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Common Cents

>From the mundane to the amusing, common area add-ons offer shopping centers customer service and imaging tools that pay off.

In a time of tooth-and-nail competition for customers, shopping center managers are looking for that something extra to grab the customer's attention. With common area add-ons such as ATM machines, stroller and locker rentals, gift wrapping services and more, center managers expect to generate additional revenue. More importantly, however, they aim to enhance convenience, making it easier for shoppers to spend time in the center.

Direction and dollars The value of add-ons is evident the moment a customer enters a shopping center. According to research conducted by 3M Media, which supplies directories to more than 900 malls throughout North America, 75 percent of all mall shoppers refer to the directory/map upon entering a mall.

When there is no directory, or when the directory is difficult to read, the center and its retailers lose sales. "We have seen people in malls get down on their knees and twist their heads around until they are almost upside down to read some maps," says James Dixon, senior leasing manager for the 3M Media mall program, based in Pittsburgh.

Typically, an 800,000 sq. ft. mall requires five or six directories, says Dixon. The center's revenue from the directories is a by-product of directory advertising.

For example, in the case of 3M, the vendor supplies directories, updates and maintenance to the center, free of charge. The center map appears on one side of each three-sided unit, and 3M sells advertising on the other panels. The vendor then pays a percentage of gross advertising revenues to the shopping center.

Pull out a stroller and stay awhile Shared revenue is part of any add-on arrangement, but center managers are equally, if not more, concerned with incorporating products or services that add value to the customer's shopping experience. For example, the availability of strollers makes getting to the center -- and staying -- easier for parents with small children.

A center may offer strollers from coin-operated dispensing units, usually placed near entries, or it may choose to dispense the strollers manually from a central customer service location.

Some centers report that manual distribution leads to a higher return rate. (In addition to the rental fee, customers pay a deposit that is refunded upon return of the stroller.) However, the cost of purchasing strollers, as well as maintaining them and supervising their rental may make dispensing units a more attractive option for center managers.

Jean Grover, retail division manager for St. Paul, Minn.-based Smarte Carte, reports that her company provides malls with dispensing units, strollers and a local operator to manage and maintain the system. "That's a popular scenario," she says, adding that the level of service is negotiable. "If a mall wants to handle some of the maintenance, that reduces our cost, and we can share a higher percentage of revenue," she says.

In addition to customer convenience and rental revenue, shopping center managers are discovering another benefit to strollers: Like directories, each stroller provides space for advertising. Space sold by the vendor is revenue shared with the center.

Storage space for power shoppers As with strollers, convenience is key to the availability of lockers in shopping center settings. By providing an inexpensive, secure place to store purchases, centers can encourage customers to unburden heavy packages and shop longer.

Basic, workhorse lockers remain popular among mall managers, says Joe Caruso, sales representative for American Locker Security Systems Inc., Jamestown, N.Y. However, he notes, "These lockers are more of a service than a source of revenue."

Caruso explains that his company supplies lockers at a cost of $120 per door and up. Malls have only recently begun to raise usage fees from 25 cents to 50 cents per rental. The change requires that the lock be sent to the manufacturer for adjustment.

Smarte Carte, which has been associated primarily with strollers and carts, is moving into the locker market by developing an electronically operated unit. "The doors are controlled by a computer," Grover says.

"When you deposit your packages, you get a ticket with a code on it. The computer tracks the time the locker is in use and charges accordingly," she explains. "You can use change or a major credit card to retrieve your items."

Common area communications Telephones are commonplace in shopping centers, and they are generally regarded as necessities rather than extras. However, competition among telephone service vendors is fierce, and they are seeking greater visibility in all markets, including retail.

According to Glenda Quinn, account manager for retail markets at BellSouth Public Communications Inc., Homewood, Ala., telephones are moving out of quiet coves into more active common areas. "We've been moving them out of the back hallways and restroom areas and setting them up in trios or quads in the common areas," she says. "The basic concept of phones is 'Out of sight, out of mind.' If you see a phone and have a reason to use it, you will; if you don't see a phone, you won't usually go looking for one."

Michael Ohrwashel, retail marketing manager for AT&T in Warren, N.J., notes that 25 percent of people who enter a retail store to use a pay phone end up making a purchase. "It might be a pack of gum or something small, but the point is, by having a pay phone, you can increase traffic in a store or mall," he says, citing 1991 AT&T research.

Like other common area add-ons, pay phones pay off through shared revenue. The service provider typically pays the shopping center a percentage of the gross revenues for selecting their service.

Pay phone features have reached a new level of sophistication in recent years. For example, using customized speed dialing options, public telephones can now be programmed to allow users to dial security, customer service, or lost and found with the touch of a button. Furthermore, they can be programmed to allow outgoing calls only, thereby deterring loitering at telephone banks.

As an extension of telephone service, some shopping centers are beginning to offer public facsimile machines. "In large malls with 100 or so retailers, the number of retailers using the fax in the management office has grown dramatically in the past few years," Quinn explains. "Business customers patronizing malls have also begun to ask for fax services.

"In some cases, mall management has installed courtesy booths that sell fax and photocopying services," she says. "As an alternative, we now offer a public fax service through the regular pay phones."

The fact that retailers can take advantage of telephone faxing may be of particular interest to mall managers. The retailer can purchase an electronic mailbox that collects incoming faxes digitally.

To send a fax to the mailbox, the sender dials the fax number and keys in a four-digit identification number for the recipient. To retrieve the fax, the recipient uses the fax-phone, dials the mail box number with the code and downloads the fax.

Revenue garnered through mailbox rentals and incoming/outgoing faxes is, like telephone revenue, shared with the center.

Coupons with cash The installation of automatic teller machines has become commonplace for malls; like telephones, ATMs are regarded more as necessities than as perks.

First National ATM, a subsidiary of ATM Capital Corp. in Clearwater, Fla., is examining ways to provide additional services through its ATMs. Rather than serving only as cash dispensing machines, ATMs are potential promotional tools for retailers, says Suzanne Duret-Hazen, vice president of sales and marketing for First National.

First National's ATM Advertising Group recently tested a trademarked program called Bonus Bucks, in which ATMs dispense a coupon along with cash. "The coupon might invite shoppers to visit a certain store where they will receive a $10 Bonus Buck discount on any purchase over $100," Duret-Hazen explains. Instructions for using the coupon are printed on the ATM receipt.

"With our software capabilities, we can download new offers every month from our central data base," she continues. "Merchants can change their offers weekly, monthly, quarterly, however they want. If a special sale is coming up, they can notify us, and we can print receipts with that information."

General advertising is finding its way to ATMs as well. The machines can reproduce on-screen graphics or, in some cases, run video appeals while customers await their cash.

Appealing to impulse Although many add-ons are designed to appeal to customers' sense of convenience and usefulness, others are designed to appeal to a sense of impulse and amusement. For example, many shopping centers are installing stackable gumball machines, photo booths and other self-serve stands to enhance their image as fun, family friendly places to shop.

Modular vending equipment can be used to create structures in a variety of shapes and sizes, reports Malcolm Knight, international sales director for Machine-O-Matic Ltd. of Newmarket in Ontario, Canada. "For example, we can put a ring of machines around a column. The result is a column that generates sales per square foot," he says.

Photo booths play similarly on customers' sense of impulse. With computerized technology and digital imaging, they have evolved from the Coney Island box with a camera into a more interactive, customized offering.

For example, today's booths combine state-of-the-art imaging with background libraries, explains Frank Daniels, vice president of marketing and customer service for Windham, N.H.-based Fantasy Entertainment. Customers can experiment with a variety of backgrounds, freezing and unfreezing their "live" image until they have the custom photograph they want.

Describing his company's revenue sharing program, Daniels explains that the shopping center provides space for the photo booth in return for commission on the gross revenues. The vendor supplies the booth and maintenance.

Name that gift box Common area extras are a year-round revenue source for shopping centers, but high-traffic periods such as the Christmas season provide a predictable boost in returns. Gift wrapping services, in particular, are a popular extra during the holidays, and gift boxes and paper provide additional advertising media for centers.

Imprinted goods (e.g., shopping bags, wrapping materials imprinted with a center's logo) are usually purchased by a shopping center's management and/or merchant's association as part of a promotional budget. Costs are recovered by charging customers for services such as gift wrapping.

Vendors are now experimenting with ways to cut purchase costs for centers by seeking co-branding opportunities. Mark Franovich, sales director for Germain Packaging Inc., San Diego, suggests two options.

In one scenario, a company such as VISA might purchase the gift wrapping paper used in a particular center, and the center could provide free wrapping services to customers who make purchases with their VISA cards. Or a company may wish to imprint materials with its own logo for distribution at a shopping center.

"With marriages like this, everyone is happy," Franovich says. "The mall gets materials, and the advertiser gets an advertising medium."

In addition to the cost of materials, wrapping services require a regular supply of manpower. Last year, Cherryvale Mall in Rockford, Ill., tested an automatic wrapping machine in an attempt to cut the center's holiday labor costs.

Owned by Wrap-It-Up Inc., Rockford, the machine was tested as a backup to customer service personnel. During the eight weeks before Christmas, center personnel wrapped more than 70,000 packages. During the final two weeks of that period, the machine wrapped an additional 7,000 packages, completing each in 60 seconds.

The real surprise turned out to be the audience at the wrapping booth, says Larry Ginestra, Wrap-It-Up chairman. "We were originally scheduled to be there only during peak hours," he explains. "It was such an attraction that mall management asked us to be there throughout the day."

Snapping up add-on opportunities In addition to gift wrapping services, holidays are a popular time for photography. What center court passes up the opportunity to host Santa Claus or the Easter Bunny?

Traditionally, centers have supplied the scenery and the characters for holiday photographs, and parents were welcome to take their own pictures. Today, photography vendors are marketing holiday packages and wrapping them up in revenue sharing.

Western Photo Services, a division of Western Staff Services, Walnut Creek, Calif., is among the companies vying for holiday business. Mall management supplies the photographic setting, Western provides personnel and digital photography (which allows customers to choose a variety of sizes for their prints), and both parties share in the event's gross revenue.

The popularity of common area extras is based upon the concept of taking an otherwise unused space and generating additional income for the shopping center.

In addition to the revenue, however, add-ons can provide a center with image-building components (e.g., convenience, service, amusement) that set it apart from its competition.

Michael Fickes is a Baltimore-based freelance writer.

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