Malls make over for shoppers

For the better part of a decade, the buzz in retailing has been focused on online sellers, free-standing stores and street-level boutiques. But there's still nothing like the mall.

In what is shaping up to be the best holiday season since before the recession, the power of the shopping center is evident in the jammed parking lots, crowds of jostling shoppers and a sea of shopping bags.

"A few years ago, I looked at malls as a deteriorating retail concept because consumers were shopping them less and less," said Britt Beemer, chairman of consumer behavior firm America's Research Group. Now "I feel more encouraged. The malls that are definitely going to survive are being more proactive."

Nearly 52 percent of retail spending takes place at shopping centers today. That's down slightly from 55 percent in the early 1990s, but is still formidable and better than mall performance in the years leading up to the recession.

The recent resurgence in mall shopping was a major reason several groups, including the National Retail Federation and the International Council of Shopping Centers, raised their holiday season sales forecasts in recent days. The retail trade group is now predicting a 3.3 percent rise over last year; the shopping center council is expecting a 3.5 percent to 4 percent rise, which would make the season the best since 2005.

Mall executives are defiant about talk of shopping centers' waning relevance.

"It's always popular to predict the demise of the king of the hill," said Art Coppola, chief executive of mall operator Macerich, which owns 71 centers nationwide. "But when the king still stays on top of the hill for 30 or 40 years in a row, it's hard to argue with success."

But mall owners acknowledge that success comes with a different formula these days.

An American institution, malls' main challenge has been to move beyond the old-school, fortress-like behemoths with their random groupings of stores and neon-lighted food courts.

Time-strapped consumers today are looking for more, so many mall owners used the recession as a time to regroup and think about ways to make their centers more than just a place to shop. The malls that have thrived in recent years tend to be the outdoor "lifestyle centers" that function as modern-day town squares, with as many nonretail offerings as there are stores.

"You do have to work harder for the customer," said Matt Middlebrook, a vice president at Caruso Affiliated, which owns the Grove in Los Angeles and Americana at Brand in Glendale, Calif., both open-air centers. "People do have limited attention spans and limited resources, and we have worked extraordinarily hard, particularly in this downturn, to give people more."

But mall owners are limited too. Unlike in the 1980s, when land was readily available and building costs were relatively cheap, new mall projects have ground to a halt in recent years. The name of the game now is remodeling, expanding or renovating existing properties.

Nationwide, a dozen Westfield malls are in negotiations to add grocery stores.

"The rumors of our demise are greatly exaggerated," Westfield spokeswoman Katy Dickey said wryly of shopping centers' future. "Just like retailers constantly reinvent themselves, I think the malls that do are the ones that succeed. It's not only about maintaining the productivity but their relevance and their appeal."

Still, although much has been made about the fast-growing online retail sector, industry experts estimated that Internet sales constitute only about 8 percent of total retail sales.

Some online shopping converts have even taken a step back this year, heading back to the malls because they missed the social interaction.

"I usually do a lot of online and this year, I'm not," Cristan Reilly, 44, said while shopping for holiday presents at South Coast Plaza in Costa Mesa, Calif. "I want to see the products and have a little more control over what I get."

For Collyn Kalunian, 24, an accountant from Santa Monica, the mall experience can't be replicated on the Internet.

"It gets me excited for the holidays," she said as she left Santa Monica Place with several Bloomingdale's bags. "If I bought it online, it wouldn't feel like Christmas."