On the eve of what some forecasters say will be a booming holiday season for retailers, Redmond Town Center is trying some new things to hold on to customers who might otherwise do their shopping online.
It has launched a weekend indoor Winter Market for crafts and foodstuffs such as cookies and organic cheese. And for the first time, it is offering an experience that Amazon and its e-commerce colleagues can’t match: an outdoor skating rink.
Other local shopping meccas are upping their game, too, as online merchants capture an ever-larger piece of the holiday retail pie. Northgate Mall has adopted Deliv, a same-day delivery service that drops off weary shoppers’ mall purchases within a 15-mile radius. Santa photos can now be booked online, too.
At Alderwood, staffers will wrap gifts, hold packages while customers do more shopping and carry items to cars for free. The mall is also offering Deliv’s services — for free during this holiday season — and will showcase live entertainment and shopping consultants Thursday evenings.
These initiatives underscore how shopping malls, which have dominated American retail for decades, are evolving under the assault of online commerce, as more shoppers opt out of the crowds and crammed parking lots to buy from the comfort of home.
While for years malls have put together winter extravaganzas such as The Bellevue Collection’s Snowflake Lane performance to get shoppers’ attention, the newest efforts focus on making it easy to shop — and on strengthening malls’ role as a gathering place.
“It’s about making sure that when you’re shopping in a retail environment instead of online, that experience is really meaningful and relaxed,” said Carol Hildahl, marketing manager for the Alderwood and Westlake malls, owned by General Growth Properties.
Many retailers have been struggling to thrive in the new environment, although companies like Nordstrom have succeeded in establishing a strong online presence to complement their brick-and-mortar stores.
But the lifeblood of malls consists of real, warm-blooded shoppers. Drawing them out has become more difficult since the Great Recession due to a wobbly economy and changing behavior.
Mall profits
The shopping mall isn’t exactly going out of business: Profitability of mall operators has been boosted by demand from new retailers at a time when few malls are being built. Total operating income, calculated on a square-foot basis, rose 6.2 percent in 2013, according to the International Council of Shopping Centers (ICSC), a New York-based trade group.
But according to real-estate research firm Green Street Advisors, e-commerce sapped 1 to 2 percentage points of growth from mall sales in 2013.
That’s not insignificant, considering that year-over-year sales growth for December 2013 was 2.11 percent, according to data by ICSC and the U.S. Census Bureau.
And the looming threat of the Internet has prompted industry leaders to warn of a potentially disastrous shift.
“Within 10 to 15 years, the typical U.S. mall, unless completely reinvented, will be a historical anachronism, a 60-year or so aberration that no longer meets the public’s needs, the retailer’s needs, or the community’s needs,” retail real-estate mogul Rick Caruso said in a keynote speech at the National Retail Federation’s annual gathering in New York last January.
So malls are looking for new ways to regain their luster — not just during the crucial holiday season, but year-round — by offering entertainment or social engagement that can’t be had online, as well as more conveniences such as doctors, dentists, gyms and dry cleaners.
“We’ve seen the face of the malls changing,” said Keith Jelinek, a retail expert with global business advisory FTI Consulting.
According to the International Council of Shopping Centers, more than a fifth of shopping centers’ footprint is now dedicated to services not related to retail or food.
Another way malls are responding to the online onslaught is by working with retailers to get shoppers started earlier.
Alderwood is opening its Black Friday frenzy earlier than ever — at 6 p.m. Thanksgiving Day.
Thanksgiving Day sales grew to $2.6 billion in 2013 from $810 million in 2012 and $523 million in 2011, according to data from ShopperTrak, a retail research firm.
The starting gun for Black Friday sales keeps moving back: Deal-tracking website Brad’s Deals says this year the average among major retailers is 5:43 p.m. on Thanksgiving Day, 82 minutes earlier than last year and nearly 12 hours earlier than in 2007.
Promising season
The holiday season is the true test of profitability for retailers, who can make as much as 30 percent of their annual sales during November and December. Recent seasons have been mediocre, as an uneven economic recovery and weather woes kept a lid on shopping activity.
But this year a stronger economy and a big drop in fuel prices may fill retailers’ stockings, despite a recent drop in consumer confidence.
While optimism for the short term has waned from last month, expectations for income are unchanged and gas prices remain low, “which should help boost holiday sales,” Lynn Franco, director of economic indicators at The Conference Board, a nonprofit business research outfit, said in a statement.
The National Retail Federation, a trade group representing major retailers, projects that November and December sales will grow 4.1 percent, more than the lackluster 2.9 percent average growth for the past decade. It would be the first time they have exceeded 4 percent since 2011.
In Washington, state forecasters expect holiday sales to grow a more robust 5.4 percent, versus 3.1 percent last year.
The problem for brick-and-mortar retailers, however, is that most of the additional dollars nationally are going to Internet sales.
Online sales are expected to grow between 8 and 11 percent, according to the retailer federation. Last year they amounted to about 15 percent of total holiday sales; this year their share may reach 17 percent.
An October survey by the retail group found that 27.9 percent of shoppers planned to do up to half of their purchases online. Only 11.4 percent of people surveyed said they would do no online shopping.
The shopping-center trade group acknowledges the shift in consumer preferences but says shopping centers have embraced it and are evolving accordingly.
Large regional centers, the ICSC says in a report, are adding big entertainment and other experiences, while smaller centers will likely focus onmore services.
Nevertheless, malls still rule over the holiday season, especially among middle-class shoppers.
A Deloitte survey found that respondents earning less than $100,000 a year plan to spend 54 percent of their holiday budgets at physical stores.
For those making six figures, however, the figure dips to 46 percent.
For retailers, real stores have some advantages: Shoppers are more likely to close an actual purchase at a store than when browsing a website.
And that’s where stalwarts such as Redmond resident Vicky Scammahorn go to stock up for the holidays.
During a visit to Redmond Town Center’s Winter Market last Saturday, Scammahorn said she still does most of her shopping in person, at a store.
She and her husband, Tom, like to make an outing out of their Christmas shopping by heading, for example, to downtown Seattle. Scammahorn said she likes the experience of looking at merchandise and supporting local businesses.
“I don’t shop online that much; I like coming to places like this,” she said.