The Regional Mall Recasts Itself

May 05, 2010

By Tom Ryan

With discounters positioned as anchors and the influx of food, entertainment
and service providers as tenants, U.S. regional malls apparently reinvented
themselves to sufficiently weather the recession.

Already feeling pressure from diminishing traffic, population shifts and anchor
consolidation, regional malls were said to be in a precarious state entering
the downturn. But an article in Stores Magazine indicates optimism
on the fate of the channel is improving. Susan Reda, executive editor,
wrote, “They
are once again attracting shoppers, now with a mix of tenants that includes
everything from a tattoo shop to an MBA program, overhauled anchor spaces recast
as gourmet food emporiums, over-sized specialty shops and fresh takes on services
and entertainment that range from health clubs to high-end movie theaters.”

Stacy Janiak, vice chairman and U.S. retail leader for Deloitte, told Stores that
developers have become more creative in building tenant mixes.

“Essentially, they’ve gone back to the genesis of the shopping
mall and its origins as a social center that blends shopping and entertainment — even
housing — in an enclosed community. Mixed-use properties, versus those
solely focused on apparel shops, will give consumers a reason to come back
again and again,” she said.

One particularl problem seemingly solved was replacing dark anchors. Forever
21 and Kohl’s replaced some Mervyn’s locations on the West Coast. Target has
replaced some defunct department stores. Costco also now operates in a handful
of regional centers.

“Adding a multi-level restaurant or a Costco is all part of re-socializing
the mall to be a destination,” said Paula Rosenblum, managing partner
of RSR Research and a member of the RetailWire BrainTrust. “Who
are the retailers that pull shoppers in? That’s who you need to have
as an anchor in the mall.”

George Whalin, founder of Retail Management Consultants and a RetailWire BrainTrust
panelist, agreed. “Consumers don’t put retailers in silos the way
we tend to do inside this industry. They don’t care if there’s
a Target on one end of the mall and Neiman Marcus on the other because they
shop both retail stores — and they’re grateful to not have to drive
across town to do it.”

But noting the high-failure rate of some themed-restaurants, Bill Taubman,
COO of Taubman Centers, was wary of some concepts coming in as anchors.

“I want a big name like Macy’s as an anchor whenever it’s
possible because department stores still have the greatest relevance when it
comes to driving traffic,” Mr. Taubman said. “Adding schools, mom-and-pop
shops and service providers are interesting ways to fill space, but in our
experience they don’t deliver anywhere near the amount of foot traffic.”

Discussion Questions: What do you like and dislike about the changes
occurring at regional malls? What do you think is the ideal anchor for a
regional mall and which should be only secondary options?

Please practice The RetailWire Golden Rule when submitting your comments.

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7 Comments on "The Regional Mall Recasts Itself"

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Dick Seesel
12 years 17 days ago
There are several key trends driving the decline of the regional mall. First, retail consolidation in the traditional department store segment means there are simply fewer tenants to occupy all of the “anchor” space without subdividing it. Second, the department store segment overall continues its long-term share decline…whether you’re talking about “super-regionals” like Dillards or mid-tier merchants like Sears. Third, the growth of value-oriented and aspirational concepts over the past 20 years (power centers, lifestyle centers, etc.) has made it harder to sustain interest in the “one-stop shopping model” of a regional mall. Finally, many regionals were built during the ’70s and ’80s in inner-ring suburbs that are now miles away from most cities’ population growth. So mall developers simply have no choice but to reinvent themselves with new tenant mixes. The best thing they can do to ensure a viable future is to imitate other successful concepts…through the addition of dining, entertainment and off-price retailers (including discounters and “big boxes”). Simply hoping for the rebound of the traditional mall anchor–because they used to be… Read more »
Marge Laney
12 years 17 days ago

Regional malls are recasting because they have been forced into it due to the recession and its impact on the consumer in particular and retail in general. The question in my mind is, is this a concerted effort to remake themselves into a more appealing destination or are they simply filling up empty spaces with any breathing and paying business that wants to be there? Probably the later, but that’s OK because when they fill their malls with sustainable businesses they are creating a sustainable mall.

Mark Barnhouse
Mark Barnhouse
12 years 16 days ago

As single-landlord regional malls replaced multi-landlord downtown shopping areas in the 1950s through the 1970s, developers took the easiest and most profitable route: multiple department stores to drive traffic and inline national chain stores to provide additional options. But there was no real variety in these developments, and it’s no wonder new generations, beginning with baby boomers and continuing with their offspring, shifted away from them–the old model of the regional mall is a boring thing.

This new trend toward more variety in tenants comes closer–but does not truly replicate–the experience earlier Americans had when they went downtown. I hope the future brings yet more variety of use in privately-owned suburban malls, but I wish even more for more vibrant downtowns, with real, compelling reasons to shop there (as opposed to our current model of downtowns as entertainment zones).

Lee Peterson
12 years 16 days ago

You know, I liked all of these ideas the first time I heard/saw them, when it was called “Lifestyle Center.” It’s amazing how forward thinking Yaromir Steiner and a select group of other developers were, but more importantly, this example shows how innovation and the execution of innovative ideas can play out to your advantage in the long run. Developers are now stuck with having to change their properties and anchors simply because it was easier to cookie-cut them out a dozen at a time vs. thinking about the future and creating something new that would last.

So while these expensive changes get implemented, the Lifestyle Center idea will continue to be the choice of the shopper. Big question now is, what’s next?

Craig Sundstrom
12 years 16 days ago

“Once again attracting shoppers, now with a mix of tenants that includes everything from a tattoo shop to an MBA program…”

Goodbye Macy’s, hello Gus’ Inkatorium??? I think not: despite this spin effort, it’s pretty obvious to anyone that a mall undergoing this type of usage change is rapidly ceasing to be a retail facility. OTOH, what’s not to like about a Target, Costco or even Walmart (gasp!) becoming an anchor? Merchants like dime-stores and supermarkets were once anchors in malls–before they all thought they needed an AF and 4 GAP outlets–and as long as the demographics and parking works out, I see no reason why they can’t be again.

William Passodelis
12 years 15 days ago
Many regional malls need to think more outside the box–literally. Supermarkets are a part of large malls in many countries and should be a good driver of traffic. Attracting potentials like Whole Foods or Trader Joe’s or other higher-end food retailers could be a boon, although the food retailers, in being shut out of that environment, have developed great alternatives and in many cases own their properties. Still adding retailers such as Target, Costco, etc, can be a great way to make the mall more relevant and useful. It is a great move. I have seen some very interesting uses of defunct department store spaces–even theaters and, of course, dividing the upper level and lower level into different stores; logistically more difficult depending on how the store was constructed but better than an empty space. Consolidation has really limited potential anchors so they need to think differently–even undertaking re-development if necessary of a portion of the mall. And let’s face it, some of the older regional centers are probably not very useful any longer with… Read more »
John Crossman
John Crossman
12 years 14 days ago

If regional malls evolve (I call it mallvolution, although the title is not catching on) they will continue to be relevant and successful. Malls have competitive advantages which they need to leverage to attract more tenants and increase traffic. A few advantages:

Location – many malls struggle from non-location issues. Meaning that they are still located where tenants want to be, they just need to show value of being in a mall.

Parking – malls typically have plenty of parking and it is free. Look for some tenants to leave typical office locations to go to malls because it reduces costs.

Events – a huge competitive advantage of malls, most malls need to do more of them.

Security – security and safety, I would argue, is better in malls with security guards provided.

Weather – in Florida in the summer time, I don’t know why anyone would want to shop outside.


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