San Diego Malls Ride A Changing Retail Wave
Tuesday, March 21, 2017
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Competition from online buying is forcing some stores to close while others struggle to think outside the big box.
It was a rainy day in San Diego and Macy’s in Mission Valley had just begun their closeout sale. Inside the store there were signs all over saying “Everything Must Go.” An architectural icon and a long-time denizen of San Diego's first suburban shopping mall, it was now one of 65 Macy's stores being closed down around the country.
“I’m kind of sad to see it go because it has been a landmark that I’ve seen for a long time,” said Macy’s shopper Heather Zook, “but I do think the sales need to be better.”
Sales have not been good. Consumer spending has been rocked by online retail, which is forcing big changes to that great American destination, the shopping mall. One study by Elite Wealth Management said there was a 48 percent decline in visits to U.S. stores between 2010 and 2013.
Miro Copic is a marketing professor at San Diego State University. He seems to make an understatement when he says physical retail is very “disturbed.”
“There are some good things that are happening in retail and some very challenging things. One of the tough things right now is there’s too much space. So there are a lot of retailers that are struggling…mostly department stores,” he said.
Along with the Macy’s closures, JCPenney will be closing nearly 140 stores this year. Kmart and Sears have made similar announcements. Sport Chalet closed its store in the Mission Valley mall last year. At Otay Ranch Town Center, in Chula Vista, the same was true of REI and Anthropologie.
That great disrupter mentioned by Copic? Amazon.
“Amazon Prime: Three clicks and I can have pretty much anything I’m looking for. And it arrives at my doorstep, sometimes the same day or within two days,” said Marcela Escobar-Eck, principal at the Atlantis Group, land-use consultants.
She said time is a valuable commodity for adults and that makes a trip unattractive. And teenagers can shop online and still find plenty of ways to connect with their friends through social media.
“You don’t necessarily have to go to the mall to meet your friends. So as a teenager you can stay at home, on your bed or on your couch and Facetime your friends, and you no longer have that need to go out to see them,” Escobar-Eck said. “So when they do go out, they want something different, they want something fun, they want something experiential.”
Heart share equals market share
That focus on creating the right “experience” at the mall is what some people call the paradigm shift in retailing. One guy in San Diego who really loves to talk about that new paradigm is Jeffrey Essakow, president of Protea Properties. He’s the managing owner of Del Mar’s Flower Hill Promenade.
“That shift has changed the whole dynamic of shopping centers. It’s more geared toward customer experience than it is customer service,” he said. “So that brings customers here because they want to be here, not because they have to be here. That’s important to us. Heart share equals market share!”
There’s something about Essakow that makes him look like he's among of the industry vanguard. He wears a casual black shirt with a beaded necklace and bracelet. He speaks with a South African accent and refers to a marketing book, lying open on the table, that he calls his "bible."
Flower Hill is a compact mall (just 13 acres) that is precisely landscaped and has a clear emphasis on creating spaces where people want to linger. It’s anchored by a Whole Foods Market and it has a family orientation. There’s an adult yoga studio called CorePower and another yoga studio for kids. Just drop off the little ones there, and you can carry your yoga mat upstairs to work out in peace.
Essakow said they have more plans to make your visit to Flower Hill even more desirable.
“So if you’re sitting here having coffee, what we’ll try to do while you’re doing that is have your car washed, have your car filled up with gas… do those things so you can sit here and do some of the things that would take up your time, so to give you more time to spend at Flower Hill in a relaxed fashion.”
Expansion of UTC
Look at other malls in San Diego and you see the effort to make them a different kind of place. There’s the public library at Otay Ranch Town Center. The Westfield UTC mall in University City is one of the places with a Tesla car dealership, which sends people home with stories of putting their 10-year-old behind the wheel.
In fact, UTC has the most ambitious plan of all. It’s an expansion that they say will host new restaurants and a total of 90 new retail tenants.
Also coming to UTC, a transit center built around a new trolley stop, and 300 apartments.
“The fact that UTC is adding residential I think is also critical,” Escobar-Eck said. “Because it’s the difference of ‘Am I going to get into my car, and drive to a mall where I know I’m going to have to find parking and I’m going to wrangle crowds,’ versus ‘I live here, I can shop here, I can take care of most of my needs here.’”
Back at the Mission Valley Macy’s, time has passed and the closing sale has been going on for two months. The display cases are virtually empty and everything’s 70 percent off. Up on the third floor a bunch of nude manikins, in temporary storage, gesture and glance in ways that look haunted.
Marketing professor Miro Copic said economic turmoil will be a long-term issue for the American shopping mall.
“It used to be the mall was the place to go, regardless, because it was new, it was different and it offered so much of a variety and exciting things.” Copic said. “And now it just needs to go to another level, and become that much more exciting and that much more interesting for people to want to go.”
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