Bustling malls show they still have hold on consumers
For the better part of a decade, the buzz in retailing has been focused on online sellers, free-standing stores and street-level boutiques.
But there’s still nothing like the mall.
As retailers look forward to what is shaping up to be their best holiday season since before the recession, the power of the shopping center is evident in the jammed parking lots, crowds of jostling shoppers and a sea of shopping bags.
“A few years ago, I looked at malls as a deteriorating retail concept because consumers were shopping them less and less,” said Britt Beemer, chairman of consumer behavior firm America’s Research Group. Now “I feel more encouraged. The malls that are definitely going to survive are being more proactive.”
Nearly 52% of retail spending takes place at shopping centers today. That’s down slightly from 55% in the early 1990s, but is still formidable and better than mall performance in the years leading up to the recession.
For proof of that, swing by Fashion Island on a Wednesday. Or check out the outdoor Grove in the Fairfax district during recent rainstorms. Or hit Glendale Galleria, well, any day of the week.
Hordes of people packed Los Cerritos Center like an amusement park recently, with an hourlong line to take photos with Santa Claus. At the entrance to the mall’s Forever 21 store, exhausted shoppers sprawled on the floor, their shopping bags at their feet. Over in the Sephora cosmetics boutique, 33 people waited in a checkout line that stretched from the back of the store to the exit.
Similar scenes were found at Newport Beach’s upscale Fashion Island, where shoppers rested on the ledge of an ornate fountain because all of the outdoor tables and patio furniture were full. On the Westside, a line of cars half a block long waited to enter the parking garage at the newly remodeled Santa Monica Place; nearby, valets wearing Santa hats raced around trying to move the luxury cars along.
Even through the pouring rain this weekend, shoppers hit the Grove in force, wearing yellow ponchos and toting colorful umbrellas. A mile away, the Beverly Center was inundated with significantly more shoppers than on the same weekend last year.
“Malls are never going out of style,” said 24-year-old Kim Hewitt, a substitute teacher from San Clemente who was laden with bulging bags from Nordstrom, Charlotte Russe and Foreign Exchange at Santa Monica Place. “It’s the No. 1 place to go to get the most done.”
The recent resurgence in mall shopping was a major reason several groups, including the National Retail Federation and the International Council of Shopping Centers, raised their holiday season sales forecasts in recent days. The retail trade group is now predicting a 3.3% rise over last year; the shopping center council is expecting a 3.5% to 4% rise, which would make the season the best since 2005.
Mall executives are defiant about talk of shopping centers’ waning relevance.
“It’s always popular to predict the demise of the king of the hill,” said Art Coppola, chief executive of mall operator Macerich, which owns 71 centers nationwide including Santa Monica Place. “But when the king still stays on top of the hill for 30 or 40 years in a row, it’s hard to argue with success.”
Other major mall expansions and remodeling plans are in the works in Southern California that will bring more shops, restaurants, grocery stores and services to local shopping centers in the coming years.
But mall owners acknowledge that success comes with a different formula these days.
An American institution, malls’ main challenge has been to move beyond the old-school, fortress-like behemoths with their random groupings of stores and neon-lighted food courts wafting with grease.
Time-strapped consumers today are looking for more, so many mall owners used the recession as a time to regroup and think about ways to make their centers more than just a place to shop. The malls that have thrived in recent years tend to be the outdoor “lifestyle” centers that function as modern-day town squares, with as many nonretail offerings as there are stores.
“You do have to work harder for the customer,” said Matt Middlebrook, a vice president at Caruso Affiliated, which owns the Grove in Los Angeles and Americana at Brand in Glendale, both open-air centers. “People do have limited attention spans and limited resources, and we have worked extraordinarily hard, particularly in this downturn, to give people more.”
But mall owners are limited too. Unlike in the 1980s when land was readily available and building costs were relatively cheap, new mall projects have grinded to a halt in recent years. The name of the game now is remodeling, expanding or renovating existing properties.
Westfield is in the beginning stages of a 1-million-square-foot expansion to be built between the mall operator’s existing Westfield Topanga and Westfield Promenade centers in the San Fernando Valley. The Village at Westfield Topanga will include space for retail, offices, restaurants, grocery offerings and a hotel and is expected to cost hundreds of millions of dollars.
Nationwide, a dozen Westfield malls are in negotiations to add grocery stores, including at the company’s West Covina property.
“The rumors of our demise are greatly exaggerated,” Westfield spokeswoman Katy Dickey said wryly of shopping centers’ future. “Just like retailers constantly reinvent themselves, I think the malls that do are the ones that succeed. It’s not only about maintaining the productivity but their relevance and their appeal.”
The biggest mall opening in the Los Angeles area this year was Santa Monica Place, a renovation that took two years and $265 million to complete. Since the August reopening, shoppers have poured into the property, now an open-air center featuring a third-floor dining deck with upscale food offerings and views of the ocean.
That lured Claudia Tarpin, 29, from Brentwood when she wanted to study for a management final recently. Nearby, shoppers stood shoulder-to-shoulder against the glass barriers overlooking Santa Monica Pier and snapped photos as the sun set; every outdoor booth was occupied.
“The idea was to study and take a break and go shopping,” said Tarpin, a USC graduate student. “I like having both opportunities.”
Macerich is now tackling several of its other centers. At Westside Pavilion in L.A., plans are underway for major parking improvements; and Stonewood Center in Downey, Panorama Mall in Panorama City and Pacific View in Ventura are all looking to add new merchants and features.
At the Americana, which opened just two years ago, mall developer Rick Caruso is hoping to expand the Glendale center by buying two adjacent properties. The proposed development would add as much as 140,000 square feet of retail space for up to three tenants and is expected to generate $80 million in additional annual revenue.
The shopping center magnate is also trying to build an upscale retail center in Arcadia next to Santa Anita Park, tentatively naming the proposed development the Shops at Santa Anita. That project has been stalled by opposition from the neighboring Westfield Santa Anita mall.
Retailers, too, have signaled that they’re not counting malls out. Warehouse club Costco, which typically does business in free-standing locations, recently announced plans to move into three Westfield shopping centers, including the Village at Westfield Topanga.
The sweeping mall expansions are a vote of confidence that Americans love to shop, and like to do so at malls. But they’re also aimed at keeping shopping centers at the forefront of consumers’ minds as they are bombarded with endless opportunities to spend their money.
Still, although much has been made about the fast-growing online retail sector, industry experts estimated that Internet sales constitute only about 8% of total retail sales.
Some online shopping converts have even taken a step back this year, heading back to the malls because they missed the social interaction.
“I usually do a lot of online and this year, I’m not,” Cristan Reilly, 44, said while shopping for holiday presents at South Coast Plaza in Costa Mesa. “I want to see the products and have a little more control over what I get.”
For Collyn Kalunian, 24, an accountant from Santa Monica, the mall experience can’t be replicated on the Internet.
“It gets me excited for the holidays,” she said as she left Santa Monica Place with several Bloomingdale’s bags. “If I bought it online, it wouldn’t feel like Christmas.”
