At Financo's 22nd annual Retail & Consumer Industry Seminar and CEO Event held on the first night of the recent NRF Convention, Mickey Drexler, the legendary apparel merchant who runs J. Crew, urged shopping malls to "get more creative" to reverse the weak traffic trends amid the increased discounting options at retail and online.
"The onus is not just on the retailers," said Mr. Drexler, citing the gains online made this holiday season as well as encroaching competition from off-mall concepts such as Uniqlo and Joe Fresh. "We are so dependent on every village in America called the shopping mall and I don't see any exciting improvement in 98 percent of them and I've said this to all of them."
Mr. Drexler complained that malls "have an obligation to get rid of some of those kiosks" to applause from the audience of apparel industry insiders. He also lamented that a popcorn shop opened directly underneath a J. Crew in one mall. Exclaimed Mr. Drexler, "Grown ups don't like the smells!" Finally, he noted that in measuring ROI, full-price brick & mortar ranks third with online first and outlet centers second.
In retort, Robert Taubman, chairman, president and CEO at Taubman Centers, noted that sales per square foot for tenants of Taubman — excluding anchors — was up 13.3 percent year-to-date through September, driven by both higher prices per transaction as well as traffic. He further cited Apple as an example of a chain "with the ultimate online product" that has more than thrived by using retail as a branding vehicle. He elaborated, "Dell went online only. Michael Dell famously announced many times that they were never going to be brick & mortar, especially in their industry. So where is Dell today? And where is Apple today?"
His brother, William Taubman, COO at Taubman Centers, noted that the spread between the traffic and sales levels of the dominant centers and weaker centers continues to widen. He also agreed with Mr. Drexler that consumers are more sales conscious.
"The time between when something is special that she's willing to pay for and when it becomes basic that she wants a discount on continues to narrow. ... And I think that one of the things that a lot of the stores find difficult is it's just so easy to continue with what was last year's best seller as opposed to driving and finding out what's new and fresh."
"We're in the theater business," said Bloomingdales' longtime CEO, Michael Gould. "I think the challenge in the mall — and it's not just [the shopping center's] responsibility, it's us too — is: What's the theater in the mall? And what's the quality of those malls? Does that mall reflect an Apple Store? So that's part of both our challenges going forward."