One of the cardinal rules of shopping centers is that the longer you manage to keep a consumer on a property, the more they end up spending. So it just goes to illustrate how bleak things have become that somemall owners are voluntarily trimming operating hours in response to the deepening recession and dim prospects for the sector. However, not every company is choosing this route, raising questions as to whether the quest to cut costs could end up alienating mall shoppers.
This month, Westfield Group cut the hours at many of its 55 U.S. centers by half an hour in the morning and half an hour in the evening Mondays through Fridays. The exceptions to the new policy are properties located near major-metro public transportation hubs, such as Westfield Horton Plaza in San Diego and Westfield San Francisco Centre. A spokesperson for the Sydney-based company, which operates 63 million square feet of retail in the U. S., contends that shorter hours will help Westfield and its tenants lower operating expenses, such as labor and utilities.
Westfield's announcement came weeks after Indianapolis-based Simon Property Group moved the Monday through Saturday closing times at 17 of its centers in New England a half an hour earlier and pushed the Sunday opening time an hour later. A few weeks ago, Simon moved up closing times by half an hour Monday through Saturday at three additional centers in Pittsburgh. The changes are part of the company's attempt to operate its centers in an “efficient and conservative manner,” says a Simon spokesperson.
As retailers struggle, the cost-savings from shorter hours are hard to dismiss. One Westfield tenant that operates eight stores within the company’s portfolio estimates it could save as much as $500,000 in operating expenses in 2009 as a result of the shortened hours, cited a Westfield spokesperson.
Given the market environment, cutting hours is the right thing to do, says James C. Bieri, president and CEO of the Detroit-based consulting firm the Bieri Co. “I certainly think landlords are wise to reduce hours because traffic is down.”
In January, shopper traffic in the U.S. fell 12.9 percent compared to the same period a year ago, reports ShopperTrak, a-based research firm. Same-store sales were down 1.6 percent year-over-year, according to ICSC, marking the fourth consecutive month of declines.
“Mall owners should listen to their tenants,” says Bieri. “Many retailers have systems that tell them when people are shopping. What this should allow for is a good discussion between landlords and tenants, understanding that nothing has to be permanent.”
Yet despite two of the largest mall operators in the country choosing to cut hours, other owners of regional malls are choosing not to emulate the strategy. The move, industry experts say, could drive time-starved shoppers to discount operators like Wal-Mart.
“I think it’s a really, really poor idea,” says George Whalin, founder of Carlsbad, Calif.-based Retail Management Consultants. “One of the strengths [of malls is] they are there when the customer wants to shop, and to cut hours when consumers put such high value on convenience is foolish.”
The fear of driving shoppers away led to Cafaro Co.’s decision to maintain its current operating schedule. Aware of the strain that long hours place on smaller retailers, this winter, the Youngstown, Ohio-based firm evaluated reducing hours at the 51 retail centers it operates, but concluded the savings would not justify inconveniencing its customers. Cafaro would not want them to have to resort to shopping at a discounter down the street, said a spokesperson.
Regional mall REITs Macerich Co. and Taubman Centers have also explored cutting operating hours but opted not to; at least for now. Taubman was reluctant to curtail hours in part over concern the changes would confuse consumers.