Mall marketers turn to fun, food

Owners try to keep up as consumers seek nicer experience

By Mary Ellen Podmolik
Special to the Chicago Tribune

CHICAGO - For years the typical trip to the mall meant shopping at department and specialty stores and grabbing something to eat in a generic food court. For entertainment there was a visit with Santa during the holiday season.

But this year shoppers at Randhurst Shopping Center in Mt. Prospect took a break by riding a carousel installed in center court. At Westfield Old Orchard in Skokie, consumers found something unusual: Steve & Barry's University Sportswear filling a space once occupied by anchor tenant Saks Fifth Avenue. And at Spring Hill Mall in West Dundee, small children watched a musical dancing water fountain while teens played video games in a "Pepsi Zone" high-tech lounge.

These changes, made since the 2004 holiday shopping season, show the shifting mentality of mall owners, who once ascribed to a "if we build it, they will come" philosophy.

Time-crunched shoppers now prefer open-air `lifestyle' centers that group retailers of a similar caliber and brand positioning, and the stores all open onto parking lots. Meanwhile, budget-minded shoppers are finding fashion, one-stop shopping and low prices at behemoth discounts.

In a preholiday poll by St. Louis-based Maritz Research Inc., one in two consumers planned to shop at Wal-Mart Stores Inc. during the holidays. The second most favored chain was Target Stores, at which 38 percent of consumers said they would shop.

All of this spells trouble--or at least a big challenge--for traditional shopping malls, especially those without some cachet like supersized Woodfield mall in Schaumburg.

"The discussion over the past few years over whether malls are dying is ludicrous," said Stan Eichelbaum, president of Marketing Developments Inc., a Cincinnati-based retail consultancy. "They are still formidable. The biggest issue is they needed to go into a new cycle and they were stagnating, and retail can't stagnate. Retail has to progress with the product and the consumer."

Malls in the next year are expected to make some strides in both areas. As the department store industry consolidates, malls are seeking high-powered anchors that five years ago were unheard-of tenants in a regional mall, names like Wal-Mart, Target, and Costco.

They also are upgrading the entertainment and dining options beyond the standard movie theater with stadium seating and generic restaurant, to increase the "fun" factor. And they are turning parts of malls inside out, creating streetscapes that give mall tenants greater visibility and customers quicker access to their cars.

"It really is all about fun and having the right retailers," said Bob Michaels, president and chief operating officer of General Growth Properties Inc., a Chicago-based mall owner and management company. "Today you need a good mix of the right retailers and the right restaurants. Food is really entertainment and it's becoming a big part of our redevelopment."

The firm's list of just-completed or ongoing renovation projects includes upscale restaurants and movie theaters and the addition of popular apparel and bookstore chains. General Growth's 2005 rehab of Spring Hill Mall also included interior improvements and booths in the renovated food court.

"The customers have just been very pleased," said general manager Diana Miller. "People say, `Oh, I haven't been to the mall until just recently.' "

The consolidation of the department store has sparked the search for new tenants that will bring in families and teens and give consumers a reason to visit malls regularly. "Broadly, what the industry needs to do is developers need to think differently in terms of their tenant mix," said Michael Niemira, chief economist of the International Council of Shopping Centers. "You're going to have to see more services in the malls, even government services, with the intent of driving traffic."

Randhurst lost four anchor tenants, but its redeveloper, Chicago-based Urban Retail Properties Co., now considers the mall--built in 1964--to be one of its success stories. A Costco opened in the fall of 2004 on a razed Montgomery Ward's site, and this fall budget-priced apparel retailer Steve & Barry's opened, with interior and exterior entrances. The mall also includes a number of doctor and dentist offices.

The next year is expected to be pivotal for Stratford Square Mall in Bloomingdale, which is in the midst of a $20 million-plus repositioning following its acquisition almost exactly a year ago for $93 million by Feldman Mall Properties Inc., of Great Neck, N.Y.

"It's a mall that I would characterize as somewhat underperforming versus its potential," said Chairman Larry Feldman. "We believe people are driving inconveniently out of their way to Woodfield and Oak Brook and other malls because this mall does not have enough of the quality shopping experience that shoppers want to see today."

Feldman's first priority is to expand and renovate the existing movie theater. Last week his firm signed a lease with Century Theatres Inc. to replace the existing theater with an upscale 16-screen complex. Feldman reasons that higher traffic within the mall will lead to leases with upscale restaurants, coffee houses and bookstores.

Says Marketing Development's Eichelbaum, "We are learning that the mall is not about just product. It's about total experience and enjoyment. The challenge is to realize we are not done."