David Simon wants everyone to know that the death of the American mall has been greatly exaggerated. The chairman and chief executive of Simon Property Group, owner of 350 malls around the globe, told attendees of a Wharton Leadership Lecture that malls will survive, although it's likely that fewer companies will be managing them in the future as the strong "get stronger."
Mr. Simon said that malls will change. According to a Knowledge@Wharton report, he said, "Long-term, the mall has to become a smarter box."
He cited his company's mall in King of Prussia, Pennsylvania as an example. "King of Prussia has 150 stores. The average consumer goes to five or six. If we can figure out how to communicate to that consumer as [he or she] walks the mall, whether it's 'Hey, go to this store because you can get free this with every purchase,' or 'New merchandise is in,' or that kind of stuff, I think it is going to facilitate loyalty. That's what we're working on."
Mr. Simon said the volatility of the retail sector has made managing malls more challenging than ever before. "Seven of the top 10 tenants we had when we went public are no longer in business today, and yet we've been able to continue to grow our business because it's the real estate that retains the value over the long term," he said.
Discussion Questions: David Simon sees small local malls having a hard time making it while larger regional malls prosper. Do you agree with that assessment? Mr. Simon talks about ways for mall to facilitate consumer loyalty. What practical steps can malls take to be more of prime destination for consumers?