Stakes High in Battle of the Malls : Shopping: The competition for sales is keener than usual this year with the opening of two new centers and the overall lackluster economy.
With Christmas one month away, the battle among the region’s big retail malls to lure holiday shoppers is now in full force.
The Christmas season often accounts for 30% or more of a retailer’s sales for the whole year and in this season, the competition is keener than usual. That’s because of the recession’s overall damper on consumer spending and because there are two new gleaming rivals in the region: Media City Center in Burbank and Valencia Town Center in Santa Clarita.
The battle’s high stakes are evident at all of the malls, the largest of which is Glendale Galleria, which does roughly $400 million in annual sales, according to the most recent state sales-tax data available.
Each mall has had stores displaying and selling Christmas ornaments, lights and other decorations since shortly after Halloween, and Northridge Fashion Center began decorating its aisles last week. The traditional day-after-Thanksgiving start for Christmas sales is now a thing of the past.
But for three of the biggest malls, this Christmas season arrives just as each is grappling with its own set of unique problems. One is losing a major tenant, another is struggling to fill empty storefronts and one is losing customers to a new competitor.
Here, then, are the stories of those malls and how they’re responding to these concerns as the holiday rush begins.
The Promenade
After watching its sales growth turn lackluster in the late 1980s, the Promenade’s owners began remodeling the upscale mall in Woodland Hills’ Warner Center in 1991.
Although the exact cost was not disclosed, the multimillion-dollar face lift was seen by some analysts as crucial for the 19-year-old mall to compete against nearby Topanga Plaza and other centers.
But the Promenade’s owner, a New York developer named the O’Connor Group, barely began reaping the benefits of the renovation before getting hit with more bad news in October: One of its anchor tenants, Robinson’s, is being closed by the store’s parent, May Department Stores Co.
May Department Stores is shuttering seven Robinson’s stores in Southern California by Jan. 31 as part of its plan to merge its May Co. and Robinson’s divisions. (Five May Co. stores in Southern California are also being closed.) The move now leaves a big gap in the Promenade, whose other anchors are Saks Fifth Avenue and I. Magnin.
The obvious question is: Can the Promenade land another tenant that not only will take over Robinson’s rent payments, but also fit into the mall’s high-brow image?
Paul Kastner, O’Connor’s senior vice president for marketing, said the mall can find a new upper-crust tenant, even in this rough retail environment. “These are difficult times, but that doesn’t diminish the quality of a mall like the Promenade,” he said. “There is great interest in the Promenade.”
That “interest” and a signed lease are two different matters, however. For as long as the Robinson’s store sits vacant, the Promenade could be losing more ground to its nearby rival, Topanga Plaza, which last week had its own “grand reopening” after an extensive renovation.
Indeed, in an example of the take-no-prisoners competition, the Broadway store at Topanga Plaza is sending letters to potential customers that, after noting that the closure of the Promenade’s Robinson’s “affects our entire community,” offer gift certificates and other special discounts for shopping at the Broadway.
The Promenade “has always been a stepchild to Topanga Plaza because of the strength of the department stores at Topanga Plaza,” such as Nordstrom’s, said Randy Brant, vice president of Melvin, Simon & Associates, a Los Angeles shopping-center developer. Topanga Plaza’s annual sales exceed $230 million, while the Promenade’s are near the $100-million mark.
As for replacing Robinson’s, Kastner noted that “these type of negotiations take a while. I don’t think an announcement will be made in the next month or two, but certainly we hope to have this resolved as quickly as possible.”
And in a possible omen of more bad news, I. Magnin’s parent, R. H. Macy & Co., is in the middle of a bankruptcy reorganization, and its co-chairman, Myron E. Ullman III, said earlier this month that Macy might close some of its 19 I. Magnin stores, although he was not more specific. Kastner said he’s received “no indication” from Macy that the Promenade’s I. Magnin is in jeopardy.
Macy also owns the Bullock’s chain, but Ullman said the company was committed to Bullock’s and is not contemplating any closures of those stores.
Northridge Fashion Center
Lloyd Miller, general manager of the Northridge mall, says he doesn’t yet have sales data to show how many customers he’s losing to the $150-million Valencia Town Center, which opened in September. Before the debut of that mall, Northridge provided Santa Clarita’s residents with their closest big mall.
“We don’t have much in the way of quantitative figures yet” to compare this year with last, he said. “But we do know that our customer traffic is the same as before.”
Still, there’s no question that many Santa Clarita residents have stopped visiting Northridge because they now have Valencia Town Center, and that means saving a 15- or 20-mile drive to visit a mall.
And therein lies a potential problem for Northridge Fashion Center, which is one of the largest in Southern California with annual sales exceeding $335 million.
“They were enjoying a lot of customers from the Santa Clarita Valley who are now taking advantage of the convenience” of the Valencia center, Brant said. The Valencia mall “has to take its business from somewhere,” he added.
Several shoppers walking into Valencia Town Center recently said they previously traveled to Northridge, but no more. “My needs are met,” said Jeffrey Fray of Saugus. The Valencia mall’s opening, he added, “made it very convenient.”
Miller said the Valencia mall “will impact us to a certain degree, but it will be minimal. We’re a very strong shopping center. We have a tenant mix that’s very strong.” Its anchors include Robinson’s--which was spared in May Department Stores’ closure plans--Broadway and Sears, and the mall’s store occupancy rate is 98.5%, Miller said.
Indeed, shoppers such as Terissa Wilson of Canyon Country said they will still visit Northridge occasionally even though they’re happy to have the new Valencia Town Center around the corner.
Wilson grumbled that “they really don’t have that many good stores here” in Valencia, such as her favorite, Bullock’s, and that the center lacks an automated teller machine. Northridge Fashion Center has both.
Media City Center
Bullock’s also is one of the anchor stores for this Burbank mall, which is approaching its first full Christmas sales season. The $175-million center began opening in August, 1991, with only Sears, Roebuck & Co. and Mervyn’s as anchors, and the Swedish-based furniture house Ikea next door.
But Bullock’s--the center’s upscale attraction--did not open until two months ago, as did the other anchor, the Sport Chalet sporting goods outlet. That staggered opening and the weak retail environment have made it harder for the mall’s owner-developer, Alexander Haagen Co., to lease out all of the center’s smaller stores, and about 30% of the mall remains empty, said Fred Bruning, Haagen’s chief of staff.
Bruning said that since Bullock’s and Sport Chalet opened, “traffic in the mall has more than doubled.” He also said all of the stores that are open “are performing well. We’re exceeding expectations.”
But some of the center’s merchants aren’t pleased.
“The mall is going to be great when everything’s open and the selection is there, but right now, it’s pretty disheartening,” said John G. Fair Jr., manager of Electronics Boutique, which sells computer and video-game products.
Bruning said “it is taking longer” than expected to fill the mall. “Many of the national mall stores were waiting to see what Bullock’s would do,” he said, referring to Macy’s bankruptcy proceedings.
National retail chains are also “picking their spots very carefully,” he said. “Many major national chains simply will not go into new malls. They’ll wait until the center has an established track record.”
Bruning said there’s been no impact on Media City Center’s sales since the opening of Valencia Town Center. That mall is anchored by May Co., Sears and J. C. Penney.
“I’ve talked to a lot of our tenants, including Sears, and their volumes haven’t had a blip since that mall opened,” Bruning said.
“We’re still getting shoppers from Valencia for our Bullock’s store.”
But Fair, noting how Media City Center’s empty stores keep a lid on overall customer traffic, said he expects some of the center’s small retailers to close after Christmas unless holiday sales are extraordinary.
“I’m wondering how some of the people will make it,” he said.
