Malls Unwrap the Trimmings for Christmas : Retail: O.C. shopping centers, ravaged by recession, have made some changes that may surprise holiday shoppers.
In Orange County, where palms sway in a warm breeze while the rest of the nation shivers in a blanket of yuletide snow, shoppers traditionally flock to the malls for a dose of holiday spirit.
For the second year, though, the cold facts of recession will be chilling the festive spirit at many of the county’s better-known shopping venues. Customers returning to their favorite malls Friday, the day after Thanksgiving, for the official start of the holiday shopping season may be surprised at the changes. They include:
* Fewer stores. Some department stores closed during the year, and the feeble economy has left few chains interested in taking their place. The result is empty buildings at the ends of some malls that will be plugged with temporary stores or cloaked by stages for Christmas carolers and dancers or other promotional gimmicks.
* Less merchandise. Chain stores are closely watching inventory to manage costs for what are expected to be poorer-than-usual sales. Also, some retailers on the brink of financial trouble may no longer have the credit line they need to order large lots of popular items. The result could be that shelves will be empty of hot-selling items before Christmas.
* Less help. Stores have hired fewer seasonal employees in anticipation of weaker sales.
* Bigger bargains. Some malls are going to extra lengths to lure customers from their larger, newer competitors. The Santa Claus at the Mall of Orange will be offering free breakfast to anyone who is still hungry on the morning after Thanksgiving. Parents can get complimentary instant photos of their children posing on Santa’s knee on weekends at Anaheim Plaza, a freebie that costs an average of $6 at most other malls.
“Shoppers are going to realize that the recession has hit the malls,” said Pat Murphy-Kessinger, a retail analyst for the Irvine office of the accounting and consulting firm Ernst & Young. “They are going to see less merchandise and more empty storefronts.”
The new look of area malls is a reflection of a tough economy, but it also marks more significant changes. Until the 1980s, most malls were as dependably the same as Big Macs. They were generally anchored by mid-price department stores, with a row of well-known chain specialty shops in between. They had the same brown tile floors, beige walls, I- or T-shaped layouts and hot-dog-on-a-stick stands.
Then, something happened. Owners of such malls as Brea, Westminster, Fashion Island and MainPlace/Santa Ana poured millions of dollars into renovations to create their own distinctive looks. The revamped malls were airier, with bright new colors and such touches as fountains or sculptures to set them apart. Customers showed they were willing to drive a little farther to these “super regional” malls for the plusher surroundings and fancier shops.
With the high concepts came higher prices. To appeal to bargain hunters, developers started building discount-oriented shopping centers. One of these centers might be typically built around a home improvement warehouse such as HomeClub or Home Depot; low-price appliance stores such as Circuit City or the Good Guys, or a retailer of inexpensive, European-inspired furniture, such as Stor or Ikea.
As a result, customers either moved up to renovated malls or moved down to the discount centers. That left a smaller market for the venerable mid-price, older malls.
The recession then enhanced the segregating effect, placing pressure on owners of older malls to find a way of bolstering their sagging customer bases.
“You’re seeing the true segmenting of retailing--value-oriented retailing versus fashion retailing,” observed Daniel W. Donahue, chairman of Donahue Schriber in Newport Beach, a major developer and manager of shopping centers and malls.
“What’s happening is the middle category . . . has really been struggling,” he said.
Many department store chains have had troubles of their own; some have gone bankrupt or closed stores in malls. The economy is so sour that other chains hesitate to open new stores that could take their place. So some malls this Christmas will have huge empty shells where some of the major department stores stood.
Malls have been hurt the worst by closure of the 16-store Buffums chain last spring. Laguna Hills Mall has a temporary vendor demonstrating model airplanes in front of its closed Buffums store. The renovated Westminster Mall has installed a holiday stage and its Santa Claus display in front of the main entrance to its closed Buffums store.
“We’re going to disguise it as much as we can,” said Nancy Feightner, general manager of Westminster Mall.
Malls are harmed not so much by the loss of department stores themselves as by the impact such a closing has on surrounding shops. Mall developers generally give huge breaks on lease payments to department stores--they might pay $4 to $8 a square foot, while specialty retailers pay $25 or more a square foot per year--because they lure shoppers to the mall.
When department stores leave, the surrounding shopkeepers can be suddenly set adrift.
That’s why mall owners will go to extraordinary lengths to find other department stores to fill the void. After two Christmases without the JW Robinson’s department store anchoring its north end, Anaheim Plaza found a way to create an instant department store: a temporary Bullock’s clearance center.
Bullock’s opened on the first floor of the old Robinson’s. With dingy floors and walls in need of fresh paint, it’s not much to look at. But mall officials are betting that its endless rows of apparel with prices marked down as much as 50% will draw crowds to patronize surrounding stores.
Originally scheduled to stay only through mid-November, Bullock’s has decided to extend the clearance center’s run through Christmas.
For the first time, smaller stores at The City in Orange face much the same quandary that has plagued Anaheim Plaza. The Orange center lost its May Co. store earlier this year when the chain closed several unprofitable stores in July.
“Ever since the May Co. closed, it’s dead. Zero,” said Maher Hekmat, operator of the Baby’s Labo infant wear store, as he fingered worry beads.
Mall officials are filling the empty May Co. with an International Christmas Bazaar that opens this weekend, featuring holiday entertainment and 50 vendors of exotic gifts.
Keith Foxe, a spokesman for the International Council of Shopping Centers in New York, said coping with a loss of a department store has recently been one of the hottest topics in the industry. There is no clear answer, he said, but subdividing the space into smaller shops and trying to “make the most of it” are among the more popular options.
The loss of major department stores is not the only bleak spot for the malls this year. Even the calendar seems to be working against retailers in 1991.
That’s because 1991 has one of the shortest possible Christmas shopping seasons--27 days--between Thanksgiving and Christmas Day. Last year, there were 33 shopping days.
To extend the season artificially, retailers began their sales early. Department store promotions have jammed county malls for two successive weekends, leading to early hopes that the season may be better than expected.
“The sales have been phenomenal,” retail consultant Murphy-Kessinger said.
“People are thinking to themselves” that the recession “will not get much worse,” and that “now is the time to go out and start buying again,” she said.
Murphy-Kessinger said she recently saw customers standing four and five deep at the cash registers at Crate & Barrel, a tony houseware store at South Coast Plaza. Others mobbed a Bullock’s for deals on such items as fancy picture frames that were already marked down, then given an additional 25% off at the checkout counter.
Some see the sudden shopper onslaught as the unleashing of pent-up demand. A year of recession is enough for some people who are not willing to put off needed purchases much longer.
“I think the bug has bit them,” said Feightner of Westminster Mall. “I just see more people in the mall at different times of the day than usual.”
It also may be a realization that the bargains may not get much better, and that even if prices fall further, the shelves will not stay full through Christmas. Retailers are priding themselves on how tight they can keep their inventories, hoping not to get stuck with excess goods that must be unloaded in after-Christmas sales.
“The department stores have not loaded up on a lot of inventory. That’s why people are buying now,” said James Charter, general manager of the Brea Mall.
Retailers are being very cautious, holding down every cost they can identify to minimize losses if they cannot maximize profits.
“You can’t be betting the farm when consumer confidence is at its lowest level,” said David Sejpal, a vice president for the Anaheim-based Clothestime retail chain of women’s off-price apparel. “You aren’t going to increase your market share, (so) you just try to maintain it.”
That merchandise is readily being snapped up by consumers is being viewed as a sign that Christmas may not be a retail disaster after all.
“It’s not going to be wonderful, but maybe it will be great,” said Charter of the Brea Mall.
Donahue of Donahue Schriber put it even more succinctly. Having seen the promising crowds at county malls himself in the past two weeks, he said, “I think we’re going to have a good Christmas.”
Taking the Measure of Malls
Everybody has their favorite Orange County mall. And generally, those malls that have undergone major renovation projects, such as MainPlace/Santa Ana and Brea Mall, are among the most popular. Others, like Westminster or Buena Park malls, remain popular because of their convenient locations. Malls that are older and those near newer and popular competitors are not doing as well.
Shopper Profile
% Who Consider $ Spent On Mall It Primary Mall Last Visit Anaheim Plaza 1% $47 Brea Mall 15% 66 Buena Park Mall 10% 62 The City Shopping Center 2% 50 Newport Center Fashion Island 3% 111 Huntington Center 6% 72 Laguna Hills Mall 5% 59 MainPlace/Santa Ana 12% 62 Mall of Orange 5% 60 Mission Viejo Mall 7% 62 South Coast Plaza 21% 122 Westminster Mall 14% 68
Where the Money Goes
Department stores, which serve as “anchors” at shopping malls to lure customers to all the shops, are not as popular as they used to be. Customers are looking toward more specialty and discount stores to fulfill their shopping needs. Here are sales figures for the 12 Orange County malls by type of store:
Type of Store 4th Qtr. ’89 4th Qtr. ’90 % Change Eating places 30,149 34,476 +14.4% Apparel stores $113,796 $128,259 +12.7% Shoe stores 25,247 25,664 + 1.7% Jewelry stores 30,933 29,781 - 3.7% Department and miscellaneous stores 618,889 598,156 - 3.4%
Figures in thousands
Source: Los Angeles Times Marketing Research
Researched by DALLAS M. JACKSON / Los Angeles Times
