The online-only retailer grew sales by 11.8% in 2014.
The web isn`t taking shoppers from malls, it`s driving shoppers to them.
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.
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.