"It goes to whole psyche of consumer patterns," Duker says. "Some consumers are so comfortable in closed malls because they can go into their favorite store, and they know four stores down is the Gap. It's our habit-forming behavior, and the enclosed mall allows that."
According to US Mall Monthly Merchandise Index released Monday, sales productivity rose for the 24th consecutive month. The healthiest tenant group was furnishings, which increased by 9.6% from the same time last year. Electronics and home entertainment comprised the biggest increase in this category with sales productivity soaring 14%. Consumer demand coupled with a steady flow of new product releases has sustained this segment for some time.
In early 2005, Apple launched the iPod Shuffle, a smaller, less expensive ($99) version of its popular digital music player. Separately, the company reported that over 5.3 million iPods were shipped during the March quarter, a 558% increase over the same period a year ago. Apple products are available at a variety of retailers, including 103 Apple stores, many of which are located in malls.
Apparel and accessory retailers also fared well. Accounting for nearly half of non-anchor mall space, the group posted a 5.4% increase. Of this category, children's apparel improved the greatest with an increase of 7.3%; family apparel improved by 5.5%; men's apparel went up 3.4%, and woman's accessories and specialties, which includes bridal fashions, maternity wear, furs, handbags and lingerie, increased by 3%.
In the footwear division, athletic and family shoe stores - the two largest footwear categories in terms of square footage - saw an increase of 9.9% and 8.6% respectively.
That's not to say enclosed malls have an easy road ahead. In regard to entertainment, consumers have strayed away from the mall. Sales per sf for the theaters category dropped by 1.8%. A separate but related category, mall entertainment, reported a 0.1% dip.
With new retail concepts gaining popularity over traditional centers, owners have needed to say abreast of the evolutionary retail market. "The concept of an anchor-driven mall has not fundamentally changed," Duker says. "Today, when there is a vacant anchor, mall owners are looking outside the box and considering big-box discounters and themed restaurants as anchor tenants. Renovations have also become important because design trends have changed ten-fold."
In November, the ICSC published a white paper supporting the longevity of the enclosed mall. In that report, for FY '03, mall retailers showed an after-tax profit increase of 50.3% over 2002, and for the first half of 2004 profitability made a leap of almost 100%.
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