SOUTH COAST PLAZA : HUGE SHOPPING MALL TESTS WHETHER MORE IS BETTER AS 8 BIG RETAILERS GO HEAD TO HEAD

It was the simplest kind of industrial espionage. Posing as a customer, the head of Bullock’s in South Coast Plaza phoned Nordstrom to find out when it would open the day after Thanksgiving, the busiest shopping day of the year.

Eight a.m., she was told.

Manager Sue Graham then decided that Bullock’s also would open at 8 a.m.--an hour earlier than usual--and would serve sleepy-eyed shoppers free coffee starting at 7:30.

Graham’s sly phone call and $50 investment in coffee are just part of the daily skirmishing in the battle for a share of the $200 million that shoppers are expected to plunk down this holiday season at South Coast Plaza in Costa Mesa.

Shoppers aren’t the only ones plunking down big money this year. After making multimillion-dollar investments in remodeling existing facilities and building snazzy new stores, eight of the nation’s biggest retailers and hundreds of smaller ones are competing head-on for the first time this Christmas at South Coast Plaza.

The 1986 holiday season at one of the nation’s largest shopping malls will provide not only important numbers for the profit-hungry retailers, but a glimpse into the future for big shopping malls across the country.

For shoppers drawn from throughout Southern California, the mall has it all--good and bad. “South Coast Plaza has just about everything you could possibly want,” said Nancy Perry of Newport Beach. “I love it. . . . It’s really classy.”

At the I. Magnin store, Dick MacKnight of Irvine said that while he and his wife were planning on hitting Nordstrom and Bullock’s, it would probably be his last trip to South Coast Plaza during the holidays. He said he may finish his holiday shopping at Newport Center Fashion Island in Newport Beach, where he thinks it is easier to park. “Traffic is a big hassle,” he groused.

Like the customers, merchants and industry observers are split on whether the battle for retail dollars this holiday season will be helped or hurt by the concentration of eight anchors (major department stores), 212 specialty stores and 17 restaurants.

The issue is critical in Southern California, the nation’s most competitive retail market, because the affluent Orange County area is considered pivotal to merchandising success and is the site for some of the chains’ top-performing outlets.

The retailers’ efforts, which include brand new Broadway and J. W. Robinson’s stores at the plaza’s $100-million Crystal Court addition, a new Nordstrom store and major refurbishing in the original mall’s Sears, May Co., Bullock’s and I. Magnin facilities, so far have drawn huge crowds of pampered shoppers.

No Face Lift

Saks Fifth Avenue is the only major retailer at the plaza that did not bankroll a face lift in time for the Christmas season.

“When you walk into Bullock’s, Robinson’s or the Broadway, it’s better than the normal Bullock’s, Robinson’s or the Broadway,” said Graham, who is president of the South Coast Plaza Merchants Assn. as well as general manager of the Bullock’s outlet.

Indeed, the numbers in recent years, even before the current expansion and remodeling, show that South Coast Plaza has clearly emerged as California’s leading mall.

With an estimated 20,000 shoppers per day flocking to the center, South Coast Plaza’s visitor count rivals that of Orange County’s other major attraction, Disneyland.

The 2.9-million-square-foot complex has been the state’s sales leader since 1980. It projects sales this year of about $500 million, outdistancing Southern California’s No. 2 mall--Del Amo Shopping Center in Torrance--by an estimated $100 million. For 1987, the center estimates total sales at about $735 million.

With the recent expansion, there will be even more to gain--or lose.

The focus of industry attention is on the newcomers at South Coast Plaza, the Broadway and J. W. Robinson’s. But most of the existing anchors also have been jockeying and investing to meet the new competitive demands:

- May Co. California completed a multimillion-dollar face lift to expand its sportswear, men’s clothing, cosmetics and accessories departments.

- Nordstrom invested $27 million to build a new 225,000-square-foot location that is almost twice the size of its previous store at the plaza.

- Sears last year finished a $5.5-million rejuvenation that was the largest of any store in the chain during 1985.

- I. Magnin spent nearly $500,000 to enlarge its men’s and designer sportswear departments.

- Bullock’s is still finishing a 90,000-square-foot addition, giving the three-level store a total 270,000 square feet, making it the largest and costliest for the 23-store chain.

“Of course competition is more intense,” said Richard F. Lombard, general manager of I. Magnin at South Coast. Since the openings of Robinson’s and the Broadway, he said, “the traffic flow has been spread out” and fewer shoppers browse through his store.

“It’s got to be a different Christmas,” said a Southern California retail executive who asked not to be identified. “Crystal Court means the business is going to be split more ways.”

Still, there are those who are bullish on the impact of the new competition. “If anything, our sales have been helped,” said Nordstrom President James Nordstrom in Seattle. “I’m a great believer in the critical mass theory: The more stores you can get in an area, the better off you’ll do.”

Spokesmen at May Co. California, Sears and Saks Fifth Avenue also said their sales have not been adversely affected by the new competition.

The same differences in opinion, not surprisingly, are reflected in the views of industry analysts.

“The real question is whether extra anchors will bring in more consumers,” said real estate economist Alfred Gobar of Alfred Gobar Associates Inc. of Brea. “At some point, adding additional anchors doesn’t have the desired effect.”

Supply Will Run Out

Gobar reasons that retail malls can’t keep adding major stores and expect to increase sales volume proportionately because eventually the supply of consumers will run out.

He also pointed to a current high level of consumer debt that he believes is likely to discourage retail spending this holiday season.

But Maurice Robinson, manager of real estate consulting services for the accounting firm of Pannell, Kerr, Forster, is more optimistic.

South Coast Plaza “can support all eight (anchor) tenants,” Robinson said. “Bringing on (two new stores) is a big lump to swallow, but the area has more than enough capacity and growth potential to absorb it. . . . This is a relatively high income area, so there’s more disposable income for shopping.”

Everett Steichen of Wallace & Steichen, a Palo Alto, Calif., retail consulting concern, which did sales volume forecasts on the plaza, noted that total personal income in Orange County--estimated at $31.4 billion in a 1983 federal survey--is greater than in 23 states.

Orange County also has one of the highest median family incomes in the nation. The typical family in 1986 will make $42,000, compared to a national median income of $27,500, according to Department of Commerce projections.

Still, there are only so many ways to slice the pie. “There certainly will be some siphoning off” of business, said Jim Doti, dean of the school of business at Chapman College in Orange. But he and store officials downplay the intrachain rivalry.

“There’s obviously a (customer) loyalty to our stores whether they be in Brea, Huntington Beach or Newport,” said Carrie Pearl, general manager of the Broadway in Costa Mesa. “I’m taking some business from my competition and attracting new customers” but not taking customers away from other Broadway stores, she said.

The ultimate success of the center could affect urban development across the nation, experts say.

That’s because South Coast Plaza, although only 20 years old, is among the oldest and most advanced examples of the burgeoning trend toward malls as the focal point of the new centers of suburban life.

Malls “are the new downtown of the post-industrial world,” explained Christopher B. Leinberger, manager partner with Robert Charles Lesser & Co. of Beverly Hills, a real estate development firm. Because of South Coast Plaza’s sheer size--and its prominent place in the “core” urban area of Costa Mesa, Newport Beach and Irvine--”the one thing it will show is whether you can jam that much critical mass into one space--the number of sheer bodies and cars. It’s pushing the outer limits of what’s possible.”

South Coast Plaza “is unique in that it caters to higher income individuals and upscale shopping. It’s the test tube to see if . . . such a large concentration of stores can be successful in attracting enough of a market to serve as a model for similar centers in other parts of the country,” said Doti.

Expects Jump in Sales

This year, South Coast Plaza expects to post 40% of its annual sales in November and December alone. By comparison, the U.S. Bureau of the Census estimates that total retail sales nationally for those months is about 25% of the annual gross, said a spokesperson for the International Council of Shopping Centers, a New York-based trade association.

With the stakes this high, South Coast Plaza has raised its seasonal advertising by 20% this year.

By Christmas, 625,000 households from San Marino to North San Diego County will have received the mall’s 90-page gift catalogue, bigger than ever, crammed with a record amount of advertising and shipped to an expanded geographic area.

By contrast, archcompetitor Fashion Island this year will send a smaller, 40-page catalogue to just 130,000 households. And Del Amo, the Southland’s second-place retail center, has a 32-page catalogue going to 145,000 families.

The major South Coast anchor retailers also are using every trick of the trade to bring customers their way.

Salespeople at the Costa Mesa Bullock’s are handing out cards redeemable for free coffee to bored spouses who want only to cool their heels while their husbands or wives shop. The remodeled Bullock’s also has more strategically placed chairs throughout the store, general manager Graham said. So where the store--like its Costa Mesa competitors--had “maybe 10 seats” before, “now we have 40 or 50,” said Graham. “Now people who shop till they drop will have someplace to sit down.”

Got to Be the Best

“You’ve got to be the best,” Graham added. “We all try to outdo each other.” So, like other South Coast Plaza retailers, Bullock’s offers a few products not found at other stores in the chain.

The Costa Mesa Bullock’s, for example, has almost more Lladro figurines than most tourists will see in Spain. (The store stocks 450 pieces.) Additionally, the store carries all 31 patterns of Waterford crystal that are distributed in the United States.

The competition between Bullock’s and its neighbor, Nordstrom, has been compared by one retailer to the rivalry 40 years ago in New York between Macy’s and Gimbels.

So both, for example, supply trams to ferry weary customers across the acres of parking to their buildings. Bullock’s has added its own valet parking and doorman in addition to valet parking provided by the mall.

And Nordstrom and Bullock’s both give away holiday shopping bags that often sell for 25 cents elsewhere in their chains.

The personal service strategy evidently has paid off. While Graham declines to give details, she said that the Costa Mesa Bullock’s we-try-harder approach has resulted in it being first in retail sales in its chain for the past three years.

Other South Coast retailers are testing other new bait to lure shoppers to their doors.

I. Magnin has plans to soon become the first in its upper-crust specialty chain to offer two one-woman roving fashion shows, strolling through the South Coast store every day. “You can look at displays all day long. It’s different if you see a model wearing the merchandise,” said general manager Lombard.

Special Ad Campaign

Observers disagree as to whether shoppers will be willing to trek between the new Crystal Court and the original mall along Bristol Street, just north of the San Diego (405) Freeway. “It’s a pain to cross over,” said Cynthia DuBois of Anaheim. “I didn’t even known (the court) was there until I got lost in the parking lot.”

Beckoning shoppers to the new court, the Broadway has stepped up its Orange County advertising with a special year-end, advertising campaign keyed to shoppers in South Coast’s market area.

In addition to the chain’s overall ad effort, the Broadway’s 100 or so buyers each chose merchandise, then developed ads tailored “to the active life style of people in Orange County,” explained J. Janvier Wetzel, executive vice president for marketing and sales promotion at the Broadway-Southern California.

By January, the store’s 10-week campaign for the South Coast Plaza location will have featured 100 newspaper ads touting its upper-moderate-to-high priced merchandise to Orange County’s affluent clientele. Wetzel said the push “is to the Orange County market in total, with an emphasis on our new (Costa Mesa) store.” It evidently has paid off so far. During its first seven days in business, the plaza store logged more than $1 million in retail sales, compared to average first-week sales of $600,000 to $700,000 for new Broadways.

Both the Broadway and Robinson’s are trying to entice buyers by offering boutique-like “shops” within their Costa Mesa stores. While such “concept shops” aren’t new to retailing, the plaza retailers have more of them and they’re more elaborate and defined.

So the brand new Robinson’s Costa Mesa, for example, is the first in its chain to house specially built alcoves for several cosmetics companies. Rather than the mere counter space allotted in other stores, shoppers can lie down on hospital-style tables and be made over, waxed or receive facials in the privacy of the Estee Lauder and Adrien Arpel “spas.” In a similar “Shiseido Room,” a microscope and TV screen are used to give free skin analysis.

That’s matched at the Costa Mesa Broadway, which has 11 concept shops--more than any other in the chain--including “the only Reebok shop on the West Coast where you can buy every item Reebok manufactures,” said June Miller, a store spokeswoman.

Instant Monogramming

The plaza’s Broadway also is the only one in the chain with instant merchandise monogramming, a full-time “resident” cooking demonstrator and a Ralph Lauren/Polo “men’s grooming center” offering haircuts, shaves and facials.

And how have customers reacted to all of this?

“The new mall is almost like another country withits marble floor and columns,” said Stella Brick of Orange. Some other malls “seem so old hat and Crystal Court feels like Paris or something.”

Of course, the center also has its detractors. The Crystal Court “does look awfully fancy,” said Roy Schooley of Fountain Valley. “Like it’s for rich people. . . . I stay with Sears.”