Retail Site Selection in a Mall Context

Beverly K. Brockman, The University of Tennessee at Chattanooga Gary L. Benton, Western Kentucky University L. W. Turley, Western Kentucky University

Abstract In the forty-plus years since malls first appeared, these shopping centers have evolved into an integral part of the American culture. However, in recent years the number of malls has increased so dramatically that competition between malls, and even mall closures have become commonplace. Although there is not a large body of work that studies malls from a marketing perspective, the vast majority of what has been published adopts a consumer rather than a managerial perspective. This paper uses the literature, when available, to explore how malls are evaluated and perceived by retail managers. Since there are no formal studies that examine this area, this paper concludes by discussing several issues that should be addressed by future research. Introduction In 1956, the first fully enclosed regional mall, Southdale Center opened in Edina, Minnesota (ICSC News 2000). According to the International Council of Shopping Centers, there are presently 1800 enclosed malls in the U.S.; however, the growth of new mall construction has slowed considerably (ICSC News 2000). Despite this decrease in growth, malls remain as some of the most desired and expensive retail locations in America. Part of this attraction can be traced to the evolution of malls, in that they started as a warehouse of stores that slowly transformed into the new Main Streets of America (Feinberg and Meoli 1991) and became an integral part of the social fabric for many communities (Feinberg, Sheffler, Meoli and Rummel 1989). Malls are still evolving to this day. Modem malls are emphasizing entertainment by offering a wide variety of attractions and experiences that have expanded the notion of what it means to "go shopping." In addition, many centers are adding a wide variety of service-oriented tenants that have broadened the ability of consumers to complete weekly activities (ICSC News 2000). Although there have been some marketing-based studies and examinations of malls, this area has not evolved into as major a research stream as one might expect based upon the multidimensional nature of malls in the U.S. culture. As noted by Bloch, Ridgeway and Dawson (1994) the unit of analysis in most retail studies is the store rather than the shopping center. In addition, most mall related studies have examined consumer perceptions and attitudes toward malls (e.g. Wakefield and Baker 1998; Finn and Louviere 1996; Roy 1994; Bloch, Ridgeway and Dawson 1994; Feinberg, Sheffler, Meoli and Rummel 1989; Jarboe and McDaniel 1987; Bellanger, Robertson and Greenberg 1977; Grossbart, Mittlestaedt, Curtis and Rogers 1975), while considerably fewer articles have explored strategic and managerially related issues associated with malls (e.g. Kirkup and Rafiq 1994.- Dommurmuth and Cundiff 1967).

The purpose of the present paper is to explore the available literature on mall choice and mall perceptions from a retail management perspective. Obviously, retail professionals consider some factors, such as lease conditions and the ability to work with mall management, that are unimportant to consumers. However, to some degree these two decisions should be based on the same variables. Retail managers base at least part of their decision on a mall on how "popular" that particular mall is with consumers. Therefore, at least some of the factors used by retail executives when making mall location decisions should mirror the factors consumers' use when deciding where to shop. Therefore, we will begin our review of the literature by examining how consumers evaluate malls when making patronage decisions. At present the literature does not indicate whether managers choose to locate in particular malls for the same reasons that consumers choose to patronize malls since this issue has not yet been the focus of a published study. Therefore, the authors conclude this paper by describing some research issues that explore how retail managers view and evaluate malls as location choices. The Consumer Perspective Despite the dramatic impact shopping malls have had on modem lifestyles and the physical landscape of cities, research on this phenomenon has been relatively scarce (Bloch, Ridgway, and Dawson 1994). Most of the work in this area has focused on the motivations of consumers for patronage of retail shopping centers. Early researchers, Dommermuth and Cundiff (1967), consider the reduction in consumer interest in shopping and its implications for retailers. Cox and Cooke (1970) investigate the impact of driving time on shopping center preference. In both studies consumers are aggregated together as one group of shoppers. Later, more in depth attention was given to the consumer with work by Bellenger, Robertson, and Greenberg (1977), which identified two distinct shopper types: 1) the convenience, or economic shopper, and 2) the recreational shopper. These two shopper types were found to have very different desires in a shopping center. Grossbart, Mittelstaedt, Curtis, and Rogers (1975) consider consumer perceptions, attitudes and behaviors relating to the area surrounding the shopping mall. They discovered that consumers form definite perceptions of this environment that vary among individuals. In more recent studies researchers have combined some of these issues for more detailed information regarding images of shopping malls. For example, Burns, Lanasa, and Lackman (1995) consider both shopping location and consumer preference by classifying respondents into one of four groups based on the proximity of the shopping mail in question to the individual's place of residence and on the individual's stated mail preference. Thus, two of the groups represent rational behavior, where relative image of the mall corresponds to residence - high preference for the mall in closest proximity, and low preference for the mall farther away. The other two groups either have a low preference for a mall located close by their residence, or high preference for a mall that is not the closest in proximity to their home. The groups were compared in regard to their perceptions of two medium-sized suburban shopping malls. Interestingly, greater perceptual differences were found between consumer groups based on their proximity to the mall in question, than between groups based on mall preference. The results suggest that a stronger relationship exists between mall location and mall image, than between mall preference and mall image.

Roy (1994) considers characteristics of shoppers - such as functional shopping motivation, deal proneness, recreational shopping motivation, age, income and family size and their influence on mall shopping frequency. The role of anchor stores and other physical characteristics of shopping centers on mall image has also been studied. Finn and Louviere (1996) discovered that discount department stores, rather than major department stores have the most consistent strong effects on shopping center image. More specifically, discount department stores were found to have a consistently negative impact on such center perceptions as high quality, wide selection, good service, and latest fashions. Wakefield and Baker (1998) examine the relationship between three factors - tenant variety, mall environment, and consumer shopping involvement and study the influence of these factors on shopper excitement and desire to stay at a mall. Their findings indicate a differential influence from the three factors. Tenant variety has the biggest impact on shoppers' excitement, while the mall environment has the greatest influence on their desire to stay. Wakefield and Baker gave more in-depth consideration to environmental factors by grouping them into music, lighting and temperature, layout, architectural design, and interior decor. Interestingly, they also found differential influence from the environmental factors on excitement and desire to stay. Architectural design had the strongest positive influence on excitement, but no effect on desire to stay. Interior decor, on the other hand, had the strongest positive effect on desire to stay, but no effect on excitement. Bloch, Ridgway and Dawson (1994) moved research on shopping malls forward through their investigation of the mall as a consumer habitat. The variance among consumers regarding their behavior in the mall and the perceived benefits of the mall are considered, with an emphasis on experiential consumption. Their research verifies that considerable heterogeneity exists among mall consumers. Feinberg, Sheffler, Meoli, and Rummel (1989) consider the social stimulation provided by malls, finding that the mall serves as an outlet for social behavior. Further examination of this issue was made by Lotz, Eastlick, and Shim (2000), who studied the similarities and differences between mall entertainment seekers and mall shoppers. Their results support hypotheses that there are different motivations for individuals who visit a mall for entertainment activities versus those who visit for shopping purposes. Work outside of consumer motivation for patronage has been more limited, but most of it still focuses on consumer perceptions. Howell and Rogers (1981), for example, discuss measurement issues regarding research on shopping mall choice behavior, exploring such issues as the measurement of patronage and situational specificity. Brown (1991) studies shopper circulation in planned shopping centers, discovering that most shoppers limit their movements to a comparatively small part of the mall. In summary, over the past twenty years research has moved from a focus on such basic motivational factors as driving time (i.e. Cox and Cooke 1970), to more in-depth exploration of mall activity in the form of experiential consumption (Bloch, Ridgway, and Dawson 1994). Along the way we have identified distinct shopper types, such as convenience versus recreational shoppers (Bellenger, Robertson, and Greenberg 1977), and found wide variance in motivation factors for patronage among these different groups. Despite this progress, much remains unknown about mall choice and mall perceptions among consumers.

The Retail Management Perspective A review of the literature indicates that there is not any published information concerning how retail managers evaluate alternative malls as location decisions. This is particularly interesting since a wide variety of stores choose to locate exclusively or predominantly in malls. Popular retail texts (c.f. Levy and Weitz 1998; Berman and Evans 2001) tend to have chapters that discuss site selection, but do so from a very general perspective and do not advise using specific and unique factors for particular location alternatives. A reader might easily infer that a retailer choosing a location in a mall would use the same factors as a retailer considering an isolated location, which obviously would be false. Because of this lack of specific mall-related site selection information in the literature, the following description of how retail executive evaluate malls is provided by one of the authors, presently serving as an executive-in-residence at a mid-western university. This retired executive has over 30 years of retail experience with a variety of retail chains including Aerosoles, Shoe carnival, Payless Shoe Source, The Shoe Box, Berman's and Dayton's department stores. While at Aerosoles and The Shoe Box this author made all mall choice and location decisions for these mall based shoe stores and served on the committee that made these decisions for Payless. The mall evaluation process described here reflects the approach used at these chains. Although this information is based upon a sample of 1, it does serve as an example for how managers make these decisions. From a managerial perspective, it is imperative for a retail company to have established procedures in place to identify the best malls out of the many choices of malls available in an "overmalled" and "over-retailed" world. In order to identify the best malls for the company's store locations, management looks at a number of key factors in making this very important and expensive decision. In this section of the paper, we will concentrate our discussion on the regional or national retailer who is expanding to other cities. However, many of the same basic principles will apply to the small operator who is looking to add a second location in another mail within his own metro area. The process of mall choices for a retailer typically involves six major steps: 1) identify geographic area, 2) get background information, 3) investigate each mall's potential, 4) tour each mall, 5) compare all malls being considered, and 6) check for leasing availability. The usual starting point is the identification of geographic areas for store locations and choosing areas that make sense, providing a natural expansion from the retailer's home base location. Once the target cities have been identified, the next step is to get background information on each of the malls that exist in the city or cities being considered. The "Directory of Major Malls" published semi-annually by the International Council of Shopping Centers (ICSQ, gives management a good base of information about all of the malls in the United States with a gross leasable space of at least 250,000 square feet. This publication includes information regarding location of the mall, the gross leasable square footage, household income of the trade area, trade area population and design of the mall.

With this basic information, the retailer then proceeds to investigate the potential of each mall in the market. Typically, mall management has prepared a promotional packet for prospective tenants which includes specific demographic and trade area analysis. With this data the retailer can set up a "zone map" of the target city with trade areas delineated that show which areas of the vicinity are served by which malls within the city. Once this background work has been accomplished, the next step is to make a visit to the city/market and tour each of the malls in the area. There is no substitute for making an actual visit to a mall to get a "feel" for its viability. Although the background research will help identify the malls that are the strongest based on size and sales per square foot, the retailer still needs to visit all of the malls in the market to understand the potential competition and identify possible expansion opportunities. Another important reason to examine all of the malls is to estimate potential economies of scale through the use of multiple locations within a market. A number of important factors must be considered with each personal visit to a mall. The first consideration is the quality of the facilities, both inside and outside. For example, is the outside of the mall in good condition, with clear signage and parking that is both adequate and wellmaintained? Does the mall provide security for shoppers in a well-lit parking area? Similar factors, such as maintenance and lighting also need to be considered inside the mall. Another important issue is dead space in the mall layout. This is a good indicator of success being achieved by the existing retailers located in the mall. If there are a large number of vacancies, then there is most likely a problem. This is an issue to follow up with mall management, to see if the spaces are truly vacant or if they have been leased and construction just hasn't started yet. The retailer also considers common areas, especially the food court, to see how extensive and busy it is, and the number of food vendors present. After checking out the general facilities of the mall, it is important to take a more in-depth look at the tenant mix. A lot can be learned by looking at the other national retail chains that have stores in the mall. One of the key things to look for is whether the national chains have their newest "design" applied to these stores or if they are older designs that have not been updated over the years. Often times a mall developer will stress its tenant mix when pitching a site in its mall. But if those stores have not been remodeled and kept up to date, it is a good indication that these national chains might be leaving the mall at the end of their lease period. The retailer must also look at the general condition of the anchor stores as part of this analysis. He must check to see if the anchors are in good condition and merchandised with current inventory or if they are anchors being used as "dump" stores, or liquidating units, for the department store chains.

The next step for the retailer is to get out and do a tour of the mall's trade area. Here he is looking at the other types of businesses in the vicinity, and checking for other shopping areas (not malls) that would compete for sales with the mall. The retailer must ask questions about the accessibility of the mall. For example, how easy is it to get into and out of the mall from the major roads serving the area? How accessible is the mall to the trade area that it serves? Are there any natural barriers that do not show up on a trade area map that make it difficult to get to the mall? When looking at the surrounding vicinity one can get a sense of its ethnicity, which can also have a major effect on the success or failure of the retailer's store. Certain chains are very successful in Hispanic neighborhoods, others succeed in Afro-American sections of a city while others do well in Asian based population areas. It is important for the retailer to be aware of the population's ethnicity surrounding each mall when deciding which malls in a market to target for his store. After the immediate trade area adjacent to the mall is toured, the retailer should have a pretty good idea of the strength of the mall and the type of clientele that frequents it. Another step regarding the mall visit, however, is usually done on this fact finding trip and this entails going back to each of the malls in the evening hours to see if the clientele changes significantly at night. In some situations, malls at night take on entirely different personalities than they have during the daylight hours. Often times malls are faced with heightened security issues from youth gangs and other groups using the mall as a social "hub" for their meeting place. This can often drive shoppers away at night and destroys key selling hours for the tenant stores. After the market tour and mall analysis is completed, the retailer must make sure that there are no other malls being planned for the area that would completely change the shopping dynamics of the market. A national retailer normally has a professional real estate staff that is responsible for knowing what new malls are being built around the country. Just to be sure, however, the retailer should check with the city chamber of commerce to find out if any additional malls are on the drawing board. In addition the retailer should be sensitive to rumors of future malls for the metropolitan market being considered as a prospective store placement location. At this point the retailer has a pretty good feel for each of the malls in the market and is usually able to rule out a number of the malls as just not being right for his operation. The malls that are still under consideration are then compared based on "go/no go" criteria. Most retailers will have a set of criteria that they use as minimum standards that must be met before they will put a store in a mall. This will be different from business to business but usually includes: 1) a minimum number of people in the trade area, 2) a mall gross leasable space of "X" square feet, in other words a certain size of mall physically, and 3) a certain minimum amount of sales per square foot of the non-anchor stores in the mall. If all of the malls that are still under consideration meet the minimum "go/no go" criteria, the retailer then ranks the malls as to desirability for this business model. Another consideration during this stage of the analysis is the developer for each particular mall. Sometimes, if all else is equal, the relationship between the retail chain and a particular developer can be a key factor for the retailer in making a decision.

Once the comparison is completed the retailer then contacts the management at the first mall choice to determine if space is available. If so, efforts are made to structure a deal that is acceptable to both parties. If an agreement cannot be reached with the first choice, the retailer then moves on to the next choice of acceptable malls as identified in the go/no go analysis. The retailer goes through the entire process described in this section each time he is considering mall locations in new geographic areas. It is also an ongoing process that retailers must constantly go through over time, continually evaluating malls and their trade areas, especially when it comes time for lease renewal or when decisions are required regarding whether or not to add additional stores in a market. Future Research on this Topic The obvious conclusion based upon the above review of the literature about how malls are evaluated is that the overwhelming majority of the work in this area has focused on the consumer perspective rather than the managerial perspective. Although the accumulated work is by no means conclusive, there is at least an emerging sense about how consumers view and evaluate malls. However, the research that has been done in this area has not focused on how different groups of consumers perceive and evaluate malls. Although a number of different research issues can be drawn from the previous statement, the following two notions are offered because of the size, influence and market potential for these two groups. African-Americans as a group have been widely studied in marketing from a number of different perspectives, but their perceptions of shopping malls and shopping centers is an unexplored issue. Therefore, the following research issue is offered as a potential future study. RI 1: Do African-Americans view malls differently than Caucasians by using different variables or by weighting decision variables differently? Similarly, even though adolescents have bee studied in marketing and as unique consumers, they have not been any studies performed that examine how they evaluate and perceive malls. This issue is particularly interesting since adolescents appear to be frequent users of malls, and may visit them for different reasons than adult consumers. Therefore, the following research issue about adolescents and mall behavior has been developed. RI 2: Do adolescents view malls differently than adults by using different variables or by weighting decision variables differently? There is not any equivalent body of knowledge that focuses on how retail executives evaluate and compare competing mall sites as location alternatives. Therefore, this is an area where future research is both needed and timely. Several managerial issues should be addressed by research. First, the process presented in this paper is a rare glimpse at how managers evaluate alternative sites in malls. What is obviously needed is a study, using a national sample, that examines how retail managers make this decision. This could be done using alternative research designs. One approach would be to provide managers with a lengthy list of site selection variables and ask them to rate the importance of each variable. Based upon this approach, the following research issue has been developed.

RI 3: Which mall/site selection variables are most important to retail executives when they must decide between alternative malls for a store in their chain? An alternative approach would use a more open-ended format and ask managers to list the steps or stages they go through when evaluating mall sites. This research study would help identify how uniform these decision processes are and how much they vary between different types of retail formats. For example, how similar are the decision stages for clothing- based specialty stores, shoe stores and department stores? Based upon this question, the following research issue is identified. RI 4: Is there a generalized or standardized decision process retailers use when evaluating malls? A related research issues focuses on whether executives from different retailer formats evaluate mall sites differently. Are there significant differences in the way department stores, specialty stores and restaurant chains evaluate malls? Are there differences in the perceived attractiveness of a mall based upon the type of merchandise a retailer sells? Are shoe stores and bookstores different in their mall evaluation approaches? In other words, this issue research focuses on whether mall evaluation is essentially the same for all retailers or dependent upon retail format. These studies might find that mall characteristics change by retail format and/or that certain characteristics become more salient to particular types of retailers. RI 5: Do different retail formats look for the same variables and do they use the same approach when evaluating a mall? Another research issue that should be addressed concerns the future viability of malls. As noted in the introduction of this paper, mall construction has slowed down considerably, and mall failures have become more prevalent. Will malls still be a viable alternative choice in the future, or are malls essentially dying a slow death? Power centers, strip shopping centers grouping a number of category killers together, have been on the rise during the last decade (Levy and Weitz 1998). Are these power center locations, because of their lower rents and increased control, the future of shopping center development or will malls still be able to offer retailers the locations they most desire? Obviously, future research in this area becomes much less important if retail managers perceive that this type of shopping center will become increasingly less importance in the future. RI 6: Do retail managers think that malls are decreasing in attractiveness as location alternatives?

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