Summer 2004
All the Right Places

This mall or that one? How do you decide? Picking the right center may be one of the hardest decisions you ever make. If you’re like most retailers, you want it all: a center that attracts shoppers like moths to a flame; a rent structure that puts a hefty profit in your pocket; and a cart, kiosk or in-line store in a good spot and in good condition, with enough space to display your product in its best light. How do you find all this? By doing your homework.

Compatibility check

Before you scout locations, there’s someone you need to know—your target customer. Because if you don’t know who your target customers are, how will you know where they shop? And if you’re not looking for target customers when you evaluate potential locations, just what are you looking for? So you need to identify them: by gender, income level, lifestyle, education, and other pertinent demographic details.

Heidi L. Cardall, director of specialty retail for CBL & Associates Properties, Inc. (Chattanooga, TN), says retailers often fall into the trap of searching for a location by the center’s sales-per-square-foot number alone. “You need to look at your price points and who your market is,” Cardall says. “[A retailer] might target any mall with sales over $300 per square foot. But [the retailer] may have a lower-cost item in a $500-sales-per-square foot mall that people wouldn’t buy,” she says, such as blown glass when customers are really looking for top-end crystal.

After you’ve consulted various sources (the library or the Net is a great place to start) and built your profile shopper from head to toe, it’s time to do a little sleuthing. “There’s nothing like going into the mall and doing your own research,” says Tim Runner, owner of Awesome Specialties International (Mission Viejo, CA), whose owner/operators are in 240 malls nationwide. “Obviously the demographics of the mall are important, but I personally believe you have to temper that by going to the mall itself.” Visit during the day and at night, both weekdays and weekends, to note any differences in the shopper populations. Notice which entrances customers use most. Once inside the mall, observe the flow of traffic. And of course, see if shoppers are buying.

Another approach comes from Pat Yates, president and owner of Happy Feet (Goshen, KY), who has more than 70 independently operated seasonal carts. Yates suggests that if you have a mall in mind, ask your vendors about that mall: she might have a relationship with the leasing agent and might even help negotiate for you as well. Or the vendor may have experience with their products in that mall and can recommend it, or not.

What if you’re looking at dozens, maybe even hundreds, of malls? A national retailer would be. In that case, the search becomes much broader and done largely from gathered information vs. visits. Fortunately, information sources abound. For example, The Shopping Center Directory and Directory of Major Malls list shopping center information. And SRR’s annual Retail Resource Guide lists cart programs in addition to other information on malls throughout the US and Canada.

Lisa Ente, real estate manager for Barnes & Noble in Westbury, NJ (parent company of the Calendar Club, whose seasonal kiosks appear almost everywhere during the holidays), advocates the Internet for evaluating locations. “I use the developer’s website and the link that shows the mall,” she says. She finds directories to be valuable for the basics; but with management companies changing hands often and tenants constantly moving in and out, she prefers online sources because they’re current.

Another idea for both the local and national retailer is getting information straight from the specialty leasing representative. “The specialty leasing managers know their centers and can offer advice,” says Deborah Georgetti-Piro, VP of Main Street Retail for The Mills Corp. (Arlington, VA). Not only can they provide demographic-packed information from marketing studies, but they’re also able to offer insight from personal experience with similar products. And it’s invaluable to be able to compare the details they provide about their typical shopper with your target customer, and see if it’s a match.

Spot check

imageLet’s say you’ve zeroed in on a viable center (or centers, as the case may be). You’ve met with the leasing representative and she’s shown you what’s available. And now a whole new evaluation comes into play: the actual location of your cart or store space within the mall. Is that spot the best one for you?

“[Even] within a top-performing mall there can still be mediocre locations,” says Runner. Conversely, “in an intermediate mall, you can get a great location.” He suggests talking to retailers. “Ask them, ‘How’s your location? If you could be anywhere, where would it be?'” “Look where traffic is busiest,” he says. Your proposed spot might seem to be a great location, “but if traffic patterns are such that [customers] don’t have to come by your cart, you may have a high body-count, but you can’t talk to them,” Runner says.

Susan Houck, regional retail marketing manager of The Rouse Company, says not to turn down an iffy location just yet. “If you’re a demonstration vendor, you can do really well in a ‘C’ location [if you have] a good product and a good salesperson,” she says. “It’s really about the volume of sales, not the volume of people. So don’t walk away from a ‘C’ location if you have confidence in your product.”

National retailers who can’t visit every mall in order to speak with retail tenants often have to choose a location from site plans. Obviously, this can be especially challenging. Sometimes we don’t see escalators or stairways [on the site plan], and we could be behind one when we get there,” says Marc Winkelman, president of Calendar Club (Austin, TX). But while he finds this to be the exception to the rule, it’s an irritating and costly one. “If you have a good working relationship with a leasing representative, [he] should tell you about issues like this.”

“We look at size of the space, location of the space, the quality of the mall, and our relationship with the developer,” says John Flynn, one of the owners of Halloween Scene (Seaford, NY), responsible for more than 50 seasonal in-line locations. “With in-lines, there’s usually only a space or two available. That’s just the luck of the draw.”

No matter whether you’re leasing a cart, kiosk or in-line, don’t forget to size up your neighbors. Mall management typically positions products that complement each other near each other. “We focus on similar uses,” says Georgetti-Piro. If she were a retailer, she’d ask about the approximate level of sales the stores in this area of the mall do. So if you’re selling children’s items, for example, she suggests finding out if that spot’s a good children’s area.

“We try to position ourselves not only in a high-traffic area, but one that will be well-received by our customers,” says Seth Hudson, director of corporate real estate for Hickory Farms, which runs nearly 1,200 locations each holiday season. For example, Hickory Farms’ customers might be put off by a loud teen-oriented store in the same area of the mall, he says.

Tis the season

No matter who your target customers are, you can count on the fact that they multiply during the holidays. For this reason alone, specialty retailers often look to expand, either by opening a second cart in the same mall, or a cart in an additional mall. The advantages of opening another cart in the same mall are many: you already know the mall, you know the customers, and you have a relationship with the specialty leasing representative, says Karen Schubert, VP and director of specialty leasing for Urban Retail Properties (Chicago). “We’re on that same page. If I find a great product, it’s better to find an owner-operator in my own backyard,” she says.

Another benefit is the ability to “talk it up,” says Cardall. If the products are complementary, sales staffers at one cart can suggest that customers visit your other cart. But you don’t want two carts next to each other. “Having [carts] side by side is usually detrimental,” Cardall says, “especially if they share employees, because one [cart] gets less attention. Yates recommends multiple locations within the same center as long as you have two great products. “You don’t want to force something that’s substandard,” he says. “You also don’t want to force a good concept just because you don’t want to drive 15 minutes to another center.”

If you decide to open another location anywhere for the holiday season, better get busy. “The days of coming in just for Christmas are over,” says Houck. In some markets, you may need to set up in October, September or even July to guarantee a spot. And you’ll probably be staying a bit longer, too. The traditional November-December holiday deal now includes January. But that isn’t a bad thing. “January sales have been fabulous the past couple of years—it’s a gift-certificate and gift-card world,” says Georgetti-Piro. Customers bearing these gifts come back in January to spend them—and often more. “Customers have learned their dollars go further after Christmas,” says Winkelman.

Of course, it’s not only sales that will increase. “Rents can jump three to four times what you pay during non-holiday,” says Schubert. “Some retailers don’t want to swallow the Christmas rent at an ‘A’-level center, but sometimes it’s worth it,” says Yates. Unfortunately, you have to pay the November and December rent before your highest revenues make their way into your cash register. (January is often a separate agreement.) Schubert estimates that only about 20-25 percent of sales are made in November, with the balance in December, the last two weeks before Christmas being the biggest. Calendar Club had three big weeks last year, says Winkelman. “The weeks ending December 13th, 20th and 27th accounted for more than 50 percent of our annual sales.”

Are we there yet?

No matter what time of year, you want to operate in a mall that delivers not only steady traffic, but the right kind of traffic. How do you know if that’s what you have? By doing your homework: research and read, talk to retailers and leasing people, walk the malls, work up the numbers, and make the best match between your product line, the mall, and the spot in that mall. And if your homework scores high marks, you’re ready to graduate to your new location.

Emily Lambert

Lambert, a senior writer for SRR, resides in Philadelphia. She can be reached at emilylambert@comcast.net.
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