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U.S. Inside/Background

The 90s: Factory Outlets

Factory outlet Malls were one of the fastest-growing segments of the shopping Mall industry in the 1990s. In 1990, there were 183 outlet Malls.
Today, there are more than 230 outlet Malls in the United States. Outlet malls are tenanted by manufacturers selling their own goods at discounted prices. Some large projects combine outlet stores with traditional off-price stores like Marshalls.
One such project, Sawgrass Mills in Sunrise, Fla., is more than 2 million square feet and features outlets, discounters and retail clearance stores. By 1992, the prevailing trend in the shopping Mall industry had become remodeling and expansion of existing projects. In 1992, these renovations outstripped new construction, with 571 additions and alterations reported.
A greater focus on professional management and marketing became the hallmark of the shopping Mall industry. The year 1993 was marked by the transition of several privately held, family-run shopping Mall development companies (Simon, Taubman, etc.) into publicly traded real estate investment trusts .
The access to Wall Street capital provided a financial jolt to an industry that still had not fully recovered from the credit crunch. One of the retail formats that became increasingly popular in the 1990s was the power Mall, which is loosely defined as a Mall between approximately 75% to 90% of its space occupied by category killers or destination anchor stores.
Power Malls are often located near regional and superregional malls. San Francisco-based Terranomics is credited with pioneering the concept at 280 Metro Mall in Colma, CA. In 1993, 16 power Malls opened in the United States, compared with only four super-regional malls.

In 1995, with the construction of the Mall of America in Bloomington, Mn., entertainment quickly became an industry buzzword as technological advances allowed shopping Mall developments to foster the same magical experiences that were once only seen in national amusement parks such as Disney World. The Mall of America, currently the largest mall in the U.S., includes a seven-acre amusement park, nightclubs, restaurants and covers 4.2 million square feet (with about half that total devoted to retailing). The Mall has been heralded as a bellwether for its innovative mixture of entertainment and retailing.
The forerunner to Mall of America, and the largest mall in North America, is West Edmonton Mall in Alberta, Canada, which encompasses 5.5 million square feet. Since the start of the entertainment wave, retailers have focused on keeping their presentations exciting and shopping Mall owners have striven to obtain tenant mixes that draw traffic from the widest audience possible. Under one roof or in an outdoor retail format, consumers enjoy children's playscapes, virtual reality games, live shows, movies in multiplex cinemas, a variety of food in either the food court or theme restaurants, carousel rides, visually stunning merchandising techniques, robotic animal displays, and interactive demonstrations.

Many shopping Malls have also focused on adding service-oriented tenants, which offer today's busy consumer an opportunity to complete weekly errands or to engage in a variety of other activities. Among the many services found in today's malls are churches, schools, postal branches, municipal offices, libraries, and museums.
As the 1990s drew to a close, Internet retailing was heralded as the wave of the future and a threat to the stability of the shopping Mall industry. In July of 1998, Time Magazine predicted the demise of the shopping mall. In bold type, Time's cover advised its readers to, "Kiss Your Mall Good-Bye: Online Shopping is Cheaper, Quicker and Better."
While the cover was purely sensational, the tone was clear. The shopping Mall industry was under attack, yet again, from an alternative shopping format. Several years earlier similar claims were made about the impact home television shopping would have on the industry. In fact, the cover of BusinessWeek magazine in July of 1993 read, "Retailing Will Never Be the Same: The Home Shopping Revolution.

Unlike home television shopping, Internet retailing quickly captured the attention of the public, the media and Wall Street as companies rushed to develop websites that would sell directly to consumers.
In the euphoria it mattered little that many of these Internet companies had little or no retail experience. Fearing the cannibalization of store sales, brickand- mortar retailers at first were hesitant to sell directly to the public via the Internet.
However, when it became apparent that they had some clear advantages over pure Internet retailers (brand name recognition, distribution facilities, supplier relationships, ability to accept returns at stores, etc.) brick-and-mortar retailers launched their own websites. These advantages quickly paid off for brick-and-mortar retailers. Brick-and-mortar retailers discovered that in addition to buying online, their consumers were using the Internet as a research vehicle. Consumers were logging on to retailers' websites to search for goods and services, and, armed with product information, were making purchases at stores.
Thus the Internet has transformed a large and growing number of retailers into 'multichannel' retailers with all sales channels (stores, web, and catalog) working as one to help retailers maximize the value of their brands. Understanding that there is great synergy between the Internet and brick-and-mortar stores, shopping Malls owners have created their own websites and are working with their retail tenants to create distribution channels to satisfy the consumer, whether the consumer decides to shop at a shopping Mall, on the Internet or both. Most shopping Mall websites have maps and directions to the Mall, a list of tenants and a calendar of events.



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Last modified: 20040903
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