No Choice
Wal-Mart greeter with the human touch. The citizens of Warrenton, Virginia, aren't buying it.
Chapter Six.
Brand Bombing Franchises in the Age of the Superbrand MTV is associated with the forces of freedom and democracy around the world.
-Viacom CEO Sumner Redstone, owner of MTV, October 1994 There isn't a lot of angst, it's just unbridled consumerism.
-MTV CEO Tom Freston describes the content on MTV India, June 1997 The branded multinationals may talk diversity, but the visible result of their actions is an army of teen clones marching-in "uniform," as the marketers say-into the global mall. Despite the embrace of polyethnic imagery, market-driven globalization doesn't want diversity; quite the opposite. Its enemies are national habits, local brands and distinctive regional tastes. Fewer interests control ever more of the landscape.
Dazzled by the array of consumer choices, we may at first fail to notice the tremendous consolidation taking place in the boardrooms of the entertainment, media and retail industries. Advertising floods us with the kaleidoscopic soothing images of United Streets of Diversity and Microsoft's wide-open "Where do you want to go today?" enticements. But in the pages of the business section, the world goes monochromatic and doors slam shut from all sides: every other story-whether the announcements of a new buyout, an untimely bankruptcy, a colossal merger-points directly to a loss of meaningful choices. The real question is not "Where do you want to go today?" but "How best can I steer you into the synergized maze of where I I want you to go today?" want you to go today?"
This assault on choice is taking place on several different fronts at once. It is happening structurally, with mergers, buyouts and corporate synergies. It is happening locally, with a handful of superbrands using their huge cash reserves to force out small and independent businesses. And it is happening on the legal front, with entertainment and consumer-goods companies using libel and trademark suits to hound anyone who puts an unwanted spin on a pop-cultural product. And so we live in a double world: carnival on the surface, consolidation underneath, where it counts.
Everyone has, in one form or another, witnessed the odd double vision of vast consumer choice coupled with Orwellian new restrictions on cultural production and public space. We see it when a small community watches its lively downtown hollow out, as big-box discount stores with 70,000 items on their shelves set up on their periphery, exerting their gravitational pull to what James Howard Kunstler describes as "the geography of nowhere."1 It is there on the trendy downtown main street as yet another favorite cafe, hardware store, independent bookstore or art video house is cleared away and replaced by one of the Pac-Man chains: Starbucks, Home Depot, the Gap, Chapters, Borders, Blockbuster. It is there inside the big-box retail outlets each time a magazine is taken off a shelf by a manager mindful of his bosses' corporate definition of "family values." You can see it in the messy bedroom of a fourteen-year-old Web master who has just had her fan page shut down by Viacom or EMI, unimpressed by her attempts to create her own little pocket of culture with borrowed snippets of trademarked song lyrics and images. It is there again when protesters are thrown out of shopping malls for handing out political leaflets, told by the security guards that although the edifice may have replaced the public square in their town, it is, in fact, private property. It is there on the trendy downtown main street as yet another favorite cafe, hardware store, independent bookstore or art video house is cleared away and replaced by one of the Pac-Man chains: Starbucks, Home Depot, the Gap, Chapters, Borders, Blockbuster. It is there inside the big-box retail outlets each time a magazine is taken off a shelf by a manager mindful of his bosses' corporate definition of "family values." You can see it in the messy bedroom of a fourteen-year-old Web master who has just had her fan page shut down by Viacom or EMI, unimpressed by her attempts to create her own little pocket of culture with borrowed snippets of trademarked song lyrics and images. It is there again when protesters are thrown out of shopping malls for handing out political leaflets, told by the security guards that although the edifice may have replaced the public square in their town, it is, in fact, private property.
A decade ago, any attempt to connect the dots among this mess of trends would have seemed strange indeed: what does synergy have to do with the chain-store craze? What does copyright and trademark law have to do with personal fan culture? Or corporate consolidation with freedom of speech? But today, a clear pattern is emerging: as more and more companies seek to be the one overarching brand under which we consume, make art, even build our homes, the entire concept of public space is being redefined. And within these real and virtual branded edifices, options for unbranded alternatives, for open debate, criticism and uncensored art-for real choice-are facing new and ominous restrictions. If the erosion of noncorporate space explored in the last section is feeding a kind of globo-claustrophobia that longs for release, then it is these restrictions on choice-restricted by the same companies that promised a new age of freedom and diversity-that are slowly focusing that potentially explosive longing on the multinational brands, creating the conditions for the anticorporate activism that will be explored later on in the book.
Constant Cloning There is a distinctive quality to many of the chains that have proliferated during the eighties and nineties-Ikea, Blockbuster, the Gap, Kinko's, the Body Shop, Starbucks-which sets them apart from the fast-food restaurants, strip malls and muffler joints responsible for the sixties and seventies franchise sprawl. They don't flash with the garish, cartoonlike plastic yellow shells and golden arches; they are more apt to glow with a healthy New Age sheen. These crisp royal blue and kelly green boxes snap together like pieces of Lego (the new kind that can make only one thing: the model fire station or spaceship helpfully pictured on the box). The Kinko's, Starbucks and Blockbuster clerks buy their uniform of khakis and white or blue shirts at the Gap; the "Hi! Welcome to the Gap!" greeting cheer is fueled by Starbucks double espressos; the resumes that got them the jobs were designed at Kinko's on friendly Macs, in 12-point Helvetica on Microsoft Word. The troops show up for work smelling of CK One (except at Starbucks, where colognes and perfumes are thought to compete with the "romance of coffee" aroma), their faces freshly scrubbed with Body Shop Blue Corn Mask, before leaving apartments furnished with Ikea self-assembled bookcases and coffee tables.
The cultural transformation these institutions have effected is familiar to everyone, but there are few helpful statistics available on the proliferation of franchises and chains, largely because most research on retailing lumps franchises in with independent businesses. A franchise is technically owned by the franchisee, even if every detail of the outlet-from the sign that hangs out front to the precise temperature of the coffee-is controlled by a head office hundreds or even thousands of miles away. Even without industry-wide figures, it's undeniable that something very dramatic has happened to the face of retail this decade. Take Starbucks, for instance. As recently as 1986, the coffee company was a strictly local phenomenon, with a handful of cafes around Seattle. By 1992, Starbucks had 165 stores with outlets in several U.S. and Canadian cities. By 1993, that number had already gone up to 275, and in 1996, it reached 1,000. In early 1999, Starbucks hit 1,900 stores with outlets in twelve countries, from the U.K. to Kuwait.
Blockbuster, another of the distinctly nineties chains, has enjoyed an even more dramatic expansion rate over precisely the same time period. In 1985, Blockbuster was a lone video store in Dallas, Texas. It was bought by waste-management czar Wayne Huizenga in 1987 and by 1989 there were 1,079 stores. In 1994, the year Huizenga sold Blockbuster to Viacom, there were 3,977. By early 1999, the number had reached 6,000, distributed over twenty-six countries, including 700 outlets in the U.K. alone.
Similar patterns can be tracked for the Gap (and its holdings Banana Republic and Old Navy) and the Body Shop, which averaged between 120 and 150 store openings a year through the mid-eighties to the present. Even Wal-Mart didn't truly find its feet as a retail powerhouse until the late eighties. Although the first Wal-Mart outlet opened in 1962, the superstore model didn't take off until 1988 and it wasn't until 1991 that Wal-Mart-by then opening 150 discount stores a year-surpassed Kmart and Sears to become the most powerful force in American retailing.
This growth spurt was brought about by three industry trends, all of them dramatically favoring big chains with deep cash reserves. The first is price wars, in which the biggest megachains systematically undersell all their competitors; the second is the practice of blitzing out the competition by setting up chain-store "clusters." The third trend, to be explored in the next chapter, is the arrival of the palatial flagship superstore, which appears on prime real estate and acts as a three-dimensional ad for the brand.
Price Wars: The Wal-Mart Model In mid-1999, Wal-Mart had 2,435 big-box discount stores in nine countries, selling everything from Barbie Dream Homes to Kathie Lee Gifford skirts and handbags to Black & Decker drills to Prodigy CDs. Of those stores, 565 were "Supercenters," a concept that combines Wal-Mart's original discount model with full-service grocery stores, hair salons and banks, as well as 443 Sam's Clubs, which offer even deeper discounts for bulk purchases and big-ticket items like office furniture. (See Table 6.1 Table 6.1 and and Table 6.2. Table 6.2.) The recipe that has made Wal-Mart the largest retailer in the world, hauling in $137 billion in sales in 1998, is straightforward enough. First, build stores two and three times the size of your closest competitors. Next, pile your shelves with products purchased in such great volume that the suppliers are forced to give you a substantially lower price than they would otherwise. Then cut your in-store prices so low that no small retailer can begin to compete with your "everyday low prices."
Because everything about the Arkansas-based retailer is premised on achieving an economy of scale, an average Wal-Mart store measures 92,000 square feet, not including the requisite substantial parking lot. Since discounting is its calling card, Wal-Mart must keep its overhead down, which is why the lots for its windowless stores are purchased on the edges of towns, where land is cheap and taxes are lower. Every year of Wal-Mart's expansion, its new stores have grown bigger in size, and many of its original, comparatively modest discount outlets have been converted and expanded into superstores, some as large as 200,000 square feet.
Another key element in keeping costs down is that Wal-Mart only opens outlets close to its distribution centers. For this reason, Wal-Mart has spread like molasses: slow and thick. It won't move into a new region until it has blanketed the last area with stores-as many as forty in a hundred-mile radius. That way, the company saves money on transportation and shipping costs, and develops such a concentrated presence in an area that advertising its brand is barely necessary.2 "We would go as far as we could from a warehouse and put in a store. Then we would fill in the map of that territory, state by state, county seat by county seat, until we had saturated the market area," Wal-Mart founder Sam Walton explained. "We would go as far as we could from a warehouse and put in a store. Then we would fill in the map of that territory, state by state, county seat by county seat, until we had saturated the market area," Wal-Mart founder Sam Walton explained.3 Then the company would open up a new distribution center in a new region and repeat the process. Then the company would open up a new distribution center in a new region and repeat the process.
After Wal-Mart began in the U.S. South, plodding slowly through Arkansas, Oklahoma, Missouri and Louisiana, it took a while before Wall Street and the Eastern-based media grasped the magnitude of Sam Walton's project. For this reason, it wasn't until the early nineties, three decades after the opening of the first Wal-Mart, that opposition to the big boxes began to mount. The argument against Wal-Mart's retail style-by now almost as familiar as Wal-Mart itself-holds that bargain prices lure shoppers to the suburbs, sucking community life and small businesses out of the town centers. Smaller businesses can't compete-in fact, many of Wal-Mart's competitors claim they pay more for their goods wholesale than Wal-Mart charges retail.
By now, there have been several books written about the effect of the big boxes, most notably In Sam We Trust In Sam We Trust, by Wall Street Journal Wall Street Journal reporter Bob Ortega. As Ortega notes, Wal-Mart is not alone in its "size matters" approach to retailing-it is simply the leader in an exploding category of big-box retailers who use their clout to wrangle special treatment. Home Depot, Office Depot and Bed, Bath & Beyond, which are often grouped together in pumped-up strip malls called "power centers," are all known in the retail industry as "category killers" because they enter a category with so much buying power that they almost instantly kill the smaller competitors. reporter Bob Ortega. As Ortega notes, Wal-Mart is not alone in its "size matters" approach to retailing-it is simply the leader in an exploding category of big-box retailers who use their clout to wrangle special treatment. Home Depot, Office Depot and Bed, Bath & Beyond, which are often grouped together in pumped-up strip malls called "power centers," are all known in the retail industry as "category killers" because they enter a category with so much buying power that they almost instantly kill the smaller competitors.4 This retail style has always been controversial and was responsible for the first anti-chain movement, which arose in the 1920s. As discounters like A&P and Woolworths proliferated, small merchants tried to make it illegal for chains to use their relative size to extract lower wholesale prices and drive down retail prices. The rhetoric of the time, as Ortega points out, bears a striking resemblance to the language of the grassroots opposition groups that have sprung up in dozens of North American towns when the pending arrival of a new Wal-Mart outlet has been announced.5 On the legal front, charges of monopolistic practices have been cropping up with growing regularity, and not just against Wal-Mart. In September 1997, for instance, the U.S. Federal Trade Commission found that Toys 'R' Us was guilty of illegally pressuring manufacturers not to supply popular toys to other chains. Because Toys 'R' Us is the largest toy retailer in the world, the manufacturers agreed; and consumers' options were reduced dramatically, along with their chances to comparison shop. "Many toy manufacturers had no choice but to go along," said William Baer, director of the Federal Trade Commission's Bureau of Competition when the case was decided.6 This was precisely the type of situation the FTC was hoping to avoid when, in 1997, it blocked a planned merger between two huge office-supply chains-Staples and Office Depot-stating that the consolidation would hurt competition. This was precisely the type of situation the FTC was hoping to avoid when, in 1997, it blocked a planned merger between two huge office-supply chains-Staples and Office Depot-stating that the consolidation would hurt competition.
Beyond spawning the category killer, Sam Walton's legacy has had other, further-reaching effects. In many ways, it was the inhuman scale of the big boxes and their accompanying sprawl-the streets without sidewalks, the shopping centers only accessible by car, the stores the size of small hamlets with all the design flair of toolsheds-that set the stage for the other significant retail trends of the decade. Discount stores were great for saving money but not for much else. And so, as the big boxes expanded into seas of concrete on the edge of town, they generated a renewed hunger for human-scale development; for the old-fashioned town square, for public gathering places that allowed both large meetings and intimate conversation; for a kind of retail with more interaction and more sensory stimulation. In other words, they laid the groundwork for Starbucks, Virgin Megastores and Nike Town.
Where big boxes used their size to move previously unimaginable amounts of product, the new retailers would use their size to fetishize brand-name goods, placing them on a pedestal as high as Wal-Mart's discounts were low. Where the big boxes had swapped a sense of community values for a discount, the branded chains would re-create it and sell it back-at a price.
Clustering: The Starbucks Model "A Comforting Third Place" is the phrase Starbucks uses to promote itself in its newsletters and evangelical annual reports. This is not just another nonspace like Wal-Mart or McDonald's, it's an intimate nook where sophisticated people can share "coffee...community...camaraderie...connection."7 Everything about New Age chains like Starbucks is designed to assure us that they are a different breed from the strip-mall franchises of yesterday. This isn't dreck for the masses, it's intelligent furniture, it's cosmetics as political activism, it's the bookstore as an "old-world library," it's the coffee shop that wants to stare deep into your eyes and "connect." Everything about New Age chains like Starbucks is designed to assure us that they are a different breed from the strip-mall franchises of yesterday. This isn't dreck for the masses, it's intelligent furniture, it's cosmetics as political activism, it's the bookstore as an "old-world library," it's the coffee shop that wants to stare deep into your eyes and "connect."
But there's a catch. The need for more intimate spaces designed to tempt people to linger may indeed provide a powerful counterpoint to the cavernous big boxes, but these two retail trends are not as far apart as they appear at first. For instance, the mechanics of Starbucks' dizzying expansion during the past thirteen years has more in common with Wal-Mart's plan for global domination than the brand managers at the folksy coffee chain like to admit. Rather than dropping an enormous big box on the edge of town, Starbucks' policy is to drop "clusters" of outlets in urban areas already dotted with cafes and espresso bars. This strategy relies just as heavily on an economy of scale as Wal-Mart's does and the effect on competitors is much the same. Since Starbucks is explicit about its desire to enter markets only where it can "become the leading retailer and brand of coffee,"8 the company has concentrated its store-a-day growth in relatively few areas. Instead of opening a few stores in every city in the world, or even in North America, Starbucks waits until it can blitz an entire area and spread, to quote the company has concentrated its store-a-day growth in relatively few areas. Instead of opening a few stores in every city in the world, or even in North America, Starbucks waits until it can blitz an entire area and spread, to quote Globe and Mail Globe and Mail columnist John Barber, "like head lice through a kindergarten." columnist John Barber, "like head lice through a kindergarten."9 It's a highly aggressive strategy, and it involves something the company calls "cannibalization." It's a highly aggressive strategy, and it involves something the company calls "cannibalization."
The idea is to saturate an area with stores until the coffee competition is so fierce that sales drop even in individual Starbucks outlets. In 1993, for instance, when Starbucks had just 275 outlets concentrated in a few U.S. states, per-store sales increased by 19 percent from the previous year. By 1994, store sales growth was only 9 percent, in 1996 it dipped to 7 percent, and in 1997 Starbucks saw only a 5 percent sales growth; in new stores, it was as low as 3 percent. (see Table 6.3 Table 6.3) Understandably, the closer the outlets get to each other, the more they begin to poach or "cannibalize" each other's clientele-even in hyper-caffeinated cities like Seattle and Vancouver people can only suck back so many lattes before they float into the Pacific. Starbucks' 1995 annual report explains: "As part of its expansion strategy of clustering stores in existing markets, Starbucks has experienced a certain level of cannibalization of existing stores by new stores as the store concentration has increased, but management believes such cannibalization has been justified by the incremental sales and return on new store investment." What that means is that while sales were slowing at individual stores, the total sales of all the chain's stores combined continued to rise-doubling, in fact, between 1995 and 1997. Put another way, Starbucks the company was expanding its market while its individual outlets were losing market share, largely to other Starbucks outlets (see Table 6.4 Table 6.4).
It also helped Starbucks, no doubt, that its cannibalization strategy preys not only on other Starbucks outlets but equally on its real competitors, independently run coffee shops and restaurants. And, unlike Starbucks, these lone businesses can only profit from one store at a time. The bottom line is that clustering, like big-boxing, is a competitive retail strategy that is only an option for a large chain that can afford to take a beating on individual stores in order to reap a larger, long-term branding goal. It also explains why critics usually claim that companies like Starbucks are preying on small businesses, while the chains themselves deny it, admitting only that they are expanding and creating new markets for their products. Both are true, but the chains' aggressive strategy of market expansion has the added bonus of simultaneously taking out competitors.
There have been other, more brazen ways in which Starbucks has used its size and deep pockets to its competitive advantage. Until the practice began creating controversy a few years back, Starbucks' real-estate strategy was to stake out a popular independent cafe in a well-trafficked, funky location and simply poach the lease from under it. Several independent cafe owners in prime locations are on record claiming that Starbucks went directly to their landlords and offered to pay them higher rental payments for the same or adjacent spaces. For instance, Chicago's Scenes Coffee House and Drama received an eviction notice after Starbucks rented a space in the shopping complex where it was located. The coffee chain attempted a similar maneuver with Dooney's cafe in Toronto, though Starbucks claims it was the landlord who made the initial approach. Starbucks did gain control of Dooney's lease but the community protest was so strong that the company ended up having to sublet the space back to Dooney's.
These cutthroat real-estate practices hardly make Starbucks unique as a developer: McDonald's has perfected the scorched-earth approach to franchising, opening neighboring franchises and mini-outlets at gas stations until an area is blanketed. The Gap has also adopted the cluster approach to retailing, brand bombing key neighborhoods with multiple outlets of the Gap, Baby Gap, Gap Kids, Old Navy, Banana Republic and in 1999 Gap Body stores. The idea is to make Gap's family of brands synonymous with clothing in the same way that McDonald's is synonymous with hamburgers and Coke is synonymous with soft drinks. "If you go to a supermarket, you would expect to find some fundamental items. You would expect to find milk: nonfat, 1 percent, 2 percent, whole milk. You would expect dates to be fresh.... I don't know why apparel stores should be any different," says Mickey Drexler, Gap CEO.10 It's fitting that Drexler's model for the Gap's ubiquity is the supermarket, since it was the first supermarket chains that pioneered the clustering expansion model. After A&P launched its "economy stores" in 1913 (the prototype of the modern supermarket), it quickly opened 7,500 outlets, then closed half of them after saturation had been achieved and many competitors were forced out of business. It's fitting that Drexler's model for the Gap's ubiquity is the supermarket, since it was the first supermarket chains that pioneered the clustering expansion model. After A&P launched its "economy stores" in 1913 (the prototype of the modern supermarket), it quickly opened 7,500 outlets, then closed half of them after saturation had been achieved and many competitors were forced out of business.
The Gap welcomes these comparisons with Coke, McDonald's and A&P, but Starbucks, because of the nature of its brand image, strenuously rejects them.11 After all, the Gap's project is to take a distinctive product-clothing-and brand it so completely that purchasing it from the Gap is as easy as buying a quart of milk or a can of Coke. Starbucks, on the other hand, is in the business of taking a much more generic product-a cup of coffee-and branding it so completely that it becomes a spiritual/designer object. So Starbucks doesn't want to be known as a blockbuster, it wants, as its marketing director Scott Bedbury says, to "align ourselves with one of the greatest movements towards finding a connection with your soul." After all, the Gap's project is to take a distinctive product-clothing-and brand it so completely that purchasing it from the Gap is as easy as buying a quart of milk or a can of Coke. Starbucks, on the other hand, is in the business of taking a much more generic product-a cup of coffee-and branding it so completely that it becomes a spiritual/designer object. So Starbucks doesn't want to be known as a blockbuster, it wants, as its marketing director Scott Bedbury says, to "align ourselves with one of the greatest movements towards finding a connection with your soul."12 Yet no matter how urbane the original concept may have been, the business of chains has a logic and a momentum of its own, having very little to do with what it sells. It breaks down each of a brand's elements-no matter how progressive and homespun-into a kit of easy-to-assemble bits and parts. Just as the chains snap together like Lego, each chain outlet is made up of hundreds of its own snappable parts. Within the logic of chains, it matters little whether those snappable parts are a McDonald's deep frier and a Hamburglar mannequin or the "four elemental icons" that form the building blocks for each Starbucks store design: "Earth to grow. Fire to roast. Water to brew. Air for aroma." A clone is a clone, whether it is molded in the shape of an arch or a peace symbol, and its purpose is still replication.
This process is even more apparent when the chains expand on the global stage. When retailers move outside their countries of origin, Starbucks-style clustering melds with Wal-Mart-style price wars to create a kind of "bulk clustering strategy." To keep prices low in a new market, chains like Wal-Mart, Home Depot and McDonald's must carry with them their trump card of being volume buyers; and in order to have the market clout to get lower prices than their competitors, they can't dribble into countries one store at a time. Instead, it has become a favored expansion tactic to buy out an existing chain and simply move into its stores in one dramatic entrance, as Wal-Mart did when it bought out 120 Woolco stores in Canada in 1994 and when it purchased the Wertkauf GmbH hypermarket chain in Germany in 1997. Similarly, when Starbucks moved into the U.K. in 1998, it acquired the already existing Seattle Coffee Company and retrofitted its 82 stores as Starbucks outlets.
For national companies looking to avoid becoming the prey of the global giants, it has become an increasingly popular strategy to initiate preemptive mergers of their own between two or more large national brands. In the name of nationalism and global competitiveness, they consolidate, lay off staff and mimic American retail formulas. Not surprisingly, they generally end up transforming themselves into copies of the global brands they were attempting to block. That's what happened in Canada when fear of Wal-Mart prompted the country's oldest department store chain, the Hudson's Bay Company, to buy Kmart Canada, fold it in with Zellers, lay off six thousand workers and open several lines of big-box discount outlets: one for furniture, one for home and bath and one for discount clothing. "Wal-Mart executed better than either Kmart or Zellers. By merging the two operations, we're going to learn how to execute better," said George Heller, president of Kmart.13 Selection versus Choice The combination of the big-box and clustering approaches to retailing is having a transformative effect on the retail landscape. Though they represent very different retail trends, the combined effect of the Wal-Mart and Starbucks models has been to gradually erode the market share of small business in what was one of the few fields remaining where independent operators stood a solid chance of competing head-to-head with multinationals. With the chains able to outbid smaller competitors for space and supplies with barely a second thought, retail has become a battle of the big spenders. Whether they are using their clout to drive prices down to impossibly low levels, to keep them artificially high or simply to seize near monopolistic market shares, the net effect is the same: a retail arena in which size is a prerequisite and small companies can barely maintain a toehold. Like sumo wrestlers, the competitors in this game must push the limits of their weight category; bigness begets bigness.
Of course independent stores and restaurants continue to open and thrive, but more and more, these are high-end, specialty retailers in gentrified neighborhoods, while the suburbs, small towns and working-class neighborhoods get blanketed in-and blasted by-the self-replicating clones. This shift affects not only who can afford to stay in business but also (as I'll get into in Chapter 8) what makes it onto the store's shelves.
There is another retail trend that is in many ways exerting an even more significant influence than the two just discussed: the branded superstore, a marketplace marriage of the size power of big boxes with the branding clout of the store clusters. As I'll show in the next chapter, the superstore is the logical result of the corporate preoccupation with synergy: part marketing, part brand-extension supermarket, part theme park.
All of these three retail phenomena, and the impact they are having on consumer choice, are about much more than changes to the way we shop. They are key pieces of the branding puzzle that is transforming everything, from the way we congregate to the way we work. In fact, the divide between the bland big boxes at the edge of town and the branded castles and clusters in the center of town can be traced back to Marlboro Friday and its aftermath. These parallel developments are the physical embodiment of the split that opened up between the lowly price-slashers and the spiritual brand-builders. For its part, Wal-Mart stands as the single most powerful symbol of the decline in brand value that sent Wall Street into a tailspin on that Friday in April 1993. The year before the so-called brand crash was a record one for Wal-Mart, during which it opened 161 new discount stores-unheard-of growth for the end of a recession. Wal-Mart's shoppers were the new "value generation" in motion, flocking to the suburbs to avoid paying premium prices for heavily marketed brands. If Wal-Mart was selling Tide at deep discounts, so much the better, but these formerly brand-conscious shoppers were just as happy to take home detergent from Wal-Mart's own private label, Great Value.
At the same time, the proliferation of Nike Towns, Disney Stores and Starbucks clusters is powerful evidence of a renewed reverence for a handful of elite lifestyle brands. For many of their loyal consumers, no price is too high to pay for these branded goods and, in fact, merely buying the products provides an insufficient relationship. Brand-obsessed shoppers have adopted an almost fetishistic approach to consumption in which the brand name acquires a talismanic power.
Not surprisingly, capitalizing on the urge for this sort of brand cocooning has become the central preoccupation of the fashion, athletics and entertainment corporations selling these fetish brands. Theme-park-inspired superstores are one part of this process, but as the successive waves of mergers and attendant synergies continue, they are only the beginning.
Michael Eisner (Walt Disney Co. CEO) seals merger with Thomas Murphy (Capital Cities/ABC Chairman). Ted Turner (Turner Broadcasting Chairman and President) does the same with Gerald Levin (Time Warner Chairman and CEO).
Chapter Seven.
Mergers and Synergy The Creation of Commercial Utopias I would prefer ABC not cover Disney.
-Disney CEO Michael Eisner, September 29, 1998, National Public Radio Commenting on the future of poetry and art in a democratic society, Alexis de Tocqueville wrote that he was not worried about a lapse into safe realism so much as a flight into unanchored fantasy. "I fear that the productions of democratic poets may often be surcharged with immense and incoherent imagery, with exaggerated descriptions and strange creations; and that the fantastic beings of their brain may sometimes make us regret the world of reality."1 We are surrounded now by the realization of Tocqueville's predictions: gleaming, bulbous golden arches; impossibly smooth backlit billboards; squishy cartoon characters roaming fantastically fake theme parks. When I was growing up, these strange creations awakened something in me that I've since come to think of as deep longing for the seductions of fake; I wanted to disappear into shiny, perfect, unreal objects.
Maybe this condition was brought on by television, maybe it was a too-early trip to Disneyland, maybe it was malls, but just as Tocqueville predicted in 1835, the world of reality looked pretty dingy by comparison. The humiliating spectacle of my all-too-real family, so sixties authentic, set against the cascade of inviting plasticity that was the seventies and eighties, was simply too much to bear. "Stop it, guys, you're embarrassing me!" was the near-hysterical cri de coeur cri de coeur of my youth. Even when there was no one but family around, I could feel the plastic world's reproachful gaze. of my youth. Even when there was no one but family around, I could feel the plastic world's reproachful gaze.
My parents, part of a wave of American hippies who moved to Canada to dodge the Vietnam War draft, were terribly disturbed by these tendencies of mine. In their newly adopted country, they had imagined themselves to be breeding a new kind of postrevolutionary child, blessed with the benefits of Canada's humane social services, public health-care system and solid subsidies to the arts. Hadn't they diligently mushed their own baby food? Read Parent Effectiveness Training? Parent Effectiveness Training? Banned war toys and other "gendered" play? Banned war toys and other "gendered" play?
In an effort to save me from corruption, my parents were forever dragging me out of the city to appreciate the Canadian wilderness and experience the joys of real-time family interaction. I was distinctly unimpressed. The only thing that saved me on these reality excursions was my dreams of fakeness, unfolding in the back seat of our station wagon as it sped past verdant farmland and majestic mountains. At five or six, I would eagerly await the molded plastic of franchise signs on the side of the road, craning my neck as we passed McDonald's, Texaco, Burger King. My favorite was the Shell sign, so bright and cartoon-like I was convinced that if I could climb up and touch it, it would be like touching something from another dimension-from the world of TV. During these family trips, my brother and I would beg to stop for fast food packed in shiny laminated boxes, and sometimes my parents would relent, if they were feeling particularly defeated that day. But more often than not, lunch would be another ponchoed picnic at a national park, with dry cheddar cheese, autumnal fruit and other distressingly unpackaged foodstuffs.
By the time I was eight or nine, my back-seat daydreams grew more intricate. I spent an entire journey through the Rockies conducting covert makeovers on everyone in the car. My father would lose the sandals and get a sharp, dignified suit, my mother a helmet hairdo and a wardrobe of smart pastel blazers, skirts and matching pumps. As for me, the possibilities were endless: kitchen cupboards filled with fake foods, closets overflowing with designer labels, unlimited access to eyeliner and perms. I wasn't allowed to have a Barbie ("a racket," my parents ruled, "first it's a doll, then a camper van, then the whole mansion") but I had Barbie in my brain.
It seemed as if the vanguard feminist-socialist child-rearing experiment was doomed to failure. Not only was I crazy for Shell signs, but by the age of six, my older brother had developed an uncanny knack for remembering the jingles from television commercials and would tear around the house in his Incredible Hulk T-shirt declaring himself "cuckoo for Cocoa Puffs." At the time, I couldn't understand why my parents were so upset about these stupid rhymes, but now I've come to feel their pain: despite their very best efforts, they had somehow given birth to an advertisement for General Mills-in other words, to regular kids.
Cartoons and fast-food franchises speak to children in a voice too seductive for mere mortal parents to compete with. Every kid wants to hold a piece of the cartoon world between his or her fingers-that's why the licensing of television and movie characters for toys, cereals and lunchboxes has spawned a $16.1 billion annual industry.2 It is also why so-called family entertainment companies have been going to greater and greater lengths to extend their television and movie fantasies into real-world experiential extravaganzas: branded museum exhibits, high-tech superstores, and, the old standard, theme parks. Back in the 1930s, Walt Disney, the grandfather of modern synergy, understood the desire to crawl inside the screen when he fantasized about building a self-enclosed Disney city and remarked that every Mickey Mouse product or toy doubled as an advertisement for his cartoons. Mattel has long grasped this as well, but if Disney's project has been extending the fantasy of its films into toys, then Mattel's was extending its toys into ever more elaborate fantasy worlds. This vision is perhaps best understood as the "Zen of Barbie": Barbie is One. Barbie is all things. It is also why so-called family entertainment companies have been going to greater and greater lengths to extend their television and movie fantasies into real-world experiential extravaganzas: branded museum exhibits, high-tech superstores, and, the old standard, theme parks. Back in the 1930s, Walt Disney, the grandfather of modern synergy, understood the desire to crawl inside the screen when he fantasized about building a self-enclosed Disney city and remarked that every Mickey Mouse product or toy doubled as an advertisement for his cartoons. Mattel has long grasped this as well, but if Disney's project has been extending the fantasy of its films into toys, then Mattel's was extending its toys into ever more elaborate fantasy worlds. This vision is perhaps best understood as the "Zen of Barbie": Barbie is One. Barbie is all things.
Which is to say that the corporate synergy mania consuming so much of pop culture today is not all new. Barbie and Mickey Mouse are miniature branding trailblazers-those two have always wanted more extensions for their brands, more lateral monopolies to control. What has changed in the past decade is that almost everyone in the corporate world now recognizes that the urge to disappear into the cross-promotional tie-ins of cherished consumer products (be they toys, TV shows or sneakers) does not magically disappear when children outgrow sugar cereal. Plenty of Saturday-morning-cartoon kids have grown up into Saturday-night-club kids, fulfilling their longing for plastic fantasy with earnestly ironic Hello Kitty backpacks and Japanimation-inspired helmets of blue hair. You can see some of them at the Sega Playdiums, which are filled with grown-up gamers on weekend nights-no one under eighteen is even allowed to enter these roaring carnivals of virtual reality, especially on South Park South Park theme nights. theme nights.
It is this insistent desire to become one with your favorite pop-culture products that every one of the superbrands-from Nike to Viacom to the Gap to Martha Stewart-is trying to harness and expand upon, exporting Walt Disney's synergy principles from kid culture and transplanting them into every aspect of both teen and adult mass culture. Michael J. Wolf, a management consultant to such major players as Viacom, Time Warner, MTV and Citigroup, can attest to that fact. "I can't begin to count the number of times that people who run consumer businesses have confided to me that their goal is to create the broad-based success that Disney seems to bring to every project and every business it touches," he writes.3 This goal didn't materialize out of thin air. Rather, it can be traced back once again to the corporate "brands, not products" epiphany sparked by Marlboro Friday: if brands are about "meaning," not product attributes, then the highest feat of branding comes when companies provide their consumers with opportunities not merely to shop but to fully experience the meaning of their brand. Sponsorship, as seen in Chapter 2, is a good start, but synergy and lifestyle branding are the logical conclusion. Just as companies like Molson and Nike have sought to build celebrity brands by upstaging the concerts and sports matches they sponsored, so are many of these same companies also attempting to overthrow local retailers by creating branded superstores, then, further down the road, branded hotels and miniature villages. As two sides of the same project, synergy and branding are both about creating cross-promotional brand-based experiences that combine buying with elements of media, entertainment and professional sports to create an integrated branded loop. Disney and Mattel have always known this-now everyone else is learning it too.
A true branded loop cannot be created overnight, which is why the process usually begins with the simplest form of brand extension, a giant merger: Bell Atlantic and Nynex; Digital equipment and Compaq; WorldCom Inc and MCI; Time Warner and Turner; Disney and ABC; Cineplex and Loews; Citicorp and Travelers; Bertelsmann and Random House; Seagram and PolyGram; America Online and Netscape; Viacom and CBS...the list grows each day. Usually, the companies cite the Wal-Mart principle: everyone else in the industry is merging and only the biggest and strongest will survive. But size for its own sake is only the beginning of the story. Once the perimeter of the brand has expanded, corporate attention inevitably shifts to ways of making it more self-sufficient, through various internally coordinated cross-promotions. In a word, through synergy.
Sometime in the early nineties, writes Michael J. Wolf, the attitude of his media industry clients underwent a philosophical change. "Companies were no longer interested in merely being the biggest studio or the most successful TV network. They had to be more. Theme parks, cable networks, radio, consumer products, books, and music all became prospects for their potential empires. Media land was gripped by merger mania. If you weren't everywhere...you were nowhere."4 This sort of reasoning lies behind virtually all the major mergers of the mid- to late nineties. Disney buys ABC, which then broadcasts its movies and cartoons. Time Warner purchases Turner Broadcasting, which then cross-promotes its magazines and films on CNN. George Lucas buys block stocks in Hasbro and Galoob before he sells the toy companies the licensing rights for the new Star Wars Star Wars films, at which point Hasbro promptly buys Galoob to consolidate its hold on the toy market. Time Warner opens a division devoted to turning its films and cartoons into Broadway musicals. Nelvana, a Canadian-based producer of kids' cartoons, purchases Kids Can Press, a publisher of children's books upon which such lucrative Nelvana cartoons as films, at which point Hasbro promptly buys Galoob to consolidate its hold on the toy market. Time Warner opens a division devoted to turning its films and cartoons into Broadway musicals. Nelvana, a Canadian-based producer of kids' cartoons, purchases Kids Can Press, a publisher of children's books upon which such lucrative Nelvana cartoons as Franklin the Turtle Franklin the Turtle are based. The merger transforms Nelvana into an "integrated company," in which future books can get their genesis in the company's marketable TV cartoons and lucrative lines of toys. are based. The merger transforms Nelvana into an "integrated company," in which future books can get their genesis in the company's marketable TV cartoons and lucrative lines of toys.5 In the broader book world, after purchasing Random House (this book's primary publisher), Bertelsmann AG buys 50 percent of Barnesandnoble.com, giving the largest English-language publishing company in the world a significant stake in the exploding on-line book retail market. Barnes & Noble, meanwhile, bids to buy Ingram, a major American book distributor, which also services the chain's competitors. If the Ingram deal had gone through (it was abandoned amid public outcry), the potential synergies among these three companies would have stretched to include the entire book publishing process, from contracting and editing to distributing, publicizing and, finally, retailing.
Perhaps the purest expression of synergy's market goals was Viacom's 1994 purchase of Blockbuster Video and Paramount Pictures. The deal gave Viacom the opportunity not only to profit from Paramount films when they played in its Paramount theaters but when they came out on video as well. "The combination of Viacom and Paramount, in my view, is the whole essence of the multimedia revolution," says Sumner Redstone, the billionaire mogul behind Viacom.6 And this ability to keep cash flows inside a corporate family carries for these moguls its own kind of reward. Virgin's Richard Branson, for instance, laughs in the face of the accusation that his far-flung branding forays are stretching the Virgin name in too many directions. "It may be right that Mars sticks to the chocolate bar and Nike keeps its feet on the ground. But if their executives cross the Atlantic on a Virgin plane, listen to Virgin records and keep their money with a Virgin bank, then at least Britain will have one new global brand for the next century." And this ability to keep cash flows inside a corporate family carries for these moguls its own kind of reward. Virgin's Richard Branson, for instance, laughs in the face of the accusation that his far-flung branding forays are stretching the Virgin name in too many directions. "It may be right that Mars sticks to the chocolate bar and Nike keeps its feet on the ground. But if their executives cross the Atlantic on a Virgin plane, listen to Virgin records and keep their money with a Virgin bank, then at least Britain will have one new global brand for the next century."
What the Virgin case clearly shows is that in the aftermath of the synergy revolution, brand extensions are no longer adjuncts to the core product or main attraction; rather, these extensions form the foundation upon which entire corporate structures are being built. Synergy, as Branson suggests, is about much more than old-style cross-promotion; it is about using ever-expanding networks of brand extensions to spin a self-sustaining lifestyle web. Branson and others are stretching the fabric of their brands in so many directions that they are transformed into tent-like enclosures large enough to house any number of core activities, from shopping to entertainment to holidays. Starbucks, upon announcing that it would begin selling furniture over the Internet, calls this a "brand canopy." This is the true meaning of a lifestyle brand: you can live your whole life inside it.
The concept is key to understanding not only synergy but also the related blurring of boundaries between sectors and industries. Retail is blurring with entertainment, entertainment with retail. Content companies (like film studios and book publishers) are leaping into distribution; distribution networks (like phone and Internet companies) are leaping into content production. And all the while, the people previously pigeonholed as pure content-the stars themselves-are charging into production, distribution and, of course, retail. So the "if you aren't everywhere, you're nowhere" sentiment described by Wolf reaches well beyond the media conglomerates. Everyone, it seems, wants to be everywhere-whether they started as home decorators, sneaker manufacturers, record companies or basketball stars, they are all ending up, as Shaquille O'Neal and his people so aptly put it, "like Mickey Mouse."
In this fluid context, the branded tent of tents might be Disney or Viacom, but it could just as easily be Tommy Hilfiger, America Online, Martha Stewart or Microsoft. Quite simply, every company with a powerful brand is attempting to develop a relationship with consumers that resonates so completely with their sense of self that they will aspire, or at least consent, to be serfs under these feudal brandlords. This explains why marketing talk of pitch and product has been usurped so completely by the more intimate discourse of "meaning" and "relationship building"-brand-based companies are no longer interested in a consumer fling. They want to move in together.
And so the fiercest marketplace battles are taking place not between warring products but between warring branded camps that are constantly redrawing the borders around their enclaves, pushing the boundaries to include ever more complete lifestyle packages: if music, why not food, asks Puff Daddy. If clothes, why not retail, asks Tommy Hilfiger. If retail, why not music, asks the Gap. If coffee houses, why not publishing, asks Starbucks. If theme parks, why not towns, asks Disney.
Superstores: Stepping Inside the Brand Not surprisingly, it was the Walt Disney Company, the inventor of modern branding, that created the model for the branded superstore, opening the first Disney Store in 1984. There are now close to 730 outlets worldwide. Coke followed shortly after with a store sporting all manner of branded paraphernalia, from key chains to cutting boards. But if Disney and Coke paved the way, it was Barnes & Noble that created the model that would forever change the face of retailing, introducing the first superstore to its chain of bookstores in 1990. The prototype for the new construct, according to company documents, was "old-world library ambiance and a wood and green palette" complemented by "comfortable seating, restrooms and extended hours"-and, of course, by a little co-branding in the form of in-store Starbucks coffee shops. The formula affected not only the chain's ability to sell books but also the role it occupied in pop culture; it became a celebrity, a source of endless media controversy, and eventually the thinly veiled inspiration for a Hollywood movie, You've Got Mail You've Got Mail. In less than a decade, Barnes & Noble became the first bookstore that was also a superbrand in its own right.
Little wonder, then, that virtually all the consumer and entertainment companies that have been building up their brand images through marketing, synergy and sponsorship are now intent on having their own retail temples. Nike, Diesel, Warner Brothers, Tommy Hilfiger, Sony, Virgin, Microsoft, Hustler Hustler and the Discovery Channel have all leaped into branded retail. For these companies, stores that sell multiple brands have become antithetical to the very principles of sound brand management. They want nothing to do with venues in which their products are sold side by side with their competitors'. "The multi-brand store is disappearing, and companies like us need store that reflect our personality," explains Maurizio Marchiori, advertising director at Diesel, which has opened twenty branded stores since 1996. and the Discovery Channel have all leaped into branded retail. For these companies, stores that sell multiple brands have become antithetical to the very principles of sound brand management. They want nothing to do with venues in which their products are sold side by side with their competitors'. "The multi-brand store is disappearing, and companies like us need store that reflect our personality," explains Maurizio Marchiori, advertising director at Diesel, which has opened twenty branded stores since 1996.7 I'm really very, very disappointed that I didn't move into the retail business years ago, because I never realized the marketing power of the Hustler Hustler name and logo name and logo.-Hustler owner Larry Flynt, owner Larry Flynt, The New York Times The New York Times, March 21, 1999 The superstores constructed to reflect these corporate personalities are exploring the boundaries of what Nike refers to as "inspirational retail." As Nike president Thomas Clarke explains, large-scale "event" outlets "give retailers the opportunity to romance products better."8 How this seduction takes place varies from brand to brand, but the general idea is to create a venue that is part shopping center, part amusement park, part multimedia extravaganza-an advertisement more potent and evocative than a hundred billboards. Popular superstore attractions include deejays spinning live from their own in-house broadcast booths, giant screens and star-studded launch parties. A cut above are the listening booths at the Virgin Megastores, the indoor waterfalls and rock-climbing walls at Seattle's Recreational Equipment, Inc., the interactive digital foot-measuring stations at Nike Town, the complimentary foot massages and reflexology at Rockport stores and the arcade-style computer games at the San Francisco Microsoft Store. And then, of course, there is that fixture of branded retail: the in-store coffee bar-even the Hustler superstore has one of those. Describing his vision for the 9,000-square-foot branded sex emporium in West Hollywood, How this seduction takes place varies from brand to brand, but the general idea is to create a venue that is part shopping center, part amusement park, part multimedia extravaganza-an advertisement more potent and evocative than a hundred billboards. Popular superstore attractions include deejays spinning live from their own in-house broadcast booths, giant screens and star-studded launch parties. A cut above are the listening booths at the Virgin Megastores, the indoor waterfalls and rock-climbing walls at Seattle's Recreational Equipment, Inc., the interactive digital foot-measuring stations at Nike Town, the complimentary foot massages and reflexology at Rockport stores and the arcade-style computer games at the San Francisco Microsoft Store. And then, of course, there is that fixture of branded retail: the in-store coffee bar-even the Hustler superstore has one of those. Describing his vision for the 9,000-square-foot branded sex emporium in West Hollywood, Hustler Hustler owner Larry Flynt explained that he wanted to create a retail space "more comfortable for women, more like Barnes & Noble." owner Larry Flynt explained that he wanted to create a retail space "more comfortable for women, more like Barnes & Noble."9 "Creating a destination" is the key buzz-phrase for the superstore builder: these are places not only to shop but also visit, places to which tourists make ritualistic pilgrimages. For this reason, the locations chosen for the stores are far more upmarket than those to which the hawkers of Disney key chains, Nike sneakers and Tommy jeans are accustomed. In fact, so many mass-market brand meccas have made their home on New York's Fifth Avenue and L.A.'s Rodeo Drive that the neighbors-the exclusive Gucci, Cartier and Armani brands-have begun to complain about the popularizing presence of Daffy Duck and Air Jordan.
Selling mass-market consumer goods and doodads on the most expensive pieces of real estate in the world, in the most costly, high-tech, art-directed retail environments ever imagined, doesn't always add up on paper. But to look at the superstore as a break-even business enterprise is to miss the point entirely. No expense is spared in the building of the stores because, while the Time Square Disney Store or the Fifth Avenue Warner Brothers outlet may be money losers in and of themselves, they serve a much higher purpose in the overall branding picture. As Dan Romanelli, president of Warner Brothers consumer products division, says of the company's flagship, "Fifth and 57th is probably the best retail location in the world. It has helped immensely in building our international business and in making a statement about our brand."10 Discovery Communication takes a similar attitude. Spinning off from its four television channels, the media company has launched thirty-five Discovery shops since 1996, hybrids of department stores, amusement parks and museums. The jewel in the crown is a $20 million flagship store in Washington, D.C., that features a full-scale model of a T. rex dinosaur skeleton and a World War II fighter plane. According to Michela English, president of Discovery Enterprises Worldwide, these outlets are not expected to make money until at least 2001. That, however, isn't stopping the company from adding dozens more stores. "There is a billboard impact to having the Discovery name on stores," she explains. Discovery Communication takes a similar attitude. Spinning off from its four television channels, the media company has launched thirty-five Discovery shops since 1996, hybrids of department stores, amusement parks and museums. The jewel in the crown is a $20 million flagship store in Washington, D.C., that features a full-scale model of a T. rex dinosaur skeleton and a World War II fighter plane. According to Michela English, president of Discovery Enterprises Worldwide, these outlets are not expected to make money until at least 2001. That, however, isn't stopping the company from adding dozens more stores. "There is a billboard impact to having the Discovery name on stores," she explains.11 Generally, this "billboard impact" is favored by companies whose primary source of sales is still multibrand venues: department stores, Cineplex Theaters, HMV record stores, Foot Locker and so on. Even without being able to control their entire distribution networks, branded superstores provide these companies with a kind of spiritual homeland for their brands, one so recognizable and grand that no matter where the individual products roam they will carry that grandness with them like a halo. It is as if a homing device had been implanted in the brand, so that, for instance, stalls selling Virgin merchandise at Virgin movie theaters aren't stalls selling merchandise at movie theaters-they are "Virgin mini-megastores," a satellite of something much deeper and more important than what meets the eye. And when consumers go to the local Foot Locker and are confronted with pairs of Nikes unceremoniously lined up next to the Reeboks, Filas and Adidas, they will, with any luck, remember the sensory overload they experienced on their pilgrimage to Nike Town. As Michael Wolf writes, branded retail is about "imprinting an experience on you as surely as the farmer's wife imprints good feelings in a clutch of baby geese when she feeds them a handful of grain every day."12 Branded Villages: Moving into the Brand The stores are only the beginning-the first phase in an evolution from experiential shopping to living the fully branded experience. In a superstore, writes Wolf, "the lights, the music, the furniture, the cast of clerks create a feeling not unlike a play in which you, the shopper, are given a leading role."13 But in the scheme of things that play is rather short: an hour or two at the most. Which is why the next phase after retail-as-tourist-destination has been the creation of branded holidays: never mind Disney World, Disney has launched the But in the scheme of things that play is rather short: an hour or two at the most. Which is why the next phase after retail-as-tourist-destination has been the creation of branded holidays: never mind Disney World, Disney has launched the Disney Magic Disney Magic cruise ship and among its destinations is Disney's privately owned island in the Bahamas, Castaway Cay. Nike has its own sports-themed cruise ship in the works and Roots Canada, shortly after introducing a homewear line and opening a flagship store in Manhattan, launched the Roots Lodge, a branded hotel in British Columbia. cruise ship and among its destinations is Disney's privately owned island in the Bahamas, Castaway Cay. Nike has its own sports-themed cruise ship in the works and Roots Canada, shortly after introducing a homewear line and opening a flagship store in Manhattan, launched the Roots Lodge, a branded hotel in British Columbia.
I visited the Roots development at the construction phase in Ucluelet, a small town on the west coast of Vancouver Island. The site is called the Reef Point Resort and it is here that branding is being taken to the next level. In April 1999, the Roots Lodge wasn't yet open, but construction was far enough along to make the concept perfectly clear: a high-end, fully branded summer camp for adults. Instead of canoes, an "adventure station" rents out ocean kayaks and surfboards; instead of outhouses, each cabin has its own hot tub; instead of the communal campfire, individual gas fireplaces. The lodge restaurant is set up mess-hall style, but the food is pure Pacific Coast gourmet. Most important, the rough-hewn wooden cabins are equipped with the entire Roots home furniture line.
"Like living in a billboard," one visitor observes as we receive our official tour, and that is no exaggeration. A cross between a catalog showroom and an actual living room, the resort has a Roots logo on display in the cabins on pillows, towels, cutlery, plates and glasses. The chairs, sofas, rugs, blinds and shower curtains are all Roots. On the wooden Roots coffee table is a brown leather Roots blotter, gently cradling a flattering book about the Roots story-and you can buy it all to take with you at the Roots store across the way. At the lodge, the "play" Wolf refers to lasts not a few hours but a weekend, maybe even a week or two. And the set at the company's disposal includes not only the architecture and design of the buildings (as is the case with superstores), but the entire Canadian wilderness around the lodge: the eagle in the cedar outside the window, the old-growth forest that guests walk through to reach the cabins, the crashing waves of the Pacific.
There is a strong symmetry at work in this branding exercise. The Roots clothing line got its genesis in a place not unlike this one. Company founders Don Green and Michael Budman both went to summer camp in Algonquin Park, Ontario, and were so moved by their experience of active living in the Canadian outdoors that they designed a line of clothing to capture the very best of that feeling: comfortable walking shoes, cozy sweatshirts, Canadian Workman socks, and, of course, the beaver logo. "Algonquin's majestic hills, sparkling lakes and forest primeval inspired Roots," states an early print advertisement. "Its golden summer days, cold starry nights, autumn blaze and still winter white are now recreated in the colours and spirit of Roots Algonquin."14 The pitch was anything but subtle, as journalist Michael Posner observed in 1993 when he wrote, "Here's the truth: Roots is less a company than a summer camp."15 The clothing manufacturer has been expanding on that carefully crafted image since the beginning. First it built retail outlets that, with the help of wall-mounted canoe paddles and exposed beams, conjure not a chain store but, as journalist Geoff Pevere writes, "summer-camp mess halls and cottages built by caring and callused hands." The clothing manufacturer has been expanding on that carefully crafted image since the beginning. First it built retail outlets that, with the help of wall-mounted canoe paddles and exposed beams, conjure not a chain store but, as journalist Geoff Pevere writes, "summer-camp mess halls and cottages built by caring and callused hands."16 Then came the homewear line, featuring blankets and pillowcases designed to look like oversized workmen's socks. And now, full circle, comes the Roots Lodge, where the original "inspiration" for a line of clothing becomes a fully realized extension of the Roots brand: from summer camp to branded camp; from lifestyle marketing to the lifestyle itself. Then came the homewear line, featuring blankets and pillowcases designed to look like oversized workmen's socks. And now, full circle, comes the Roots Lodge, where the original "inspiration" for a line of clothing becomes a fully realized extension of the Roots brand: from summer camp to branded camp; from lifestyle marketing to the lifestyle itself.
Mark Consiglio, the fast-talking, fleece-wearing developer of the resort, has bigger plans still for Reef Point, of which the Roots Lodge represents only a fraction of the available property. He shows me a model for a 250-cabin complex and explains his vision: a retail town center with brand-name stores and services. The Roots store, of course, but perhaps an Aveda Spa as well, and maybe stores like Club Monaco and the Body Shop too. Each retail outlet will be attached by boardwalk to its very own branded lodge, which, like the Roots Lodge, will be kitted with all the logo-festooned accessories the company can supply. Consiglio can't name names yet-"still in negotiations"-but he does tell me pointedly that "Roots isn't the only clothing company getting into homewear, you know. Everyone is doing it."
The problem with branded vacation destinations, however, is that they only provide temporary opportunities for brand convergence, an oasis from which families, at the end of the trip, are abruptly yanked and dumped back into their old lives, no doubt a poorly managed mishmash of competing logos and brand identities. Which is where Celebration, Florida, comes in-that very first Disney town. The meticulously planned development arrives complete with picket fences, a Disney-appointed homeowners' association and a phony water tower. For the families who live there year-round, Disney has achieved the ultimate goal of lifestyle branding: for the brand to become life itself.
Except the life on offer is perhaps not the one we might have expected from the Mouse. When Walt Disney first conceived of a branded city, it was meant to be an artificiality bonanza, a temple to the mid-fifties futuristic gods of technology and automation. The city never was built in Walt's lifetime, though some of the ideas went into the Epcot Center sixteen years after his death. When Disney CEO Michael Eisner decided to pick up on Walt's old dream and build a branded town, he opted against the Jetsons Jetsons-inspired fantasy world his predecessor had imagined. Though wired with every modern technology and convenience, Celebration is less futurism than homage, an idealized re-creation of the livable America that existed before malls, big-box sprawl, freeways, amusement parks and mass commercialization. Oddly enough, Celebration is not even a sales vehicle for Mickey Mouse licensed products; it is, in contemporary terms, an almost Disney-free town-no doubt the only one left in America. In other words, when Disney finally reached its fully enclosed, synergized, self-sufficient space, it chose to create a pre-Disneyfied world-its calm, understated aesthetics are the antithesis of the cartoon world for sale down the freeway at Disney World.
Like the gated communities that have sprung up across the U.S., on Celebration's tranquil, tree-lined, billboard-free streets inhabitants are not subject to any of the stimulations or ravages of contemporary life. No Levi Strauss has bought up all the storefronts on Main Street to sell a new style of wide-legged pants, and no graffiti artists have defaced the ads; no Wal-Mart has left the downtown boarded up and twisted, and no community group has formed to fight the big boxes; no factory closures have eroded the tax base and pumped up the welfare rolls and no quarrelsome critics are around to point fingers. What is most striking about Celebration, however, particularly when compared with most North American suburban communities, is the amount of public space it offers-parks, communal buildings and village squares. In a way, Disney's branding breakthrough is a celebration of brandlessness, of the very public spaces the company has always been so adept at getting its brands on in the rest of its endeavors.
Of course this is an illusion. The families who have chosen to make Celebration their home are leading the first branded lives. As social historian Dieter Hassenpflug has remarked, "Even the streets are under Disney's control-private space that pretend[s] to be public."17 So Celebration is an intricate inversion of Tocqueville's prediction: an "authenticity" bunker, specially retrofitted by the founder of fake. So Celebration is an intricate inversion of Tocqueville's prediction: an "authenticity" bunker, specially retrofitted by the founder of fake.
The whole idea reminds me of a place on Vancouver Island called Cathedral Grove, about an hour and half's drive from the Roots Lodge and the mouth of Clayoquot Sound, Canada's most cherished old-growth forest. The drive through this part of the world has converted thousands of unsuspecting tourists into environmental activists, and it's easy to see why. After driving uphill for miles you reach a vista of mountains covered with lush cedars, sparkling lakes and drifting eagles-the wilderness that soothes and reassures the soul. The planet is as strong and rich as it ever was, it tells us-we just have to drive farther north to see it. But the serenity doesn't last long. The next dip and climb brings a radically different view: two huge bald gray mountains so burned and scarred they look more like the moon's surface than the earth. Nothing but death and asphalt for miles.
Nestled in the folds of this psychic roller coaster is the entrance to Cathedral Grove. Every day, hundreds of cars pull over to the side of the road, and their passengers embark on foot, glossy brochures in hand, to see the only old-growth trees left in the area. The largest tree has a rope around it and a plaque mounted on a stick. The irony, not lost on most residents of the area, is that this miniature park is owned and operated by MacMillan Bloedel, the logging company responsible for clear-cutting Vancouver Island and much of Clayoquot Sound. Cathedral Grove isn't a forest but a tree museum-just as Celebration is a town museum.
It's tempting to dismiss Celebration and the idea of the branded town as the particular neurotic obsession of the Disney corporation: this isn't a harbinger of the future privatization of public space, it's just Walt playing God again from beyond the grave. But with virtually every superbrand openly modeling itself after Disney, Celebration should not be too readily dismissed. Of course Disney is ahead of the game-Disney invented the game-but as is always the case with the Mouse, there are many would-be imitators trailing behind, taking notes. From his perch as adviser to the top media conglomerates, Michael J. Wolf observes that theme-park-style shopping locations like Minneapolis's Mall of America may be precursors to the live-in malls of the future. "Maybe the next step in this evolution is to put housing next to the stores and megaplexes and call it a small town. People living, working, shopping, and consuming entertainment in one place. What a concept," he enthuses.18 Setting aside, for a moment, the Brave New World/Stepford Wives associations such a vision inevitably evokes, there is something undeniably seductive about these branded worlds. It has to do, I think, with the genuine thrill of utopianism, or the illusion of it at any rate. It's worth remembering that the branding process begins with a group of people sitting around a table trying to conjure up an ideal image; they toss around words like "free," "independent," "rugged," "comfortable," "intelligent," "hip." Then they set out to find real-world ways to embody those ideas and attributes, first through marketing, then through retail environments like superstores and coffee chains, then-if they are really cutting edge-through total lifestyle experiences like theme parks, lodges, cruise ships and towns.
Why wouldn't these creations be seductive? We live in a time when expectations for building real-world commons and monuments with pooled public resources-schools, say, or libraries or parks-are consistently having to be scaled back or excised completely. In this context, these private branded worlds are aesthetically and creatively thrilling in a way that is totally foreign to anyone who missed the postwar boom. For the first time in decades, groups of people are constructing their own ideal communities and building actual monuments, whether it's the marriage of work and play at the Nike World Campus, the luxurious intellectualism of the Barnes & Noble superstores or the wilderness fantasy of the Roots Lodge. The emotional power of these enclaves rests in their ability to capture a nostalgic longing, then pump up the intensity: a school gym equipped with NBA-quality equipment; summer camp with hot tubs and gourmet food; an old-world library with designer furniture and latte; a town with no architectural blunders and no crime; a museum with the deep pockets of Hollywood. Yes, these creations can be vaguely spooky and sci-fi, but they should not be dismissed as just more crass commercialism for the unthinking masses: for better or for worse, these are privatized public utopias.
Shrinking Options in the Privatized Town Square The terrible irony of these surrogates, of course, is how destructive they are proving to be to the real thing: to actual town centers, to independent business, to the non-Disney version of public spaces, to art as opposed to synergized cultural products and to a free and messy expression of ideas. Commercial climates are being dramatically altered by the expanding size and ambitions of these large players, and nowhere more so than in retail, where, as we have seen, companies like Discovery and Warner Brothers are in it for the "billboard effect" as much as for the sales. Independent shopkeepers, on the other hand, generally lack the resources to turn shopping into performance art, let alone into a destination vacation spot.
As superstores adopt the production values and special effects of Hollywood, small business is getting caught between, on the one hand, the deep discounting of the Wal-Marts and on-line retailers like Amazon.com, and on the other the powerful draw of the theme-park-infused retail environments. These market trends are combining to drastically undermine the traditional concepts of value and individual service that small business is known for offering. The staff at the indies may be more experienced and knowledgeable than the assistants at the superstores (the high turnover doesn't allow clerks to gain experience: more on that in the next section, "No Jobs"), but even that relative advantage can often get drowned out by the pure entertainment value of the superstores.
As many have commented, this phenomenon has been particularly pronounced in the book industry, where membership in the American Booksellers Association has fallen startlingly from 5,132 in 1991 to 3,400 in 1999.19 Part of the problem is the Wal-Mart effect: the superstore chains have negotiated discounts on wholesale books with many publishers, making it nearly impossible for the independents to compete on price. The other difficulty is the retail standard set by the superstores. Bookstores are now expected to play the role of the university library, theme park, playground, pickup joint, community center, literary salon and coffee house all in one-a pricey undertaking even for the big players, which often involves taking a loss in the interest of future brand equity and market share. That has been the experience here in Canada, where the Canadian equivalent of Barnes & Noble, the bookstore chain Chapters, was able to open ten superstores in prime locations in 1997, while running at a loss of $2.1 million. Part of the problem is the Wal-Mart effect: the superstore chains have negotiated discounts on wholesale books with many publishers, making it nearly impossible for the independents to compete on price. The other difficulty is the retail standard set by the superstores. Bookstores are now expected to play the role of the university library, theme park, playground, pickup joint, community center, literary salon and coffee house all in one-a pricey undertaking even for the big players, which often involves taking a loss in the interest of future brand equity and market share. That has been the experience here in Canada, where the Canadian equivalent of Barnes & Noble, the bookstore chain Chapters, was able to open ten superstores in prime locations in 1997, while running at a loss of $2.1 million.20 It is here, once again, that the economy of scale comes powerfully into play. Of course some independent bookstores have held their own against the chains by adding cafes, cozy reading chairs and cooking demonstrations, but there is only so far most independents can travel down the road of experiential shopping before they experience financial stress. If, on the other hand, they do nothing to compete, single, independent stores can all too soon begin to look like poor cousins next to the brandstravaganza unfolding across the street. The end result is a retail playing field where more books are being sold, but it is becoming as difficult for small retailers to compete as it is for independent film producers to go up against the major studios on the multiplex circuit. Retail has become a vastly unequal playing field; yet another industry-like film, television or software-where you have to be huge to stay in the game. Here once again is the strange combination of a sea of product coupled with losses in real choice: the signature of our branded age.
A great deal of critical attention has been lavished on the effects of superstores on the book industry-partly because bookstore consolidation has clear implications for freedom of speech, and partly because media types tend to care more passionately about where they buy their books than where they buy their socks. In many ways, however, the bookstores are an anomaly in the superstore universe: they are multibrand stores, carrying books from thousands of book publishers, and they are primary business ventures, as opposed to being extensions, synergy schemes or 3-D billboards for brands primarily invested elsewhere. To see the animosity toward marketplace diversity most directly, one has to look not to the bookstores but to the pure branded superstores like those built by Virgin, Sony and Nike. It is there that the quest for total brand reach is revealed most starkly as the antithesis of marketplace diversity: like synergy itself, these stores seek name-brand cohesion, a safe logo cocoon apart from the warring messages of other brands.
The Virgin megastores provide perhaps the clearest displays of this kind of brand cohesion, employing various intra-brand synergies to leapfrog over entire stages of consumer choice. In the past, record labels, no matter how much money they sank into promoting new artists, were still at the mercy of record-store owners and radio-and music-video station programmers (which is why the labels got themselves into so much legal trouble in the fifties for bribing deejays). No more. Virgin's 122 megastores are wired up to be synergy machines, equipped with building-sized mural ads, listening stations for customers to sample new CDs, huge video screens, deejay booths, and satellite dishes to beam live concerts into the stores. This is par for the course in the age of the superstore, but since Virgin is also a record label, all of this technology can be harnessed to create a sense of breaking excitement about a new Virgin artist. "We'll be featuring certain artists every month. That means we play them in the store, we can do live shows via satellite from another location and we can give them store presence," says Christos Garkinos, vice president of marketing for Virgin Entertainment Group. "Think of what we can do for a developing artist."21 More to the point, why wait around for something as temperamental as audience demand or radio play when by controlling all the variables you can create the illusion of a blockbuster success before it even happens? More to the point, why wait around for something as temperamental as audience demand or radio play when by controlling all the variables you can create the illusion of a blockbuster success before it even happens?
That is synergy, in a nutshell. Microsoft uses the term "bundling" to describe the expanding package of core goods and services included in its Windows operating system, but bundling is simply the software industry's word for what Virgin calls synergy and Nike calls brand extensions. By bundling the Internet Explorer software within Windows, one company, because of its near monopoly in system software, has attempted to buy its way in as the exclusive portal to the Internet. What the Microsoft case so clearly demonstrates is that the moment when all the synergy wheels are turning in unison and all's right in the corporate universe is the very moment when consumer choice is at its most rigidly controlled and consumer power at its feeblest. Similarly, in the entertainment and media industries, synergy nirvana has been attained when all of a conglomerate's arms have been successfully coordinated to churn out related versions of the same product, like molded Play-Doh, into different shapes: toys, books, theme parks, magazines, television specials, movies, candies, CDs, CD-ROMs, superstores, comics and megamusicals.
Because synergy's efficiency is not measured by the success of any one "product," whether a film or a book, but rather on how well any one of those products travels through the conglomerate's multimedia channels, synergy projects tend to grow out of freewheeling meetings in which agents, clients, brand managers and producers riff on how next to leverage their flagship brands. And so the market is flooded with the mutant progeny of these brainstorming sessions: Planet Hollywood restaurants, Disney-published books written by ABC sitcom stars, Starbucks coffee-flavored beer, Lost in Space Lost in Space breath mints, a chain of airport bars modeled after the deceased set of the sitcom breath mints, a chain of airport bars modeled after the deceased set of the sitcom Cheers Cheers, Taco Bell-flavored Doritos...
It seems fitting, then, that Sumner Redstone calls his Viacom entertainment products "software" since there is so little that is firm at the center of these synergy schemes. By software, Redstone means branded entertainment products that he pats and molds to fit his various media holdings. "We have created a software-driven media global powerhouse," he says. "Our mission is to drive that software in every application here in the U.S. and to every region on the earth. We're going to do it." Redstone prides himself on the "absolute open communication" between his holdings. "We are coordinating various aspects of the business so each takes advantage of the opportunities provided by the other."22 The New Trusts: The Assault on Choice In less enthusiastic eras than our own, other words besides "synergy" were commonly used to describe attempts to radically distort consumer offerings to benefit colluding owners; in the U.S., illegal trusts were combinations of companies that secretly agreed to fix prices while pretending to be competitive. And what else is a monopoly, after all, but synergy taken to the extreme? Markets that respond to the tyranny of size have always had a tendency toward monopoly. Which is why much of what has taken place in the entertainment industry during the last decade of merger mania would have been outlawed as recently as 1982, before President Ronald Reagan's all-out assault on U.S. anti-trust laws.
Although many media empires have long had the capacity to coordinate their holdings to promote their various offerings, most were held in check from aggressively doing so by laws designed to put up barriers between media production and media distribution. For example, U.S. regulations passed between 1948 and 1952 limited the ability of film studios to own first-run movie theaters because lawmakers feared a vertical monopoly in the industry. Though the regulations were loosened in 1974, the U.S. government was at that point in the midst of implementing a similar series of anti-trust actions designed to keep the three major U.S. television networks (CBS, ABC and NBC) from producing entertainment shows and movies for their own stations. The Justice Department charged that the three networks had an illegal monopoly that was blocking the work of outside producers. According to the Justice Department, the networks should act as programming "conduits," not programmers themselves. During this government anti-trust campaign, CBS was forced to sell off its programming arm-which, ironically, is now the synergy-obsessed Viacom. Another irony is that the interest that pushed most aggressively for the Federal Trade Commission investigation was Westinghouse Broadcasting, the same company that merged with CBS in 1995 and now enjoys all the attendant synergies between production and distribution. Full circle arrived in September 1999 when Viacom and CBS announced their merger, worth an estimated $80 billion. The companies, reunited after all these years apart, converged into an entity far more powerful than before the divorce took place.
In the seventies and early eighties, however, the majors were under so much scrutiny that according to Jack Myers, then a sales executive at CBS-TV, his network was reluctant to coordinate the sales departments of its television, radio, music and publishing divisions for cross-promotional purposes. "The idea," writes Myers, "is one that several major media companies are today attempting to follow, but in 1981 concerns about anti-trust regulations prevented direct divisional interaction."23 Those concerns were alleviated when, in 1983, Reagan began the not-so-gradual dismantling of U.S. anti-trust laws, first opening the door to joint research between competitors, then removing the roadblocks to giant mergers. He yanked the teeth out of the Federal Trade Commission, dramatically limiting its ability to impose fines for anticompetitive actions, cutting the staff from 345 to 134 and appointing an FTC chairman who prided himself on reducing the agency's "excessively adversarial role."24 A former FTC regional director, Carlton Eastlake, commented in 1983 that "if the policies of the current chairman are permitted to govern for a sufficient period of time, some of our most basic liberties will be jeopardized." A former FTC regional director, Carlton Eastlake, commented in 1983 that "if the policies of the current chairman are permitted to govern for a sufficient period of time, some of our most basic liberties will be jeopardized."25 Not only were the policies continued, but in 1986 even more dismantling legislation was passed with the explanation that American companies needed greater flexibility to compete with the Japanese. Reagan's term saw the ten biggest mergers in American history up until that point-and not one was challenged by the FTC. The number of FTC anti-trust cases against corporations dropped by half during the eighties, and the cases that were prosecuted tended to target such ultra-powerful forces as the Oklahoma Optometric Association, at the same time as Reagan stepped in personally to protect the world's ten largest airlines from a pending anti-trust investigation by his own government. Not only were the policies continued, but in 1986 even more dismantling legislation was passed with the explanation that American companies needed greater flexibility to compete with the Japanese. Reagan's term saw the ten biggest mergers in American history up until that point-and not one was challenged by the FTC. The number of FTC anti-trust cases against corporations dropped by half during the eighties, and the cases that were prosecuted tended to target such ultra-powerful forces as the Oklahoma Optometric Association, at the same time as Reagan stepped in personally to protect the world's ten largest airlines from a pending anti-trust investigation by his own government.26 For the culture industries, the final piece of the new-world jigsaw fell into place in 1993 when Federal Judge Manuel Real lifted the anti-trust restrictions that had been imposed on the three major television networks in the seventies. The decision opened the door for the majors to once again produce their own prime-time entertainment shows and movies and neatly paved the way for the Disney-ABC merger. For the culture industries, the final piece of the new-world jigsaw fell into place in 1993 when Federal Judge Manuel Real lifted the anti-trust restrictions that had been imposed on the three major television networks in the seventies. The decision opened the door for the majors to once again produce their own prime-time entertainment shows and movies and neatly paved the way for the Disney-ABC merger.27 However, even in today's climate of weak anti-trust laws, some of the more audacious synergy dreams have begun to wake up the long-dormant FTC. In addition to the high-profile case against Microsoft, Barnes & Noble's bid to buy the book distributor Ingram created such rage in the book industry that the FTC was forced to set up a dedicated phone line to deal with the complaints and Barnes & Noble abandoned the bid. That these controversies are fiercest in the book and software industries is no coincidence: what is at stake is not the availability of cheap staplers, toys or non-branded towels but the free publication of, and access to, a healthy diversity of ideas. It doesn't help that the concentration of ownership among Internet, publishing and book retail companies has come hot on the heels of what must now seem an incautious level of hype about the openness and personal empowerment of the so-called Information Revolution.
In an open E-mail to Bill Gates, Andrew Shapiro, a Fellow at Harvard Law School's Center for Internet and Society, voices an opinion that has surely occurred to most thoughtful observers of modern mergers and synergy schemes. "If the whole idea of this revolution is to empower people, Bill, why are you locking up the market and restricting choices? Synergizing your way from one biz to another every month?"28 This contradiction represents a much larger betrayal than the usual doublespeak of advertising that we are all accustomed to. What is being betrayed is no less than the central promises of the information age: the promises of choice, interactivity and increased freedom.