultan of fashion: Venezuela's Graffiti retail chain was born as a single store selling designer clothing. CEO Carlos Sultan has turned it into a house of style with hundreds of outlets—and plans to take the chain global

Latin CEO: Executive Strategies for the Americas, Dec, 2000 by Christina Hoag

Carlos Sultan is a hard man to pin down these days. His only time for an interview is sandwiched between bank meetings, document signings, VIP guests and a procession of phone calls. But the flurry of activity is understandable--Sultan is on the brink of taking Venezuela's most successful retail business, Grupo Sultan, global. "Venezuela is a challenging market," says the energetic CEO, springing from his chair to head for another meeting. "If we can make it here, we can make it anywhere."

With US$500 million in annual sales, Grupo Sultan ranks as one of Venezuela's top ten private companies. It reached that spot during the last decade through a combination of innovative strategies in marketing, advertising and product supply that has turned its retail chain Graffiti into a household name across Venezuela.

Carlos Sultan and his brother Simon, each of whom owns half the company, have managed to pack stores with customers even during downturns in the oil country's roiling boom-and-bust economy. Though the government classifies 80 percent of Venezuela's 24 million population as poor, with little or no disposable income, Graffiti has gone from a single store nine years ago to 360 stores today. "They're brilliant businessmen," says Robert Bottome, director of the VenEconomy consultancy in Caracas. "They've done several things that others in Venezuela weren't able to do." Such as import fashionable clothing and household items at low prices, and reinvent their business as the political and economic environment has changed over the years.

Growing Pains Venezuela is now too small for the Sultans, whose father Abraham started the company 40 years ago as a retail outlet on Margarita Island. At the time, the duty-free zone there was the only place where imported apparel was allowed to enter the country Now the Sultans are negotiating with partners to open Graffiti stores in Argentina, Chile, Mexico, the Dominican Republic and Puerto Rico. And today Graffiti stores sell much more than clothing, including furniture, home fashions and toys.

What Carlos Sultan, 48, is most excited about is AsiaDirecto, a combination Internet/bricks-and-mortar wholesale outlet. The idea is to eliminate intermediaries by linking retail buyers in Latin America, the United States and Europe directly with Sultan's 53 suppliers in Asia. Sultan's company gets a commission on every purchase. "We've already negotiated good prices for the quantities we're buying, so [the new buyers] will tag into our quantities," Sultan explains. "We believe we have an incredible potential for growth."

Sultan predicts that AsiaDirecto, which is 30 percent owned by US trading company ColbyNet Limited, will help propel Grupo Sultan's sales to US$700 million next year. With a US$10-$15 million investment, the project will kick off in January with a 40,000-square-foot showroom displaying some 10,000 home products in Miami. Sultan then plans to open showrooms in Los Angeles and New York, by midyear in Frankfurt and Spain, and then Hong Kong.

Buyers will also be able to tour the showrooms and order products online, though Sultan stresses that the Internet is just a marketing tool, not the pivot of his business model. "B2B is putting buyers and sellers together, but in most cases it's just a fantasy The business doesn't exist," he says, blue eyes flashing with enthusiasm. "We already have a successful business--buying direct from the source--a winning concept we're making available to others."

A Sultan is Made If there's one thing that Sultan knows about, it's buying and selling. The day after receiving his business administration degree in 1975 at what is now the University of Massachusetts at Lowell, he was in Montreal buying for the family store, then just the one outlet on Isla Margarita called Abraham Sultan & Company The following year, he was already wondering where to take the business. "We were importing brand-name clothing from the US, but Venezuelans didn't know the brands and wouldn't pay my prices. We decided to create our own brand name and advertise it," he recalls, sitting in his small, windowless office that is practically wallpapered with photos of his five children. So Sultan created Graffiti, taking the name from a favorite movie, American Graffiti.

He lined up manufacturers in Asia and the United States to stock his store. The Graffiti brand was a hit for a while, but in 1983, when the bolivar crashed and imports quadrupled in price overnight, the idea no longer worked. It was time to reinvent the business--or at least the sourcing. "We moved to the mainland and started manufacturing, right here in this building," Sultan says of his current headquarters, located in La Trinidad, on the outskirts of Caracas. Even the decorations that festoon the hallways--colorful native art collected by Simon Sultan--reflect the idea of 'made-in-Venezuela.' The manufacturing facilities soon turned Sultan into a wholesale supplier, as well. "We were supplying all the traditional retail stores in Venezuela," he says.