(This is the first of a two-part look at mall marketing efforts. This feature looks at what marketing managers are doing inside properties. A second story will examine how companies are embracing social networking and other online technologies to promote retail centers.)
Up until about a year ago, mall marketing managers had been focused on creating a sense of community. Today, they have taken a new direction. The emphasis is now firmly on driving sales.
With tenants struggling to make rent payments as a result of falling sales, there is a newfound emphasis on translating mall visits into actual sales. It's a return to focusing on malls' primary reason for existence. The point is not to create public gathering places. It's to provide venues where retailers can profit.
This has altered the kinds of campaigns being mounted at regional malls. In the past, when the focus was on prolonging visits rather than driving sales, mall managers focused on events like fashion shows for women, concerts for teenagers, car shows for men and cartoon character themed events for young children. These events, even when shared by sponsoring corporations like PepsiCo or Coca-Cola or Sprint, cost thousands of dollars to put on. But mall owners didn't mind, convinced that it was part of making consumers feel like their local mall was a place to hang out and linger however long they wanted. Malls should be a places where shoppers feel welcome even if they didn't spend a single cent. In the long run, by fostering loyalty, these efforts would pay off by creating customers for life for a mall and its tenants.
That view has now changed. "People are much more planned now about their purchases and the difficulty for shopping centers is how to keep their audience," says Kelly Georgetti, a retail marketing expert with the Marketing Arm, a Dallas-based marketing firm. "While concerts are great, I think that you are seeing a lot more interactive events, where you get consumers to participate in the process."
For example, last holiday season, 25 malls across the country allowed Nintendo, the producer of video game consoles, to set up temporary kiosks at their premises where shoppers could play Wii Music, Wii Sports and Wii Fit games for free. Nintendo got to promote its brand. But the mall owners also got a chance to help their electronics retailers sell more Nintendo products.
To be sure, mall marketing departments still feel it's paramount to project the idea that malls are part of local communities. This summer, there will still be plenty of concerts—Simon Property Group, the Indianapolis-based giant with 246 million square feet of retail space in its portfolio, has just launched its annual dTOUR Live event, which will bring free performances by teen bands Hoobastank, Shwayze and Forever the Sickest Kids to 11 of its properties. Macerich Co., a Santa Monica, Calif.-based REIT, has been putting on free concert performances at least at one of its centers, the 450,000-square-foot Kierland Commons in Scottsdale, Ariz. And CBL & Associates Properties, a Chattanooga, Tenn.-based retail REIT, meanwhile, will hold American Idol auditions at five of its malls. "We have people that will drive 100 miles to participate in something like that," says Barb J. Faucette, vice president of corporate mall marketing with CBL, who estimates that the events can attract anywhere from 500 to 1,000 visitors. (CBL also has a campaign called Treat Yourself that is designed to encourage customers to splurge on themselves.)
But many of mall owners' new marketing initiatives have a more thoughtful approach to how in-mall events can help tenants, aside from drawing new foot traffic to the property, says Traci Weber, senior vice president of marketing with Macerich. "Getting people into our malls is really only half the equation—getting them to shop is the real challenge," she notes. "Once we get people in, we want to give them an incentive to shop."
That has meant efforts are now organized around retailers' sales promotions and store openings. For example, from July 27 through Aug. 13, Macerich plans to hold a denim drive at most of its 72 properties to support local charities. At the end of the two-week period, Macerich will host a Great Denim Event, during which volunteers will be able to help package the donated jeans for delivery. (For example, it will host one such event at the Danbury Fair Mall.) However, simultaneously participants will get expert advice on which styles of jeans best fit their bodies. In many centers, that advice will be provided by employees of Gap, a major tenant.
These kinds of events, which are part of the REIT's "Get Together and Give" series, also often feature thousands of free care bags highlighting goods from the centers' retailers. Since the program was launched fairly recently—in 2008—Weber says she doesn't yet have solid data on how much they impact sales. "But anecdotal information from our retailers tells us that women are going in and using coupons and asking for specific items that have been featured in these events," she adds.
The additional benefit of this new brand of marketing campaigns is that they tend to be extremely cost-efficient—there is usually no stage to be assembled, no special equipment to be rented, no animated characters to pay. The owner spruces up the center's common area, serves as a liaison for the charities that benefit from the shoppers' donations and sends the word out to the community, often through free-of-charge communications channels like Facebook and Tweeter. The rest is up to the retailers.
Come together now
Part of what makes these kinds of campaigns possible is the increased cooperation from the tenants. While mall owners and retailers have always tried to work together to improve shopper traffic and sales, when times were good, retailers could often be less than enthusiastic about participating, notes Faucette. Most of the effort had to come from the landlord. Today, tenants are actually approaching mall owners about new marketing events.
"I've been in the shopping center industry for 25 years and I've never seen more [cooperation] between retailers and landlords," says Faucette. "We have ongoing conversations with our retailers every day, talking about how they can be involved. I think it's becoming an overall partnership."
Macerich, for instance, has started working with the Food Network and upscale kitchen supplies seller Sur La Table at Kierland Commons to produce cooking demonstrations by famous chefs, including Curtis Stone. Macerich uses the events to promote Sur La Table products with special coupons. When Stone served as a guest at Kierland Commons this year, the next day sales at the store went up by $1,200.
In recent months, Forest City Enterprises, a Cleveland, Ohio-based firm with 14.6 million square feet of retail space in its portfolio, has been holding events throughout its 57 centers that were the result of partnerships with at least one key tenant. Last fall, Forest City worked with Macy's at the Shops at Wiregrass in Wesley Chapel, Fla. to bring over make-up artists from Estee Lauder, Clinique and Lancome to give makeovers to women shoppers, according to Nancy McCann, senior vice president of marketing with the firm. As part of the promotion, Macy's provided discounts for shoppers to buy cosmetics at its stores. At another property, J.C. Penney invited fitness experts to talk to mall visitors about the best ways to stay fit. The store then had a chance to promote its new line of exercise clothes.
Meanwhile, when Forest City held an event to benefit the American Cancer Society (ACS) at one of its malls—visitors to the center could purchase a tile with their first name on it, with the proceeds going to the ACS,—the center's retailers donated small goody bags that were meant to encourage shoppers to come by their stores. As a result, the event achieved two objectives at once, in McCann's view. It allowed the center to create a stronger connection with the local community by doing something of emotional significance for those whose lives were affected by cancer. And it drew attention to the center's tenants by directing shopper traffic to participating stores.
Glimcher Realty Trust, a Columbus, Ohio-based retail REIT with a 21.7-million-square-foot portfolio, has instituted a similarly community-minded program at its malls in recent years. Called "Earning for Learning," the program runs during the annual back-to-school shopping season and allows anyone who spends at least $1 at a Glimcher property to nominate a local school as a recipient of a monetary award from Glimcher. Each nomination is worth one point. At the end of the six- to eight-week shopping period, the school that racks up the highest number of points per student wins the grand prize. For example, at Polaris Fashion Place, a 1.5-million-square-foot mall in Columbus, the winner will get a total of $7,500, which it can then use as it sees fit. Runner-up schools also get prizes, ranging from $1,000 to $4,000. Glimcher awarded more than $280,000 to local schools last year.
Even a superficial look at all these programs, however, will show that they tend to be less extravagant than the ones that were prevalent a few years back. Instead of free concerts, many centers have instituted free movie nights, which are inherently less expensive and which also give the mall owner an opportunity to steer shoppers toward the center's restaurants for a "dinner and a movie" experience, notes Weber. There have been more and more events featuring partnerships with local and national charities. And though there is still room for more showy events, like celebrity appearances, mall's marketing departments look for ways to make these as cost-effective as possible. Last year, superregional malls, the properties most likely to invest in on-site marketing, spent an average of $0.08 per square foot on promotions and special events, according to the SCORE report from ICSC. Back in 2004, the figure was more than twice that amount, at $0.21 per square foot.
"The way we market has changed a little bit, we are looking for smarter ways to spend our dollars," says Weber.
This July, for example, CBL's Fayette Mall, a 1.2-million-square-foot regional center in Lexington, Ky., invited shoppers to meet and get an autograph from Mario Lopez, the current host of "Extra" and a former contestant on "Dancing with the Stars." Lopez' appearance attracted more than 600 guests, with stores like Sephora, which is geared heavily toward women shoppers, reporting a 15 percent increase in sales compared to a normal day, according to Faucette. But the event was virtually cost-free for CBL. A local television station, WTVQ, arranged the appearance and ran promotional material for Fayette Mall, contributing approximately $25,000 in publicity for the property.
"As an industry, we are leaning more toward that, putting on these events at little or no cost," says Faucette. "We may do the press release and media promotions, but in general, the partners we work with put on the activity."