Mall weathers retail storm

The Battlefield Mall was abuzz on a recent Tuesday afternoon.

Shoppers of all ages – college students, young families and elderly couples – walked the corridors as Christmas melodies began to play over the sound system.

The newly renovated dining pavilion was nearly half-full with customers taking a break from their shopping, and Starbucks Coffee by anchor store J.C. Penney Co. had a line out the door.

It wasn’t a ghost town. But that’s normal, said Michael Martin, Battlefield Mall’s general manager.

Despite stories of shopping malls and retail stores closing nationwide, and a steady drop in occupancy rates across the country, the Battlefield Mall seems to be weathering the storm.

“Our traffic is always outstanding, sales continue to be solid – occupancy continues to be strong,” Martin said. “You’ve got to go three hours in any direction to find something comparable or better than us.”

Well, occupancy at Battlefield Mall did hit a bump in 2018, coming in at a five year low of 92%, according to annual reports filed by mall owner Simon Property Group Inc. (NYSE: SPG). In previous years, 95% was more the norm.

Nationally this year, retail stores are closing by the thousands, according to published reports. Closure announcements have come from Charming Charlie, Payless ShoeSource Inc., Gymboree Group Inc. and Charlotte Russe, all of which were formerly at Battlefield Mall. Other closures across the nation – but not local – include Sears, J.C. Penney and Victoria’s Secret. Meanwhile, CNBC reports more than 2,600 stores are expected to open during 2019.

Still, the local mall’s occupancy rates are above the national average, according to Springfield Business Journal research. More than 130 retailers are recorded in the directory, and during a recent trip to the mall, 10 storefronts appeared to be vacant.

So, what’s the Battlefield Mall doing to allure tenants and shoppers?

Ahead of its 50th birthday in 2020, Martin said the mall has undergone several capital improvement projects to enhance the experience. He cited new LED lights throughout, a complete renovation of the dining pavilion – which added modern furniture, televisions and charging stations – outdoor landscaping and a 12,000-square-foot expansion on the Glenstone Avenue side.

Martin declined to disclose capital improvement costs. But a recent quarterly report from Simon Property Group also shows the company funded consolidated capital expenditures of $622.7 million nationwide through September this year.

Previous SBJ reporting recorded an estimated price of $480,616 for the dining pavilion remodel and $2 million via city permits for the recent mall expansion, where a Pizza Ranch franchise will occupy half the space in time for the holidays.

“We’re evolving, which is what we should be doing,” Martin said. “We’re constantly looking for new retailers, amenities, features and, really, the overall experience.”

The experience
A walk around the Battlefield Mall today looks different than it did just a few years ago. Not only are the corridors brighter with the recent LED project, but the storefronts look fresher, as well.

Bath and Body Works and Sephora were both renovated this year, Martin said. He declined to disclose the renovation agreements between tenants and Simon Property Group.

International Council of Shopping Centers spokeswoman Stephanie Cegielski said such capital improvement projects can impact whether a shopper returns.

“The conditions of the property may not be the first things that mall-goers think about when they think about going shopping, but the experience of the physical space at the mall is part of the larger experience and can influence foot traffic in terms of people wanting to return or not,” she said via email.

New-to-market tenants also are a big pull. Martin pointed to Pepper Palace, Don Tono and Altar’d State as bringing a new experience to shoppers.

Altar’d State, a women’s fashion boutique, joined the mall in April 2018. Store manager Dillan Watson said the shop is experiencing 30%-40% less traffic this year than it did last year, but he said the store’s sales are up. He declined to disclose numbers. He said he thinks the brand has become more established at the mall and has initiated renovations among the store’s neighbors. The fashion chain also is focused on local community engagement and missions, which Watson said allows shoppers to give back to organizations with their purchases. Rescue One and The Mercy Tree Ministries have been recent community partners with the store.

This isn’t the only factor attracting shoppers, Martin said, citing the social experiences hard to match by e-commerce platforms.

“People don’t say, ‘Let’s go to the internet this weekend.’ They want a social experience, and we’re providing that, and so are our retailers,” he said.

ICSC reports show Gen Z might have something to do with a recent boost in mall traffic. The council’s data show that 97% of Gen Z shop at malls or physical stores, Cegielski said. “As the first digitally native generation, they value having technology incorporated into experiences – but also recognize that the in-person experience simply can’t be duplicated online,” she said.

What’s next
Available through online annual reports by Simon Property Group, SBJ found occupancy rates at the Battlefield Mall have been consistently higher than the national average occupancy rates recorded by the ICSC.

In 2014, the local mall’s occupancy rate was at 95.7%, while the national rate came in at 94.2%. The years following, the Battlefield Mall’s rate stayed in the 94%-95% range, with a recent dip in 2018 to 92.1%, according to the data.

Across Simon’s properties, the management group recorded an occupancy rate of 94.7% through the third quarter this year, according to a recent quarterly report.

Declining to disclose current figures, Martin said occupancy rates for Battlefield Mall are fluid, and he’s expecting the upcoming openings of Pizza Ranch, Glow Golf and Indulge restaurant, along with a potential replacement for the vacant Charming Charlie storefront, to increase the rate.

“Businesses come and go, that’s just the nature of the business,” he said. “Typically, here, if we lose a store, they went nationally.”

Cegielski said malls surviving the storm aren’t just filled with retail. They’re diversifying tenants to include grocery, fitness, entertainment and even health care facilities.

Martin said Simon is trending with apartments and grocery stores in the group’s properties across the country. At the Battlefield Mall, he pointed to the Urban Air adventure park as an example of diversification.

“Consumers don’t just want to shop for apparel, they want to take their family and spend the day doing a variety of activities,” Cegielski said. “Any mall that is evolving to meet the needs of its community and the shifting demographics will succeed.”

As 2020 nears, Martin said the mall has new tenants in the pipeline, though he declined to disclose names or types, that would be new to the market.

“There’s some huge, vacant spaces here that have a great opportunity with new brands, especially with a lot of the companies and the way retail’s going in general,” Watson said. “I’m interested to see what kind of mall we’ll be looking at within a year or two years’ time.”