Changing demographics lead malls to shift their focus

Walking through Gwinnett Place Mall these days is a bit like running into an old friend who looks familiar, but whose face you don’t quite recognize.

Once the belle of the ball, the 26-year-old mall has seen a rash of competition from other properties and rapidly changing demographics in and around Duluth. That has led to a shift in the mall’s tenants, a point of contention for nearby residents  last month when A+ Financial Services, which offers check cashing, was approved to operate in Gwinnett Place.

But experts say it isn’t the mall operators who are seeking business from particular tenants -- it’s the new shoppers in the area who are demanding them.

“Retailers respond to where shoppers spend money,” said Tisha Maley, the assistant vice president of leasing for Gwinnett Place owner Simon Property Group. “What we look for is the best marriage, where we think the retailer would be best received.”

If, at Gwinnett Place, a check-cashing facility is coming in, there must be a demand for it, said Kennesaw State University professor of marketing Randy Stuart. And if mall owners don’t respond to the target market for an area, they run the risk of having empty stores.

“They’re the biggest mall owner in America, they generally know what they’re doing,” Stuart said of Simon. “I don’t think they would have come into this lightly.”

Indeed, Steve Bailey, a wireless consultant at the month-old Sprint kiosk at Gwinnett Place Mall, said he had to close an Internet service provider he operated at the mall after seven months because customers, when required to pay with credit cards, couldn’t do it.

“It’s a cash-only mall,” he said.

But not all see the need for such a shift. Greg Whitlock, president of E2E Risk Management, Inc. and a member of the Duluth City Council, said he is concerned that Gwinnett Place’s management is accepting what he calls sub-standard tenants that aren’t typically seen in a mall – and that shoppers don’t want.

He said he hears complaints from people working nearby that the mall doesn’t serve their needs. Whitlock is worried that shoppers could develop negative opinions of the mall.

“The area carries the name of the mall,” he said. “If the mall doesn’t keep the standards up, the perception of the area will go down.”

Maley said all of Simon’s malls in the Atlanta area are healthy and well-occupied. Atlanta is an important portfolio for the company, she said, and Simon is meeting the shopper profile for that area with the changes it is making at Gwinnett Place.

“My whole goal is to put together a mix the community will thrive in,” she said. “How can we own an asset and not care about it?”

While Gwinnett Place is a striking example, it is far from the only mall in metro Atlanta undergoing a shift in its target demographic or making changes to attract new customers. But the malls are doing them with different degrees of success.

At Cumberland Mall, new restaurants, additional retailers like White House Black Market and H&M and the addition of Costco as an anchor made the mall more current, senior director of public affairs for Cumberland owner General Growth Properties Jim Graham said in an e-mail. The move, in part, was a chance to appeal to an underserved market of office workers in the area.

Graham contends that the moves have been successful for the Atlanta mall, but not all agree. Jim Adkins, vice president of retail services for Bull Realty in Sandy Springs, said he has heard that the changes do not drive much business into the mall itself. Others echoed that sentiment.

But malls like Town Center at Cobb have successfully added new tenants like Coach and Sephora, catering to an increasingly sophisticated shopper who frequents that mall, said Maley, at Town Center-owner Simon. She also noted that Northlake Mall has become community driven as the area has gentrified.

While Maley said she tends to see such shifts in hindsight, and does not plan to push a mall in one direction or another, she does try to have a sense of where she would ultimately like a property to be positioned.

“We look back and say, ‘This is what happened,’” she said. “More often than not, we turn back and say, ‘Wow.’…I wish we could take credit.”

When a mall does change, it is because operators are taking note of what has already happened in the community, Kennesaw professor Stuart said.

“Generally, the neighborhood changes, then retail changes to serve that,” she said. “It’s a gamble for a mall to say if we change our mix, they will come. Field of dreams? It doesn’t work like that in retail.”

Marc Weinberg, Georgia operating partner for The Shopping Center Group, said that was the mistake Cumberland Mall made .

Dennis Kemp, general manager for General Growth Properties’ Perimeter Mall, said he tries to keep up with changing demographic information as he manages that mall .

“We lease our centers to the marketplace,” he said. “The outside community affects the change. The change in the marketplace changes the shopping center.”

Adkins, at Bull Realty, said those changes tend to be gradual ones. Because different kinds of merchandise appeal to different customers, it doesn’t make sense to position a mall for a demographic that isn’t there.

“At some point, you have to say the market is what it is, you have to market to them,” he said.

At Gwinnett Place, Simon is embracing the changing demographics of the area, opening a Korean discount superstore called Mega Mart this fall.

According to Census data, Duluth’s Asian population was last estimated at 18.7 percent between 2006 and 2008; it was 12.9 percent of the city’s population in 2000. The city’s Hispanic population rose to 11 percent between 2006 and 2008 from 9 percent in 2000. The latest data shows 17.6 percent of Duluth’s residents are black and 58.3 percent are white.

Given the area’s demographics, Weinberg at The Shopping Center Group doesn’t think adding the Mega Mart is going far enough.

“I haven’t seen the mall reinvent itself yet,” he said.

In addition to Mega Mart opening, the loss of stores like Ann Taylor, The Children’s Place, The Disney Store, Gap, The Limited, Starbucks and Yankee Candle since 2007 have made way for more local retailers such as Atlanta Mattress Factory, Carpet Fiesta, El Caballo Ballo Western Wear and Pine Tree Embroidery.

Weinberg said there is more that Gwinnett Place can do.

Amanda Govin, owner of Mariscos el Vallarta LLC – a restaurant company that opened one space in Gwinnett Place’s food court in February and is opening a different restaurant in the same food court next month – said she wouldn’t be investing in the mall if she didn’t think it had a future. The mall manager is enthusiastic, she said, and she continues to see new customers every day.

Still, she said when restaurants or stores close, it hurts retailers.

“Of course I wanted Gap here. The store is empty,” Govin said. “The more spaces that are full here, the more people come.”

To be sure, some people are still discovering Gwinnett Place. Denise Burns, who moved to Duluth two months ago, said she can find anything she’s looking for at the mall, which still has a number of national retailers including Abercrombie & Fitch, Victoria's Secret, Macy's, Sears and JCPenney. She expects to come at least every two weeks.

Angeleigh Paolini, a Duluth resident who was at Gwinnett Place getting a birthday present at Justice and a haircut for her son, said the mall isn’t her first-choice destination because it no longer has all the stores she’s looking for. But Paolini said she sees the potential benefits for small, local retailers as national names leave the mall.