Skip navigation
Retail Traffic

Retail Cycles Through The Decades

Like the fashion industry, where hemlines may be high one season and low the next, the shopping center industry has had to continually create new concepts and property configurations to attract consumers. Whatever the style of the day, retail property managers are responsible for selling and packaging it in a way that draws consumers and enhances the value of the real estate investment.

More than any other sector of the real estate industry, retail is a cyclical business with consumer trends dictating changes in shopping center property configuration, concept and marketing strategy. Each of the past three decades has introduced new retail property types to correspond to changing consumer tastes and behaviors. Property managers have had to adapt to these changes to meet the varying needs of both the retailer and the retailer's customers.

1970s: Comfort of enclosed malls Comfort and convenience defined the retail center of the 1970s, most typified by the enclosed mall. An enclosed mall provides a pleasant atmosphere to shop in regardless of what the weather is like outside. It can be 102 degrees in the shade or there can be 2 feet of snow on the ground, but the climate inside the mall is just right.

This type of mall appealed to the 1970s consumer, who sought a shopping environment that would allow them to find what they were looking for quickly and conveniently in a comfortable setting. The mall of this decade began to represent a main center of activity for shoppers, forming a kind of town-square environment.

This decade also introduced the specialty center, built around a theme, such as San Francisco's Ghirardelli Square. Specialty centers have a completely different set of criteria for their tenant mixes, particularly because there are different subsets of specialty centers. Tourist-oriented centers like Ghirardelli are dominated by entertainment and food services, having several restaurants in particular.

Location is often part of the overall attraction. Ghirardelli, located at the end of a cable car line and near San Francisco's waterfront, is an old chocolate factory converted to a specialty shopping center with a view of the Golden Gate bridge.

1980s: Value and convenience As the early 1980s rolled in, they brought a consumer belief in self-interest and upward mobility. Consumers spent, spent, spent, and they dropped their dollars at the decade's popular new power centers. These big-box retailers provided the spendthrift consumer of the 1980s with the convenience of one-stop shopping and a vast array of choices.

Power centers are dominated by destination-type tenants with very large stores. These category-killers are heavily advertised, high-volume operations. Their success depends on moving large amounts of merchandise. Most power centers have between 250,000 sq. ft. and 350,000 sq. ft. of GLA. They need a very large population base from which to draw customers, so they are generally located in or near major metropolitan areas and close to an expressway exit.

The middle of the decade, however, ushered in an age of confusion. The good times stopped rolling. Americans worked harder, earned less and stopped shopping so frivolously. Retailers began to come to terms with the idea that these were long-term trends, not simply temporary whims.

Downsizing and downward mobility were now the trends of the day. For many consumers, the focus shifted from moving forward to not moving backward. Stagnant incomes brought savings back into fashion, resulting in the birth of the outlet center. Retailers adapted to this significant change in consumer behavior by emphasizing the practical value of their products. Consumers now were focused on preserving their health, the environment and their financial assets.

The rise of the outlet mall was driven primarily by manufacturers creating distribution for their goods, either through outlet or off-price tenants. Often situated far from residential communities, outlet malls increased from 183 centers and total sales of $6.3 billion in 1990 to 294 centers and total sales of $11.4 billion in 1994, according to Value Retail News. Generally located 20 miles away from the manufacturer's major wholesale venues, outlet centers focused on selection and value, not convenience.

For the property manager, the 1980s meant a much deeper focus on marketing and merchandising. While retail management in the 1970s required minimal promotion, the power centers and outlet centers of the 1980s required a commitment to creating activities and promotions that would draw the consumer. With some major retailers facing bankruptcy, malls helped to avoid dark anchor locations by providing shoppers with entertainment and other activities such as special events and promotions.

As centers became obsolete, the challenge for the retail manager of the 1980s was to reposition the center so it could remain competitive. With the threat of a new, more exciting retail format down the road and the potential loss of an anchor tenant, managers needed to think creatively in positioning the retail product in the marketplace.

Sometimes, the evolution of retailing formats solved this problem. For example, when supermarkets grew from 25,000 sq. ft. to 50,000 sq. ft. spaces, they left centers with vacant stores. Fortunately, medium-size box stores such as Office Depot became popular at that time and filled some of this obsolete supermarket space.

1990s: That's entertainment If the 1970s were about comfort and the 1980s were centered on convenience and value, then the 1990s are about lifestyle entertainment. Dominating the retail market this decade are lifestyle and entertainment centers, which focus on shopping as an "experience."

The early to middle part of the decade caused retailers to face the issues of the day: consolidation, entertainment, technology and non-store competition. Traditional retailers are increasingly threatened by non-store competition such as TV home shopping, catalogs and online shopping.

Retailers are finding that they need to put the fun in their product in order to sell it to today's consumer. One example is the popularity of the Discovery Zone chain, where children play in a large enclosed playground while their parents shop or eat nearby.

The lifestyle center, introduced in the early 1990s, was driven by small- to medium-size box stores such as Barnes & Noble and Eddie Bauer Home. These stores, typically 10,000 sq. ft. to 35,000 sq. ft., together with more traditional retailers, created a new "old downtown" feeling.

Many neighborhood and community centers today evoke that "town center" feel by adding such amenities as sports fields or ice rinks. In fact, according to the Urban Land Institute's Dollars and Cents of Shopping Centers: 1997, neighborhood shopping centers reported the highest sales per square foot among the four major shopping center types at $216 per sq. ft.; net operating balances also were up.

Today's lifestyle centers offer experiences reminiscent of a time passed. Amid a world of impersonal computers and high-tech gadgetry, consumers seek a simpler lifestyle, one that emphasizes family, friends, values and experiences.

Lifestyle centers are more of a reflection of what our society wants than the dream of a developer or a response to a new retailing format. What distinguishes lifestyle centers from regional malls is that they are considerably smaller and more intimate with no department stores and fewer shop tenants, and they have a greater mix of national, regional and local merchants. Developed in an outdoor environment, they are a place for families and friends to gather and socialize and enjoy an array of experiences.

Catering to lifestyle Redmond Town Center in Redmond, Wash., was built around the concept of an open-air lifestyle center. A 120-acre, 400,000 sq. ft. mixed-use development, the center was designed to be an extension of the existing downtown. The scale of the development is consistent with the older buildings in downtown. The streets within the development are aligned with the existing city streets for a seamless transition from the older areas to the new section of downtown.

The retailer of the 1990s understands that shopping has to be fun for today's consumer, who is time-poor and rarely has three hours to spend getting a latte and browsing for the latest fashions. Instead, shopping needs to be an experience. Some of the best examples of this kind of entertainment retailing are NikeTown and FAO Schwarz, in which the stores themselves become attractions.

Park Meadows, a regional center near Denver, draws people with its resort-like atmosphere. The center is designed to look like a resort with fireplaces, rugs, paintings - all the things common to a lodge. Copper roofs, tall spires, wrought-iron door handles and wood flooring add to the theme of the center.

Another store that has taken advantage of today's consumer's need for excitement, fun and service is the Akron, Ohio-based West Point Center. Known as the "happy store" to many in the community, West Point aims to create a sense of adventure by slowing the shopper down to enjoy the environment and unique visual presentation of the market.

Faced with a stagnant growth rate in the area in the 1980s and fierce competition from bigger supermarkets, West Point built its reputation by catering to kids in a fun way. The center has yellow and red Fisher-Price shopping carts for "little shoppers only," and it takes free photographs of children manning the carts. One copy of the photo is given to the parents, and one is kept in a book that shoppers can browse through.

Children receive "cookie credits," which they can redeem at the center's bakery for a large chocolate-chip cookie. Children also can find lunch-bag and snack items such as chocolates in the shapes of bandages, crayons, cows and teddy bears; "ants on a log," which are pieces of celery stuffed with peanut butter and dotted with raisins; and brioche cut into animal shapes.

The store's layout and promotion schedule keep children in mind, too. A section called "Grandma's Corner" sells Winnie the Pooh lunch buckets, jam and cookies; Beatrix Potter plates and bowls; children's books; and a Fitz and Floyd Bunny collection of teapots and baking mixes. Events geared to children range from Halloween parades with costume contests to visits from the Easter Bunny and Santa Claus. And every weekend, the store gives away helium-filled balloons at all the registers.

Accommodating the shopper In fact, more than any other decade, the 1990s have forced retailers to focus on defining their target market and developing marketing strategies that will draw that consumer. For example, Yaohan Plaza in Arlington Heights, Ill., caters to customers' culture by drawing consumers of Asian descent. It announces sales and promotions through a direct-mail list of 12,000 regular customers.

The physical features of the 61,000 sq. ft. Yaohan market are designed for the Asian shopper as well. The shelves are as much as a foot lower to keep items within easy reach of small-framed customers. The store also offers unusual housewares seldom found in American supermarkets, such as the Panasonic Intimist, an electric appliance that attaches to a toilet. It has three settings: family, bidet and dryer.

For the property manager, entertainment and lifestyle centers require a higher level of skill sets. Managers need to be much more attuned to the retailing concept of each center, understanding how best to promote and market it.

The retail manager of the 1990s also must contend with differences in the customer base of today's centers. Entertainment centers, for example, draw a broad base of consumers who visit the center at varying hours during the course of the day. These centers stay open late to provide the kind of entertainment activities that consumers are seeking. Managers need to pay closer attention to maintenance and security issues as entertainment centers often remain open past the 8 p.m. to 10 p.m. closing time of traditional malls.

Flexibility is the key to success for any retail manager today. No longer will the rules and practices of the 1970s work. As retailers and shopping patterns change, so too must managers' operational guidelines.

While income performance of retail centers has been flat over the past few years, this down cycle may be starting to turn. Both enclosed malls and open shopping centers reported increases in net operating income in 1996, according to the 1997 edition of the Income/Expense Analysis: Shopping Centers, Open and Enclosed, published by the Institute of Real Estate Management. Adding to this positive trend, operating expenses decreased for both types of centers.

For open centers, median income based on average actual occupancy increased 6.6 percent in 1996, to $9.52 per sq. ft. (up from $8.93 in 1995). Income for malls rose to $11.43 per sq. ft., a 2.7 percent increase from the previous year.

As retail managers approach the new millennium, more than ever before, the key to their success in enhancing the value of shopping centers will be to stay alerted to new retailing trends. The ability to be flexible and to adapt one's management style to the operations of differing centers and changing tenant mixes will be essential.

While the look of the retail center may change from decade to decade, professional, quality management will always be in style. With a commitment to creative marketing strategies, flexibility and an awareness of changes resulting from technology, consumer trends and non-store competition, retail property managers will be prepared to manage for the next decade and decades to come.

What will the mall of the millennium look like? What will the next cycle of retail trends bring? Here are a few possibilities:

* Consumers will seek out connection with others while avoiding intrusive interaction, according to the results of an annual survey of American consumers conducted by New York City-based Langer Associates Inc. Stores, restaurants and clubs can satisfy both needs by building zones of "alone-togetherness" into their layout.

* Customers today do not seek out products or services; they assume that offers will come to them. Therefore, businesses need to adopt the "woo-me" concept of marketing and be more active, approaching consumers with free trials and special offers.

* The new yuppie will be less interested in designer labels. Advertising that stresses value and de-emphasizes status as a reason for buying (even if that is the reason) will likely appeal to this crowd.

* The trend toward casual dress has caused consumers to cut back on clothing spending. Instead, the money that would have gone into the closet will be spent increasingly on homes, travel and investments.

* Malls will offer more service facilities, everything from veterinary clinics and learning centers to martial arts centers and state offices that serve the public.

* Retailers will look for an edge on the competition through creative use of consumer information. To better service shoppers, retailers will keep a computer database of detailed information on consumers' sizes, style preferences and other key data.

* According to Michael Beyard, project head for Urban Land Institute's Dollars and Cents of Shopping Centers: 1997, expect more entertainment, from 35-screen multiplexes to an "American Wilderness" zoo of non-endangered species.

* The next cycle of retailing may witness a shift from a "downtown" to a "city" feeling shopping environment. Malls will offer a complete array of products and services, from medical facilities and hotels to entertainment complexes and educational outlets.

* Amenities of the future may include virtual-reality pastimes such as mountain climbing and skiing, according to the International Council of Shopping Centers, New York. Retailers may take advantage of automatic valets that, with the help of electronic or magnetic strips, identify customers' cars, park them when they arrive, and deliver them when they are ready to leave.

Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish