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US malls turn experience centres

business Updated: Jul 18, 2012 20:53 IST

Glimcher Realty Trust, which owns and manages shopping malls, is experimenting with making them Internet-proof. The company concedes that if shoppers can buy something online, they will. So it is trying to fill one of its malls, in Scottsdale, Arizona, with businesses that do more than sell stuff.

There are still clothing-only retailers at the mall, Scottsdale Quarter, but more than half of the stores offer dining or some other experience that cannot be easily replicated on the Web. That has Glimcher executives taking some unconventional approaches to finding suitable tenants — like testing out laser salons, getting hairstyling lessons and watching movies in a theater that serves food.

Executives in suits descended last year on a prospective tenant in Manhattan, Make Meaning, where they mulled over making ceramics, candles and jewellery. While a Scottsdale shopper can buy clothes on the Web, “she can’t go out to lunch with her girlfriends and have a glass of wine and a salad online,” said Michael P Glimcher, chairman and chief executive. “She can’t get her hair done online.”

Just about every mall owner in America is looking for ways to compete with the Internet. RJ Milligan, a real estate analyst for Raymond James, said that developers were slowly adding more service-oriented elements to malls.

The elements for instance include dividing a closed Sears anchor store into multiple cafes.

Glimcher's first-quarter sales rose 9% to $70 million, with the Scottsdale mall a major contributor to the increase. Scottsdale Quarter makes $1,000 per square foot, the highest figure of any Glimcher mall.

Glimcher is now applying lessons learned in Scottsdale to its other malls, which are largely midrange or outlet properties. While Glimcher malls initially consisted of apparel stores and a food court, service- or experience-oriented stores represent 20% of the company's portfolio, and that percentage is increasing. At Scottsdale, 30 of the 53 stores offer dining or some other experience in addition to pure retailing.