Gleaming Mall Struggles to Attract Tenants, Clients : Commerce: The Baldwin Hills-Crenshaw Plaza has failed to win over affluent blacks in the minority area.

Before Los Angeles and a private developer collaborated to put a major shopping mall within walking distance of her Baldwin Hills home, Deirdre Hill did her shopping across town.

She still does--three years after the $120-million Baldwin Hills-Crenshaw Plaza first beckoned the affluent residents of the nearby hilltop neighborhoods.

Hill said she still makes the trek because the May Co. and Broadway stores at the plaza failed to sufficiently upgrade their merchandise and facilities. “They have allowed a beautiful mall to be built around them and they have invested very little in it themselves,” she complained.

When the Baldwin Hills-Crenshaw Plaza opened in 1988, it immediately gained nationwide attention as the first regional mall in the country built in a largely African-American community. The developer, Alexander Haagen Co., said the center--with its skylights, towering palm trees and white-gloved security guards--not only would attract the neighborhood’s affluent black professionals but would also “break the color barrier” by luring white shoppers back to the Crenshaw Boulevard commercial strip they had abandoned long ago.

But it has not happened. Since opening, Baldwin Hills-Crenshaw Plaza has steadily lost money--more than $9 million, according to a Haagen company spokesman. Only 60% of the plaza’s available 120 retail spaces are occupied, and a Los Angeles Times marketing survey found that the plaza ranked 46 in retail sales volume among 59 malls in Los Angeles, Orange, Riverside, San Bernardino and Ventura counties.

Today, the gleaming art deco structure at the corner of Martin Luther King Jr. and Crenshaw boulevards embodies the frustration and disappointment that can result when visions of community redevelopment meet the harsh realities of the marketplace.

It also underscores the seemingly intractable problem of attracting--and retaining--department stores and other retail outlets in largely minority South Los Angeles, where access to many goods and services is already limited.

The mall has been caught up in a vicious cycle of frustration. Its tenants have been unable to win over their “natural constituency” of blacks with high disposable income because these consumers are accustomed from years of experience to the neighborhood not meeting their consumer needs. Meanwhile, retailers have resisted upgrading merchandise until more affluent shoppers show an interest in their stores. At the same time, whites, fearful of crime, generally have stayed away altogether.

Political decisions also have conflicted with economic needs. City Councilwoman Ruth Galanter, for example, opposed pursuing the popular Ikea furniture store chain for the mall area because it would increase traffic. But many residents believe that if Ikea came many other retailers would follow.

In another instance, area residents contend that political leaders got in the way of key efforts to boost the mall by attracting a movie house. The mall management was pressured to negotiate only with a black-owned theater, which ultimately could not finance such a deal.

Despite its financial problems, the plaza has received widespread praise for creating jobs and entrepreneurial opportunities for blacks. It provides a safe locale for civic functions, a place where parents can find a black Santa Claus at Christmastime and a place for neighborhood celebrations.

Haagen, for one, remains optimistic about the mall’s business future. Sales at the mall continue to grow, albeit at a slower pace. “This has been the hardest deal I have ever done in my life,” he said. “It has been a long uphill struggle, but every step has been more encouraging.”

Improving the mall’s business outlook remains a priority for many politicians who represent the area. In recent months, for example, State Sen. Diane Watson (D-Los Angeles) has initiated a letter-writing campaign to persuade popular national chains conspicuously absent from the mall--including Judy’s, Ann Taylor, Miller’s Outpost, the Gap, See’s Candy and the Limited--to set up operations there. So far, though, the stores have made no commitments.

Some community activists criticize area residents, contending that they must do more to support the mall by shopping there and by refusing to shop with retailers who won’t serve their community.

When conceived in the mid-1970s, the mall was to be a major city effort to stem the flight of business and affluent consumers to the suburbs, isolating the inner-city poor. But it has always been a hard sell to business. Mayor Tom Bradley, according to sources close to the negotiations, had to personally lobby the Broadway and May Co. not to close their Crenshaw stores--a necessity for the mall to go forward.

In a nationwide search for a developer, Manhattan Beach-based Haagen, who has built three successful inner-city shopping centers in the Los Angeles area, was the only bidder to emerge.

With the development deal in place--including a $30-million investment from the Los Angeles Community Redevelopment Agency--Haagen attracted Sears as a third department store, but Sears drove a hard bargain. Haagen had to agree to buy Sears stores that had been closed in Inglewood and in the Mid-City area on Pico Boulevard, and a Sears property in Hollywood.

But many of the smaller national chain stores commonly found in suburban malls never signed on, despite the success of a few who did locate there.

Many small tenants blame the anchor department stores, alleging they have shown only lukewarm commitment to the development. The anchor stores are key to the success of any mall, but in the case of Baldwin Hills-Crenshaw, many potential customers, who are the neighborhood’s most affluent, roundly criticize these stores and stay away in droves.

They sniff at the merchandise selection, contending the anchors have badly misjudged the market. Customers cite the decisions of May Co. and the Broadway not to sell men’s suits and to offer only a limited selection of women’s fashions. The Crenshaw Broadway, for example, recently had only a few, discontinued Jones New York items on a sales rack. The store does not regularly carry the label whose line includes suits and ensembles popular with working women. Such decisions provide no incentive for professionals, who need business attire, to shop there, they argue.

“The merchandise in the mall does not attract the type of person who would support that mall over the long haul,” said Presley Burroughs, 34, a transportation planner.

Broadway marketing vice president Jo Lawley and Ed Mangiafico, the recently retired chairman of May Co. of California, said the anchors in the Crenshaw mall carried merchandise selected in response to customer buying patterns.

“The Baldwin Hills store is important to our trading area, and its performance has been very good,” said Lawley. “We respond to what the customer is buying and increase the level of inventory when the customer says they like something. In the Baldwin Hills store, men and women’s sportswear, cosmetics and accessories, domestic fashion--those areas are doing excellent.”

Merchants say they are reluctant to move in, or offer different merchandise until customers with deeper pockets, like Burroughs, begin showing up. Consumers say, why bother until the stores reflect their tastes.

Still, some mall merchants say the plaza’s anchor stores should take the lead.

“Our anchors are sinking the ship,” said August Gagnier, owner of Gagnier’s of New Orleans restaurant, one of 18 businesses in the Plaza owned by African-Americans.

His restaurant has suffered because the department stores have not generated the foot traffic that would enable him to prosper, he said.

Before opening his restaurant, Gagnier said, he managed a construction company that renovated the May Co. store in the Westside Pavilion. The May Co. Crenshaw’s renovation was cosmetic compared to the remodeling of the company’s store in the Westside Pavilion a few years earlier, he said.

Officials at the Crenshaw Plaza estimated that the May Co.’s 1988 renovation of the Crenshaw store cost $5 million, compared to an estimated $12 million spent at the Westside Pavilion store in 1985, according to officials at that mall.

“In each case the amount of money was consistent with the shape and remodel requirements,” Mangiafico said. “It is all driven by what sells, not sales for just a few customers but for a sufficient base to warrant the investment. . . . The Westside Pavilion is much bigger and has much more sales.”

Long before the first drop of concrete had been poured in the new development, alarms about the project’s target shoppers had been sounded. A 1979 study recognized the residential area near the proposed mall as a “benchmark of social and economic achievement.” However, middle-class and affluent blacks in the area tended to isolate themselves from the decline along the Crenshaw strip, the study said, rather than aggressively confronting the public and private sector to slow the advancing deterioration.

“Given a natural inclination and choice, the tendency (of residents) is to intentionally ignore the problems, shop elsewhere, send children to schools elsewhere, engage in recreational and cultural activities elsewhere,” said the report, which the city paid a Beverly Hills architectural and consulting firm $97,000 to conduct.

Retail sales along Crenshaw Boulevard dropped by half from 1972 to 1977, as residents spent nearly 60% of their income outside the community, the study said.

Some savvy African-American merchants know that shopping pattern all too well and decided that if they couldn’t attract the shoppers to Crenshaw, they’d take their businesses to the preferred malls.

Shaun Vest, who owns Shaunzo’s Hats in the Westside Pavilion, said he was tempted to open a store in Baldwin Hills mall--after operating a store on Crenshaw for more than a decade--but decided against it.

“I have been on Crenshaw for 13 years, and I know that every Sunday my customers are not on Crenshaw Boulevard,” he said.

The difficulty of reversing the black middle-class flight to the suburbs to shop is compounded by the plaza’s inability to attract a mix of smaller national chain stores commonly found in most suburban malls.

On paper, the plaza has an ideal location for a regional shopping center with a variety of merchants.

Average household incomes of $38,000 within a five-mile radius of the plaza-- which includes stable working-class and middle-class neighborhoods such as Leimert Park, as well as the more affluent enclaves of Baldwin Hills, View Park and Windsor Hills--are only slightly lower than income averages around the more successful Fox Hills Mall, just five miles away.

“Based on per-capita income or purchasing power, the area meets an acceptable criterion for retailers,” said UCLA urban planner Eugene Grigsby. “The difference is that it is predominantly minority. Most businesses still believe that is a bad climate to invest in. And that (belief), coupled with the perception that minority areas are unsafe, makes it two strikes against you.”

Andrew Natker, Haagen’s spokesman, said decisions by national chains not to open shop in the plaza “are made back East by people who, when they think black, think poor and problems. They don’t understand that this is not the South Bronx.”

Small chains that have committed to the mall--Lerner New York, Lane Bryant, Waldenbooks--say they are doing well.

Sizzler Co. President Tom Gregory said his chain’s restaurant outside the enclosed plaza is in the top 25% of the company’s outlets in profitability.

Other chains have been more intractable. A letter-writing campaign organized by Councilwoman Galanter was needed to persuade Lucky stores to open a 43,000-square-foot supermarket in the plaza--expected later this year--that would compete with the Boys Markets dominant in the area.

To bring in a sure-fire foot-traffic builder, many residents have urged the developer to bring in a multi-screen theater.

But efforts to attract a theater chain have been complicated by demands that the developer only negotiate with the minority-owned Baldwin Entertainment Complex, currently located a few miles west of the mall at Rodeo and La Brea. Assemblywoman Gwen Moore threatened to become the “first to join a picket line around the plaza” if the Baldwin Theater was denied first crack at the deal.

But negotiations for the theater fell apart in September after the Baldwin Theater owners were unable to structure a financial package.

Another deal that might have easily turned things around is one that Haagen still regrets that he was unable to make. Back in 1988, Haagen came up with a plan to put Ikea, then a little-known European furniture store, into the run-down 23-acre shopping center directly west of his mall.

Haagen’s plan was opposed by Galanter, who was elected the year before on a slow-growth platform. Galanter said the Ikea would generate too much traffic and “did not satisfy this community’s need for minority-owned local economic development opportunities.”

Haagen said that approval of Ikea--which in November opened its first Southland outlet in his Burbank mall with a huge wave of television advertising--would have given him leverage to attract the highly popular Nordstrom chain to the mall. But the plan for an Ikea was never aggressively pursued.