As they search for riches, immigrants strike out on their own. : Mini-Malls: Stores of Opportunity

For Rofelia Ibanez from the Philippines, the road to riches has led to a Los Angeles mini-mall on the southeast corner of Vermont Avenue and First Street.

There, in a narrow storefront decorated in shades of pink and gray, Ibanez spends 12 hours a day, seven days a week, tending to a beauty salon that bears her name. “I feel so tired,” said Ibanez, 34, who abandoned a career in nursing and sunk $50,000 to open the salon five months ago.

Business has been slow, the $2,000-a-month rent is a constant worry and Ibanez has been robbed at gun point. But she is not ready to quit. Ibanez likes being her own boss and dreams of opening another salon--Rofelia’s No. 2--in a much larger store and a bigger mall.

“I know some day this will make money,” Ibanez said of her business. “I know I can make it.”

Ibanez occupies one of eight storefronts at First Vermont Plaza, a 17-month-old mini-mall. Her neighbors include a former banker from Saudi Arabia who runs the butcher shop. Two Cambodian brothers own the doughnut shop. The gift store owner is a Vietnamese refugee. A Filipino from Hong Kong operates the video store. And the Little Caesar’s pizza parlor is managed by a young Latino.

The merchants at First Vermont are typical of the shopkeepers shoehorned into the approximately 2,000 mini-malls spread throughout Southern California. They peddle everything from $15 haircuts to $2 movie videos to 38-cent doughnuts. Each in their own way struggles against high rents, stiff competition and--in many instances--their own inexperience.

While mini-mall construction seems to be a hot political issue in Los Angeles these days, the most important issue for the merchants who inhabit the concrete block and stucco structures is turning a profit--not politics.

It’s not surprising that money is such an overriding concern. Some of these merchants have invested $50,000 to $60,000--money that often comes from life savings and loans from relatives. Ibanez, the hair stylist, saved money from working 16-hour days for several years: “I worked liked an animal,” she said. They save money by staffing the stores themselves or by hiring relatives for low wages. The doughnut shop owner pays his cousin a monthly salary of $600.

The First Vermont merchants--packed into a one-story building with a red tiled roof--have formed a loose alliance of sorts. The gift shop owner gabs away with the butcher. The butcher patronizes the video shop next door. The video store carries Ibanez’s business cards. And everybody begins their days with a quick trip to the doughnut shop for coffee.

“To make it in America you have to go for it--you have to work hard,” said Nang Chhun, the 25-year-old co-owner of L.A. Donut & Croissant.

Opened 13-months ago, L.A. Donut marked the southward expansion of an an eight-store doughnut chain that Chhun and his older brother, Chuay, 33, founded three years ago in Oakland. Chhun eagerly shows off blueprints of the brothers’ ninth store, to be located at a nearby mini-mall at Third Street and New Hampshire Avenue.

A Cambodian refugee who fled to the United States with his brother in 1979, Chhun quit college in Missouri and moved to Oakland to join his brother who had bought a doughnut shop.

Chhun and his brother have learned that revenue from other items--like soft drinks, coffee and even the video machines tucked into their stores--are as important as the sale of doughnuts. With that in mind, Chhun, who tools around in a cherry red Nissan 300ZX, expects to recoup the $60,000 he and his brother have invested in the L.A. Donut store within two years.

“If we just sold doughnuts,” Chhun said, “we won’t even pay the rent.”

Criticized as ‘Eyesores’

The mini-malls represent a slice of the thriving immigrant business community in Los Angeles. Developer William Hayes, whose company has built 125 mini-malls, estimates that 75% of his tenants are recent immigrants.

John A. Davis, the Los Angeles developer who owns First Vermont Plaza, said his tenants “have all been enthusiastic about coming to this country, working hard and making a go of it.” Mini-malls, he said, “provide the tenants a way to make money in this country--it’s opened up opportunities (for them).”

But not everyone is enamored of mini-malls. Critics malign the developments as urban eyesores that worsen traffic congestion and breed crime. Los Angeles and other cities have temporarily halted the building of mini-malls while they draw up ordinances to control their growth.

Such restrictions will hurt newcomers, said Wilfred Marshall, director of Mayor Tom Bradley’s office for small business. “From a business standpoint,” he said, “it’s going to have an adverse affect on the start-ups and the growth of small businesses.”

Building moratoriums may be the least of a mini-mall merchant’s problems, however.

David C. Lachoff, a senior marketing consultant at Grubb & Ellis, said “the turnover is very high” for mini-mall merchants. “They last six months to a year before they run out of money.” The chief reason: high rents.

Lachoff said a doughnut shop owner may have to sell 1,000 doughnuts a day just to meet the rent. “I don’t know of many people who can sell 1,000 of anything in one day,” he said.

The ideal sites for mini-malls are those near office buildings and densly populated residential neighborhood--the combination ensures that a large pool of potential customers is always nearby. However, these sites are probably already occupied or too expensive.

“The better (mini-mall) centers will lease to national-type stores,” said Lachoff. “That’s going to force out the mom-and-pop guys to secondary locations,” where business is tougher to come by.

The stiff rents and the secondary locations many merchants have to settle for just serve to fuel the high failure rate for new businesses--only 1 out of 10 start-ups are still around to celebrate their fifth birthday, according to government statistics.

Nausherwan Mahmood,who runs the Alhalal Meat Center at First Vermont Plaza, winces when he’s asked how much rent he pays. “It is pretty difficult to survive with the high rents,” said Mahmood, who shells out $2,400 a month for his 825-square-foot storefront.

Mahmood and his neighbors at First Vermont Plaza occupy the site of a former movie theater and furniture store. When Davis decided to spend the $1.5 million necessary to get center built, it was the only mini-mall in the area.

Merchants Work Long Hours

Since then, however, a much larger two-story strip center filled with many of the same stores found at First Vermont has opened up right next door. Across Vermont Avenue, another mini-mall is under construction.

The additional stores intensifies the competition for customers and forces the merchants to stay open longer and find ways to set themselves apart.

Rogelio Tan, owner of Allied Video Home Entertainment, caters to the neighborhood’s large population of Latino and Filipino residents with movies filmed in Spanish. The store, open 12 hours a day, also sells freshly popped popcorn and nachos swimming in melted cheese.

“We have to keep coming out with new releases to keep them (customers) coming back to the store,” said Tan, who competes against a much larger Wherehouse records and tapes store in the adjacent strip center.

His strategy seems to work. Latino and Filipino customers--with children often in tow--jam the store’s narrow aisles in the late afternoon and early evening. Despite the popularity of foreign language movies, Tan said his most popular video last month was the English language film “Crocodile Dundee.”

And what does Tan do when he gets home at the end of a long day? “I watch one movie before I go to bed,” he said. “That way I know what movies to recommend.”

When Vinh (Denny) Thai, 25, made the decision to open up Vermont Toys & Gifts, he made an extra effort to set himself apart from the rest of the mini-mall crowd. “Every mall had a video store and a doughnut store,” he said, “but nobody had a gift shop.”

Thai, at the suggestion of an uncle who supplies the shop with products from the Far East, opened the shop last October. The narrow store is packed floor to ceiling with odds and ends: skateboards, ceramic Buddhas, stainless steel pots, artificial flowers, telephones, porcelain elephants, artificial flowers, sunglasses and bubble gum. Childrens’ bikes and baby strollers are lined up in neat rows outside the store like new cars in an automobile dealer’s lot.

Low Prices Are Key

Retailing runs in Thai’s family. His parents ran a grocery store in Saigon before the family fled to the United States in 1980. They originally settled in Maryland before recently moving to Los Angeles.

His brother and sister help staff the store to keep costs low. “If we hired somebody,” Thai said, “we would have to raise prices.”

Low prices are the key to Thai’s strategy. He figures his prices will appeal to the neighborhood’s low-income residents who might not be able to afford the more expensive toys and gifts found in chain stores.

Sales at Vermont Toys & Gifts have gone well, and Thai plans to open another store next year. Thai may even break with family tradition and hire someone to run the store, giving him time to attend college and earn a degree in electrical engineering.

“In this type of business, you make just enough for expenses and for your own salary,” Thai said. But, “even if you make a little bit of money,” he said, “it’s better than working for somebody else.”

While Thai plans ahead for a new store, Ron Blanco, the 22-year-old manager of Little Caesar’s, looks forward to managing a larger outlet. A former convenience store clerk, Blanco was only with the fast food chain two months before he was promoted to store manager.

“This is not such a bad place,” Blanco said of First Vermont Plaza, located right across the street from his former junior high school. “We get all kinds here: Mexicans, Koreans, Filipinos,” he said of his clientele. “And they all like pizza.”

Of all the merchants at First Vermont Plaza, the owner of the butcher shop, is the most pessimistic about his business’ future.

“I thought with my own business I would be better off,” said Mahmood, who spent $60,000 to open the shop in April, 1986. But customers have been scarce and the shop continues to lose money.

Leaning against a butcher block table at the rear of his shop, Mahmood concedes that he does not even like meat-cutting. He has hired a butcher to do that. He is a banker by trade, but switched careers and left his native Saudi Arabia two years ago for the United States.

“Eventually, if it does not work out,” said Mahmood, “I’ll go back to banking.”