Business Report From Horton Plaza: Good and Getting Better

It’s now three months since Horton Plaza--downtown San Diego’s $140-million experiment in urbanity--opened its doors, and by most measures it’s doing well, drawing customers from throughout the county and beyond.

According to a recent survey by the center’s developer, the center is attracting a diversity of clientele, with as many affluent shoppers from La Jolla and Pacific Beach as there are moderate-income customers from Chula Vista and National City.

In addition, both Horton Plaza officials and representatives of the center’s major department stores say last week’s liberalizing and simplifying of the complex’s confusing parking policy has led to more shoppers at the center, despite the recent inclement weather.

Correspondingly, officials of other large shopping centers in San Diego, such as Mission Valley and Fashion Valley, report that while the opening of Horton Plaza has had some effect on their business, particularly in the weeks immediately after it opened, the changes haven’t been dramatic, and they predict any shifts are only temporary.

So where are Horton Plaza’s customers coming from?

According to a survey of 1,000 people shopping and visiting Horton Plaza conducted last month by center developer Ernest W. Hahn Inc., most customers come from North Park, various South Bay communities, downtown and the waterfront communities of Pacific Beach, Point Loma, La Jolla and Coronado.

In addition, a significant portion (28%) are tourists, defined as people who live outside San Diego County, including 17% who live outside California and 4% who are from another country. This figure is particularly important because part of Horton Plaza’s success formula depends on the center being distinctive enough to draw tourists.

“Our research shows that the center hasn’t developed an image . . . where certain segments of society feel uncomfortable being there,” says Scott MacDonald, vice president of market research for the Hahn company. “Usually, after a center has been open awhile, it has a tendency to appeal to one level or another.

“So far, Horton Plaza is different. It’s downtown and it’s for everybody.”

The reason the center hasn’t had a dramatic effect on any of its competitors is that people shopping at Horton Plaza seem to be dispersed throughout the county, according to the survey. For example, 5% of the customers surveyed were from the northern coastal communities of Carlsbad, Oceanside and Encinitas, while 5% to 10% lived inland in Vista, Escondido, Fallbrook, Rancho Bernardo, Scripps Ranch and Poway.

And another 10% to 15% were from East County cities such as El Cajon and La Mesa.

“If you have shoppers coming from such a large area, the impact is softened because there’s a little bit from everywhere,” MacDonald said.

When Horton Plaza opened on Aug. 9, it was expected many people would travel to see it, but the question was whether they’d come back. The survey found that of the people who identified themselves as San Diego County residents, 25% to 30% said they’ve visited the center at least five times.

Other interesting survey results included the following: Horton Plaza seems to be attracting more couples than are usually found at suburban malls; males constitute one-third of the center’s shoppers, a relatively high number, and of the people who said they left work to stop at the center, half worked outside of downtown.

It’s difficult to quantify exactly how well Horton Plaza is doing because retail merchants guard their sales figures closely. The Hahn company says that for the months of August and September, the latest for which statistics are available, Horton Plaza did better, based on sales per square foot of retail space, than any of its 41 shopping centers.

Interviews with representatives of Horton Plaza’s four major department stores show all are pleased with business there. Discussions with smaller businesses at the center reveal a slightly different picture, but not significantly so.

Stores located on the center’s ground floor, which serves as a sort of Main Street, report business has been good, not extraordinary, but that it’s steady and it continues to grow. However, some stores located on the top floor of the multilevel structure say business has been slow because relatively few customers venture up that far, although they expect this to change as more stores and restaurants open.

“It’s interesting,” says Jammie Baugh, regional manager in San Diego County for Nordstrom department stores, “the first opening month we did see a little shift of business from Fashion Valley,” where Nordstrom also has a store.

While that shift has disappeared, she says, another one has remained. Nordstrom, like other stores at the center, has tapped into a new market: the South Bay.

Since the store opened, it has approved more than 20,000 courtesy charge accounts. These are charge accounts people apply for at the store rather than by mail. And a large percentage of these accounts are going to South Bay residents.

“We’ve found a new audience . . . people from Chula Vista and Bonita,” Baugh said. “These are people who didn’t shop on a regular basis in Fashion Valley.”

In addition, Baugh says, the Horton Plaza store is attracting middle-class and wealthy Mexicans. “On a regular basis throughout the week, we see customers from across the border, while in our other stores, we’d only get them on weekends.”

While Baugh is satisfied with business at the downtown shopping center, she says the key to sustained growth will occur in about six months. “The real test is next spring. Right now, we’re going to have Christmas. That means there’s a reason to shop. But in spring, we’ll see if the tourists come back.”

So far, Nordstrom has felt the patronage of out-of-town shoppers. Baugh bases this on the use of American Express credit cards, which is greater at the Horton Plaza store than at Nordstrom’s two other stores in the county. Traditionally, tourists and other out-of-town visitors use American Express because they don’t have store-issued credit cards.

Another Horton Plaza department store which has had experiences similar to Nordstrom’s is the Broadway, which opened about a month ago.

Michael Saucier, vice president for the Broadway stores in San Diego and Orange counties, said a 30-day analysis of charge-card purchases shows the new downtown store is drawing heavily from North County, nearby beach communities and East County.

“We’re very pleased with the performance of the store,” Saucier said, noting the Horton Plaza store “doesn’t seem to have had a negative impact” on the five other Broadway stores in the county.

Bob Dobson, general manager of Horton Plaza, believes his outdoor center is pulling away customers from both Mission Valley and Fashion Valley malls--the prototypes of suburban shopping malls, with acres of free parking. Both are located within 15 minutes driving time from Horton Plaza.

But representatives from the two centers disagree with that assessment. Marilee Bankert, director of marketing for Fashion Valley, says the extensive publicity surrounding Horton Plaza caused some shoppers to go take a look downtown.

“They’ve probably captured some of that, but that’s what you’d expect to happen when something as new and unique as Horton Plaza opens,” Bankert said. “But it’s nothing dramatic. I’d say the impact has been light and that any shift is merely temporary.”

Bankert says that business at Fashion Valley, which was built in 1969 and has 147 stores, has continued to increase, despite the presence of retail’s flashy new kid on the block.

Offering a similar analysis is Jeri Belik, marketing director for Mission Valley center. “It’s really hard to say what impact Horton Plaza has had,” she said. “I know when it first opened there was a noticeable, slight decrease. But our merchants say it’s back to normal.”

Overall, Belik said, merchants at the 150-store shopping center, which is now 24 years old--though it’s been renovated--take the attitude that downtown’s new showpiece “is nothing to get too concerned about.”

Gordon Jackson, general manager of University Towne Centre in La Jolla, which, like Horton Plaza, is owned by the Hahn company, says that based on sales volume and counts taken of cars parking at his center, he hasn’t noticed even a ripple caused by Horton Plaza.

“We haven’t seen anything materialize at this point,” Jackson said. “It would seem to me that most of their business would come from south of town, tourists and Mission Valley and Fashion Valley.”

Some of Horton Plaza’s smaller merchants say that while business hasn’t been spectacular, it has been steady and climbing.

“We’ve been going like this since we opened,” said the Lane Gallery’s Dave Gelber, positioning his hand in a slight upward direction. The Lane Gallery, specializing in expensive works of art and designer clothes, is located on Horton Plaza’s main floor, which guarantees it access to the thousands of people who walk into the center each day.

Up on the top floor, however, merchants say sales have been slower than they expected.

Employees of a woman’s dress store and a card shop said there are times when they see no customers for periods of up to half an hour.

“People get tired roaming around the center and don’t get up here,” said one employee, who asked not to be named. “There’s still a lot of construction going on up here too, and that probably scares them away because they think there’s not much up here.”

But these workers are optimistic things will turn around as soon as all the stores and the center’s restaurants, many of which are congregated on the upper floor, open for business.

There are now 87 stores open at Horton Plaza, with 13 more expected to open by Christmas.