Lifestyle centers — those outdoor shopping areas that resemble the downtowns where people shopped in those long-ago days before malls — are cropping up everywhere. Current estimates indicate around 130 lifestyle centers around the county. In view of this, it comes as no surprise that the International Council of Shopping Centers (ICSC) made a case for regional malls in a recent white paper. And who turns out to be the stars of regional malls? Specialty retailers.
ICSC concludes that the profitability and innovation of specialty retailers in malls drives up the demand for mall space.
Further, the white paper cites "strongly differentiated specialty retailers" as being a competitive advantage of regional malls: "The competitive advantage of mall retailers is not price — rather, it is cutting-edge fashion and innovation, combined with ambience, service and other less tangible ‘experiential’ characteristics that add value to the merchandise."
Mall stores, according to the white paper, frequently are niche — rather than mass market — concepts. These differentiating characteristics enable mall retailers to maintain relatively high profits margins.
The underlying growth in profitability for mall specialty retailers, the paper indicates, has been solid same-store sales growth and the ability to make those sales at a higher markup.
One other factor that may be boosting sales at mall stores is that developers seem to be using restraint in building still more malls. Mall openings — which hit a high of 19 in 1990 — were projected at a far more conservative nine last year. This restraint, ICSC notes, "helped to drive up demand for space in existing centers."