Mall Firms Go to Net to Shop for Customers

Shopping mall developer Mills Corp., owner of Ontario Mills, on Tuesday announced an alliance with online auctioneer EBay Inc. intended to drive people to its malls.

The deal, in which Mills Corp. will auction shopping sprees and valuables on EBay, shows how mall developers are using the Web to enhance the brick-and-mortar shopping experience--in part to make malls attractive to online shoppers.

The agreement also helps Mills create an image for its malls, which typically mix shopping and recreation--such as the skateboard parks at Ontario Mills and the Block at Orange.

“Our presence on EBay is a great profile for us and a way to promote the types of experiences and retailers that we have in our centers,” said Mark Rivers, executive vice president of strategic operations for Arlington, Va.-based Mills.

Indianapolis-based Simon Property Group Inc., the country’s largest mall operator, also is using the Internet to attract shoppers. Last month, it began tests in Atlanta of a hand-held device that creates a Web-based shopping list from items people scan in stores. People can e-mail the list to relatives and friends.

The program, aimed at teenagers, could provide Simon with revenue every time an item is purchased through the system. Simon could also capture and resell in aggregate the data on its shoppers’ behavior.

“Teens get what they want, and moms and dads don’t have to hand over their credit card so their kids can go to the mall,” said Melanie Alshab, president of Clixnmortar.com, the majority-owned subsidiary of Simon that is implementing the program.

In Southern California, Simon operates Westminster Mall, Brea Mall, Laguna Hills Mall and the Shops at Mission Viejo.

In another Clixnmortar.com project, to be test-marketed in Atlanta this month, adults armed with hand-held devices may scan products they want to purchase. After going around the mall, shoppers will return to a central location where they may purchase the items and either bring them home or have them shipped.

“We’re trying to create products that bring together place and space,” Alshab said. “You might buy a product from a merchant online or off-line, but you want that experience to be continuous.”

Retail sales on the Internet are still a small fraction of overall consumer spending, but the rise of electronic commerce represents a threat to traditional shopping centers, analysts say. Sales from online shopping are expected to grow to $6 billion to $12 billion this holiday season from $3 billion in 1998.

“E-commerce is another level of competition for them,” said Charles Post, a financial analyst with Arlington, Va.-based Friedman, Billings, Ramsey & Co. “They may lose some occupancy or perhaps they won’t be able to push rents as they have in the past.”

At least one mall operator has gone on the defensive.

Two weeks ago, Hycel Properties Co. sent a letter to the 170 tenants of its St. Louis Galleria, telling them that no sign, decal, advertising or display about the purchase of merchandise over the Internet is allowed in the mall.

For its part, Mills says it sees the Internet more as a tool than a threat.

“We’re not afraid of the Internet,” Rivers, the executive vice president, said. “We think it’s a wonderful thing, and we’re going to tap into its voltage.”

The Mills deal with EBay calls for auctions of collectibles, shopping sprees and other Mills-related activities, such as private lessons at the Vans skateboard park in Ontario Mills. The auctions will begin Dec. 11 and take place both online and in the malls.

The alliance with EBay will initially focus on three Mills properties--the others being in Chicago and Washington--but then it could spread to the company’s other 18 centers, including the Block at Orange, Mills officials said.

Mills, through the Internet and mall-based activities, is trying to elevate mere shopping into entertainment, said Paul Marsh, a financial analyst with SG Cowen Securities in New York.

“The parallel I draw is to the movie business: A theater that has bad seating and lousy service loses out to home videos or pay-per-view,” Marsh said. “In contrast, a theater with stadium seating and cup holders and video games and all that will continue to draw people who just want to get out.”

Simon Properties is also trying to develop its brand through the free “S” magazine produced with Time Inc. and gift certificates to be used at any store in any Simon mall--solidifying for shoppers which centers they own.

The company has announced plans for a cybercafe in all its malls, complete with computers that offer information about other Simon malls and perks, and a cash-back Visa card for purchases made at a Simon property.

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Times staff writer Abigail Goldman contributed to this report