Customers visiting shopping centers for more than just pretty products are looking for services and fun experiences with friends and family. And specialty retailers are delivering tangible results.
Specialty retailers selling unique products have long hung out their shingles inside malls. Service providers—honing in on a unique niche, such as eyebrow threading or paint-your-own pottery studios—are now doing the same. Taking advantage of a steady flow of traffic that numbers in the thousands each week, as well as low lease costs, has been a win-win for specialty retailers who provide services in malls all across the country.
In the third quarter 2012 edition of Specialty Retail Pulse, the quarterly performance report published by Specialty Retail Report, the services category (split into Professional and Personal in the report) inched into the top 10 categories of specialty retail for the first time. And from all indications, strong growth in these categories is expected. “A lot of these retailers are providing things that were not in the mall already,” says Patricia Norins, founder and CEO of Pinnacle Publishing, the parent group of Specialty Retail Report. This growing trend can probably also be explained by a greater thirst from consumers for “experiences” along with the products—it’s what’s been defined as experiential shopping. The newer shopping centers increasingly reflect this trend by providing a mix of stores selling product along with stores that sell experiences or services.
Specialty retailers are capitalizing on the experiential shopping trend by offering something not sold on Amazon.com or other e-commerce sites. “You can’t create an experience like paint-your-own pottery or Build-A-Bear by buying it online,” says Duffy Weir, Specialty Retail Report’s Director of Education, as well as owner of Duffy LLC, a specialty retail consulting firm in Baltimore, MD. “Shoppers are looking for a bigger experience.”
It’s also about creating memories, as opposed to swiping a credit card for a store-bought purchase. “When you have a celebration you go to a restaurant and everybody orders something different while they’re together,” says Mike Mooslin, founder of Color Me Mine, a chain of paint-your-own-ceramics studios. “It gets rid of the iPads and the Gameboys and it forces the family to come together like they did at the dinner table.” His goal is to craft a similar experience at each of his stores.
Customers are also looking for more functional services such as eyebrow threading and teeth whitening. “It’s been fun to see this little turn,” says Pat Fleser, director of specialty leasing at Glimcher, a Columbus, Ohio-based innovator in the field of shopping-center development. “We’ve seen that transforming over the last couple of years. As a society, these services are part of what we’re looking for—entertainment for a little treat. Sales-wise, they’re staying successful.” The ability to receive a personal service—whether it’s a haircut, dry cleaning, shoe shining, teeth whitening or eyebrow threading—at a mall allows customers to bundle errands and ultimately shave time off busy schedules.
Location, location, location
If your business is one that provides such experiences, being locked into a residential setting with a freestanding storefront, where the customer base rarely fluctuates, might not always be a good thing. “You can go through the 70,000 to 80,000 people who live in that neighborhood within a few years. You’re only going to paint so many ceramic items. You need a large enough population with enough fresh water flowing into the business,” Mooslin says. A few years ago Mooslin spotted the potential in malls and now chooses to open up in those locations first. With this business shift he relies less upon aggressive tactics to solicit pedestrians and more on mall advertising that bring customers in. He also works hard on cultivating a bright, fun and colorful storefront as most specialty retailers do.
“A mall parking lot is full of different people every day,” says Mooslin, who targets wealthy mothers as potential customers. He intentionally seeks out spaces near high-end retailers—such as Chico’s, Pottery Barn or the Disney Store—where moms shop, as well as restaurants and movie theaters. However, even if the business is tied into a clearly defined demographic, marketing to all should not be forgotten. Norins suggests this rule of thumb when scouting locations: “Go with the busiest location of the mall. Choose the highest traffic location.”
When EDGE-UP co-founder Percy Souder Jr. walked into Westfield Culver City, a mall in southern California, and saw a leasable space he immediately knew it would be perfect. Although a seasoned owner of barbershops in the region, the other locations clung to convention: they were in freestanding storefronts, not in a large shopping center. “The natural way of thinking is to put together a nice location, do great hair and people will come to you,” says co-founder Tyhese Sanchez. “However, why not put something in the middle of a place where people are [already] going instead of having them come to you?” EDGE-UP services close to 2,000 clients a month between two locations—in Westfield Culver City and Westfield Covina. “There’s no comparison,” Souder says, to his earlier ventures. “It’s a different animal.”
EDGE-UP’s lime-green and jet-black 260-square-foot open-air kiosks are not run-of-the-mill barbershops. They are sleek, trendy and eye-catching. There is also an expansive seating area with lime-green chairs and white tables. “Our kiosk really speaks for itself,” Sanchez says. “We don’t even have to stand outside the kiosk.”
The company has spent less on marketing and promotions, relying instead on mall traffic. Strategically, the EDGE-UP kiosks are placed on the ground floor (to receive heavy traffic flow) and near retailers that share a demographic: the Finish Line, Target and Best Buy for example. “It’s very low overhead, and lower overhead compared to a storefront,” says Sanchez.
Another attraction to be in a shopping center? Potentially lower rents. “There are many more specialty retailers selecting malls because the price for space has come down,” Weir says. She has seen everything from shoe repair to community colleges, even yoga studios, signing leases inside malls. “Some of these developers have so much space available that they can turn it into classrooms.”
This opens the door for specialty retailers who are quite new to the business and itching for opening day at their first store. “It’s a huge opportunity for an entrepreneur to come in to the mall and get started,” says Norins. “Right now mall rents are the lowest they’ve been in the last six years.”
Mooslin, of Color Me Mine, agrees. “We’ve been able to find great mall locations at affordable rents.” Yet even with all the extra space to select from, there can be challenges in making the shift from a traditional storefront to a mall. Being in full display meant EDGE-UP couldn’t just replicate its previous model, where casualness might have trumped cleanliness. Before, any clutter or disarray, no matter how minor, could easily hide behind an entryway and reception desk. In a mall they are right out in the open where every piece is visible. Other changes: hiring more stylists during a shift and staying open later as well as on major shopping days (to coincide with the mall’s hours). Three large digital-display screens are built into the design of each EDGE-UP kiosk. These screen video advertisements from other mall retailers, creating another revenue stream for EDGE-UP.
Many service providers inside malls rely on social media to get the word out regarding specials and events. Piggybacking on mall-sponsored social-event marketing creates even more reach and usually costs nothing. Many malls even publish newsletters for customers or send out email blasts.
Connecting with the marketing or events coordinator for the mall puts you on their radar. “The retailers should approach the mall and say ‘Hey, how do we get onto your Facebook page or in your enewsletter?” encourages Norins.
“I think specialty retailers are really missing the boat by not using these tools,” says Fleser. Offline, there are even more marketing opportunities, such as table tents in the mall’s food court or other seating areas and signage throughout the mall. By partnering with another retailer who shares your customer demographic (like a nail salon with a bridal dress store), the reach is even greater. Banding together to create a guided “ladies night” or “family day” outing with stops and sales at different stores, as well as capturing the spirit of a holiday or a season like Easter or Christmas, is another idea to boost customer traffic. It can also be a progressive shopping experience, where if a customer buys at one store they receive a discount at another store, one offering a complementary service. One example of a good pairing might be an eyebrow-threading salon with a massage studio.
As it reinvents itself, the shopping center’s transformation has been interesting to watch. Sanchez, of EDGE-UP, grew up near a mall and has watched it evolve to include personal services and experiences. “Shopping centers are transforming into one-stop shops which offer total convenience, product and service availability to the consumer, saving them time and ultimately money, which is extremely valuable,” she says.