Once thought a threat, the Internet is now serving shopping centers
By Kurt Peters
Two years ago, shopping center owners were worried that consumers would leave the malls and take to the web to do their buying. While that hasn’t happened yet, consumers are leaving mall. But it’s to shop at off-mall retailers, such as Wal-Mart Stores Inc., Target Corp. or Kohl’s Corp.
And so now shopping centers which once feared the Internet are embracing it—but not in ways they might have imagined two years ago. Shopping centers, which tried their share of selling-related projects on the web, have discovered the web as a marketing medium to drive mall traffic.
Example: Bloomfield Hills, Mich.-based Taubman Centers Inc., which owns or manages 31 shopping centers, has collected 350,000 e-mail addresses to which it sends newsletters promoting sales at particular stores. It encourages shoppers to visit web sites for deals at stores in each shopping center and has seen a steady increase in visitors to the sites.
Example: Simon Property Group Inc. of Indianapolis, which operates 280 malls, has collected 150,000 e-mail addresses to which it sends mall promotions just since the start of holiday shopping last year. Simon expects to reach 1.5 million this year.
Example: General Growth Properties Inc. of Chicago, which operates 135 malls, is collecting more than 3,000 e-mail addresses a week at 70 malls in a program that promotes specific retailers to shoppers. It expects to collect 500,000 names from shoppers at 100 malls within six months.
Tough times
Once considered the new town centers, malls are facing tough times these days. And so these approaches to using the web to generate foot traffic are smart moves, says Mary Brett Whitfield, senior vice president and director of the E-retail Intelligence Program for Columbus, Ohio-based consultants Retail Forward Inc. “As people take more of their shopping off the mall, it’s incumbent on mall owners to keep their tenants relevant to consumers,” she says. “The in-line stores relied on the anchor stores to advertise specials to bring in traffic. But as the department store sector has been challenged, the in-line stores need to re-think how they market and advertise.”
It’s not hard to find evidence that consumers are leaving the malls. The sales numbers from the department stores themselves tell the story. 2001 sales at Federated Department Stores Inc., for instance, were down 8.6% over the prior year while sales at comparable stores were down 5.1%. At May Department Store Co., yearly sales were down 0.8% and comparable store sales were down 4.3%. At Sears Roebuck and Co., the numbers were 2.4% and 2.5%. At Dillard Departments Stores Inc., they were 4% and 4%; at Saks Inc., 7.2% and 4.8%.
It’s also not hard to see where shoppers went—to off-mall stores. Sales at Wal-Mart were up 13.9% in 2001 and comparable store sales rose 5.9%. Target’s sales were up 9.2% and comparable stores were up 2.5%. Sales at Kohl’s were up 22.9% and 6.6%.
Using mall-specific web sites and e-mail campaigns that cost tenants nothing is one way to extend the smaller retailers’ marketing reach. And they are taking advantage of it. More than 90% of Taubman’s retailers have participated in e-mail marketing campaigns. General Growth says tenants have received its program, which has been operating since January, well and the number of participants has been increasing as tenants hear of others’ success with the program.
Taubman was the first shopping center operator to understand the power of the web as a marketing tool for its local malls and their tenants, Whitfield says. And it has one of most ambitious and mature approaches. Just over a year ago, Taubman started building web sites for each of its shopping centers. Consumer response to the effort has exceeded expectation, says Carol Gies, Taubman vice president of marketing and center planning. The 350,000 e-mail addresses, for instance, are 15% ahead of where Taubman expected to be at this time. In the fourth quarter, the sites delivered more than 5 million page views and hosted 800,000 unique visitors.
While he won’t reveal response rates, Drew Sheinman, president of Simon Brand Ventures, says the proportion of consumers who provide an e-mail address when asked is strong. Simon has gathered the e-mail addresses through sweepstakes tied to seasonal events at the malls.
General Growth promotes signing up for the e-mail newsletter at its malls and on its web site by offering an opportunity to win a mall gift certificate. Shoppers choose which categories they are interested in and then receive e-mail promotions for those areas.
Shoppers at Taubman’s malls sign up at the web site for e-mail alerts about sales and promotions at particular stores at each shopping center. They select which retailers they want to receive notices from, and the system automatically tailors the bulletins to include information from those stores. Taubman employs a full-time person in each shopping center to gather information about sales, special offers, promotions and featured merchandise at every store every week and to post it on the shopping center web site and include it in the alerts.
“This is the first time any shopping center has been able to promote each of its tenants to customers who specifically request the information,” Gies says. “We can update information every 24 hours on the web site and send a new message each week through our e-bulletins. This by-permission, direct-to-the-home marketing is by far our most powerful and most measurable marketing tool.”
The specific nature of the promotion is what makes it work so well, Retail Forward’s Whitfield says. “By making it a very targeted offer, they are making it much more likely that recipients will open and read the e-mail,” she says. “They are giving consumers enough specific information about stores.”
Consumers like the specific offers via an electronic format, shopping center operators say. For instance, redemption rates for General Growth’s e-mail coupons is 9% vs. the 2-3% that it experiences with traditional direct mail, says Keith Maladra, vice president of customer relationship management. “Because the lists are so segmented you can really get right into the niche you want,” he says.
Shopping centers need that more targeted approach to succeed, observers say. Previous shopping centers’ efforts to attract web shoppers proved too complex, Whitfield says. They included such plans as trying to link a mall’s stores to online shopping, allowing consumers to check inventory availability in stores or equipping consumers with scanners to create a wish list from store inventories that the user would then upload to a mall’s web site where a gift giver could find the information. “That kind of content is almost overwhelming,” she says. “This is a simple approach compared to the complex future vision that other approaches represented.”
While Simon experimented with how to tie online and offline shopping together, its focus now is on coordinating online and offline promotions, Sheinman says. For instance, the malls may use their web sites and e-mail bases to market a Spring Fever promotion in which various retailers participate. “We’ve always believed in the convergence of the online and the offline,” he says.
In fact, Simon believes the two must work together to be successful. “People want to be communicated with initially offline and in person,” Sheinman says. “We start the engagement in the mall, then extend it and go deeper with the relationship by coming into people’s homes with online promotions.”
Making shopping efficient
Simon Property started collecting e-mail addresses for promotions last Halloween. Its primary source has been sign-ups at malls, says Amy Noll, director of affinity marketing. Customers register for sweepstakes at malls and at ShopSimon.com by giving e-mail addresses. Simon hosts 2 billion shopper visits a year by 100 million consumers.
Simon uses its e-mail database and web site to promote not just its retailers but also manufacturers who want access to Simon’s customer base. Simon has done mall promotions that tied together online and offline marketing with Pepsi-Cola, Visa U.S.A., Ford Motor Co., Microsoft Corp. and Cingluar.
While attempts to bring shopping centers’ web sites into the e-commerce arena may be on hold for now, there’s no denying that many more consumers are online today and willing to accept and act upon e-mail promotions. Taubman, which bases its approach on the results of 36 focus groups of consumers who match the demographics of the malls that Taubman operates, has seen the proportion of its customers with web access grow from about 45% three years ago to in the 70s today, Gies says. In that time, the proportion of customers who have bought apparel on the web has grown from about 3% to 16% and, in one recent focus group, reached as high as 21%.
But the primary learning that came out of Taubman’s research, Gies says, was: Save time and money. Thus the strategy of offering specific specials from tenants.
Taubman promotes its web sites through arrangements with iWon and AOL. In addition, local mall marketing directors piggy-backed site promotion on regular advertising and used sweepstakes, mall signage and flyers to attract visitors to the site.
The sites have been effective in driving traffic, Taubman says. The Privilege fashion store at the Beverly Center in Los Angeles, for instance, reports that 90% of customers on a Saturday in December used Beverly Center’s web site coupon, which offered a $100 savings on purchases of $400 or more. Another retailer at the Beverly Center, What Lies Beneath, a women’s sleepwear and lingerie retailer, said 50% of its November phone sales could be credited to the site. The store says it received phone orders from as far away as Texas and New York after customers read about products on the web site.
The sites also offer a gift guide featuring thousands of products, with photos and prices, a gift-reminder service that allows shoppers to list key gift-giving dates and then sends e-mail reminders, specials on hotel packages and special offers for out of town visitors and job openings in each store.
Lower cost surveying
Taubman maintains the site server at its headquarters with a staff of two and a half. The tenant coordinators in the mall update the sites from terminals in each mall. “It’s very economical per center,” Gies says.
An unexpected benefit of having a staffer gather information from tenants is weekly contact between mall management and tenants. “We get terrific feedback from tenants,” Gies says. “They view the tenant coordinators as people who can take concerns and questions back to mall management.”
A further benefit that General Growth has discovered is that surveying of shoppers is faster and cheaper. General Growth uses its e-mail list as well as a button on its web site for surveying. Because the polling is electronic, General Growth can tabulate results instantly. “We are saving thousands of dollars doing electronically what we would have done face-to-face at the mall,” Maladra says.
Replacing those face-to-face efforts with an automated system that still gives
shoppers the feeling that they are being dealt with on a one-to-one basis is
part of the beauty of e-mail and web-based systems, analysts say. “Who wouldn’t
want to be able to talk to shoppers on an individual basis and tell them about
the things they are really interested in,” Maladra says. “But we could never
have afforded to do that using traditional methods.”
kurt@verticalwebmedia.com
