California Dreamer

With American malls on life support, Los Angeles real estate billionaire Rick Caruso is thriving as the Walt Disney of shopping. Now the developer behind The Grove and other retail wonderlands is doubling down on his successful model by continuing to embrace the past—while learning the lessons of e-commerce.

- Samantha Sharf

To understand The Grove, the 575,000-square-foot shopping Xanadu in central Los Angeles, let its owner, Rick Caruso, introduce you to its neighbour, the iconic Farmers Market. He takes you to a butcher stall where, some 80 years ago, Caruso’s father was sweeping the floor. Next he points to a pizza stand founded by Patsy D’Amore, who baked LA’s first pie in 1939. “I grew up on his knee,” he says. Dapper in a custom suit and striped tie, Caruso weaves his way through the chaos, frequently stopping to ask merchants, “How’s business?”

It’s the same question Caruso asks of his own tenants, who have put this 59-year-old real estate developer on The Forbes 400 at No. 179. While the Farmers Market is gritty and authentic, The Grove is the pinnacle of artificial grandeur, where every detail matters. The copper garbage can lids are polished. If a child drops an ice cream cone, a security guard will swiftly appear with a fresh scoop. Male employees must wear ties unless the temperature tops 85 degrees. Caruso obsesses over the positioning of trees, which arrive on his properties fully grown. A practising Catholic, he begins planning for Christmas a year in advance and started his own Santa staffing business because the agency options didn’t meet his north of the North Pole standards.

And after all these years, Caruso hasn’t forgotten the lessons he learned growing up around the Farmers Market. “If you provide something that is unique and relevant, in a setting that people find captivating, you will do well,” he says. “Retail has gotten sideways because it became the commodity. It is not about being high tech; it is about understanding what your customer wants.”