Shopping centers have
existed in some form for more than 1,000 years as ancient market squares,
bazaars and seaport commercial districts. The modern shopping center, which
includes everything from small suburban strip centers to the
million-square-foot superregional malls, had its genesis in the 1920s.
The concept of
developing a shopping district away from a downtown is generally attributed to
J.C. Nichols of Kansas City, Mo. His Country Club Plaza, which opened in 1922,
was constructed as the business district for a large-scale residential
development. It featured unified architecture, paved and lighted parking lots,
and was managed and operated as a single unit.
In the later half of the
1920s, as automobiles began to clog the central business districts of large
cities, small strip centers were built on the outskirts. The centers were
usually anchored by a supermarket and a drug store, supplemented by other
convenience-type shops. The typical design was a straight line of stores with
space for parking in front. Grandview Avenue Shopping Center in Columbus, Ohio,
which opened in 1928, included 30 shops and parking for 400 cars.
But many experts
consider Highland Park Shopping Village in Dallas, Tex., developed by Hugh
Prather in 1931, to be the first planned shopping center. Like Country Club
Plaza, its stores were built with a unified image and managed under the control
of a single owner, but Highland Park occupied a single site and was not
bisected by public streets. And its storefronts faced inward, away from the
streets, a revolutionary design.
In the 1930s and 1940s,
Sears Roebuck & Co. and Montgomery Ward set up large, freestanding stores
with on-site parking, away from the centers of big cities. Nighttime shopping
was inaugurated at Town & Country Shopping Center in Columbus, Ohio, when
developer Don Casto hired Grandma Carver (a woman who dived from a 90-foot
perch into a 4-foot pool of flaming water), to perform her act in the lighted
parking lot, bringing shopping center promotion to a new level.
The early 1950s marked
the opening of the first two shopping centers anchored by full-line branches of
downtown department stores. Northgate in Seattle, Wash., (two strip centers
face-to-face with a pedestrian walkway in between) opened in 1950, and Shoppers
World in Framingham, Mass. (the first two-level center), debuted the following
year. The concept was improved upon in 1954 when Northland Center in Detroit,
Mich., used a “cluster layout” with a single department store at the center and
a ring of stores around it. The parking lot completely surrounded the center.
Northland was also the first center to have central air-conditioning as well as
heating.
In 1956, Southdale
Center in Edina, Minn., outside of Minneapolis, opened as the first fully
enclosed mall with a two-level design. It had central air-conditioning and
heating, a comfortable common area and, more importantly, it had two
competitive department stores as anchors. Southdale is considered by most
industry professionals to be the first modern regional mall.
By 1964 there were 7,600
shopping centers in the United States. Suburban development and population
growth after World War II created the need for more housing and more convenient
retail shopping. Most of the centers built in the 1950s and 1960s were strip
centers serving new housing developments.
By 1972 the number of
shopping centers had doubled to 13,174. Regional malls like Southdale and The
Galleria in Houston, Tex., had become a fixture in many larger markets, and
Americans began to enjoy the convenience and pleasure of mall shopping. During
the 1970s, a number of new formats and shopping center types evolved.
In 1976 The Rouse Co.
developed Faneuil Hall Marketplace in Boston, Mass., which was the first of the
“festival marketplaces” built in the United States. The project, which revived
a troubled downtown market, was centered on food and retail specialty items.
Similar projects were built in Baltimore, Md., New York, N.Y., and Miami, Fla.,
and have been emulated in a number of urban areas.
The Bicentennial year
also marked the debut of the country’s first urban vertical mall, Water Tower
Place, which opened in Chicago, Ill., on Michigan Avenue. To many experts,
Water Tower Place with its tony stores, hotel, offices, condominiums and parking
garage, remains the preeminent mixed-use project in the United States. With the
opening of Water Tower Place and Faneuil Hall, the shopping center industry had
returned to its urban roots.
The 1980s saw an
unparalleled period of growth in the shopping center industry, with more than
16,000 centers built between 1980 and 1990. This was also the period when
superregional centers (malls larger than 800,000 square feet) became
increasingly popular with shoppers. In 1990, a Gallup poll found that people
shopped most frequently at superregional malls and neighborhood centers.
Americans average four trips to the mall per month.
Between 1989 and 1993,
new shopping center development dropped nearly 70%, from 1,510 construction
starts in 1989 to 451 starts in 1993. The sharp decline in new center starts
was attributed to the Savings and Loan crisis, which helped precipitate a
severe credit crunch. While overbuilding occurred among small centers in some
regions of the United States, shopping centers remained the most attractive and
best-performing real estate category for investors during this difficult
period.
The year 1993 was marked
by the transition of several privately held, family-run shopping center
development companies (Simon, Taubman, etc.) into publicly traded real estate
investment trusts (REITs). The access to Wall Street capital provided a
financial jolt to an industry that still had not fully recovered from the
credit crunch.
One of the newer retail
formats that has become increasingly popular in the United States is the power
center, which loosely defined is a center between 250,000 and 600,000 square
feet, with approximately 75% to 90% of its space occupied by category killers
or destination anchor stores. Power centers are often located near regional and
superregional malls. San Francisco-based Terranomics is credited with
pioneering the concept at 280 Metro Center in Colma, Calif. In 1993, 16 power
centers opened in the United States, compared with only four superregional
malls.
Factory outlet centers
were one of the fastest growing segments of the shopping center industry in the
1990s. In 1990, there were 183 outlet centers. Today, there are over
approximately 312 outlet centers in the United States. Outlet malls are
tenanted by manufacturers selling their own goods at discounted prices. Some
large projects combine outlet stores with traditional off-price stores like
Marshalls. One such project, Sawgrass Mills in Sunrise, Fla., is more than 2
million square feet and features outlets, discounters and retail clearance
stores.
The largest mall in the
United States is currently Mall of America in Bloomington, Minn., which
includes a seven-acre amusement park, nightclubs, restaurants and covers 4.2
million square feet (with about half that total devoted to retailing). The
center has been heralded as a bellwether for its innovative mixture of
entertainment and retailing. The forerunner to Mall of America, and the largest
mall in North America, is West Edmonton Mall in Alberta, which encompasses 5.5 million
square feet.
Entertainment quickly
became an industry buzzword in the early 1990s as technological advances
allowed shopping center developments to foster the same magical experiences
that were once only seen in national amusement parks such as Disney World.
Since the start of the entertainment wave, retailers have focused on keeping
their presentations exciting and shopping center owners have striven to obtain
tenant mixes that draw traffic from the widest audience possible. Under one
roof or in an outdoor retail format, consumers enjoy children’s playscapes,
virtual reality games, live shows, movies in multiplex cinemas, a variety of
food in either the food court or themed restaurants, carousel rides, visually
stunning merchandising techniques, robotic animal displays, and interactive
demonstrations. Many shopping centers are also focused on added
service-oriented tenants, which offer today’s busy consumer an opportunity to
complete weekly errands or to engage in a variety of other activities. Among
the many services found in today’s malls are churches, schools, postal
branches, municipal offices, libraries, and museums.
As the 1990s drew to a
close, Internet retailing was heralded as the wave of the future and a threat
to the stability of the shopping center industry. In July of 1998, Time
magazine predicted the demise of the shopping mall. In bold type, Time’s cover
advised its readers to, “Kiss Your Mall Good-Bye: Online Shopping is Cheaper,
Quicker and Better.” While the cover was purely sensational, the tone was
clear. The shopping center industry was under attack, yet again, from an
alternative shopping format. Several years earlier similar claims were made
about the impact home television shopping would have on the industry. In fact,
the cover of BusinessWeek magazine in July of 1993 read, “Retailing Will Never
Be the Same: The Home Shopping Revolution.”
Unlike home television
shopping, Internet retailing quickly captured the attention of the public, the
media and Wall Street as companies rushed to develop websites that would sell
directly to consumers. In the euphoria it mattered little that many of these
Internet companies had little or no retail experience. Fearing the
cannibalization of store sales, brick-and-mortar retailers at first were hesitant
to sell directly to the public via the Internet. However, when it became
apparent that they had some clear advantages over pure Internet retailers
(brand name recognition, distribution facilities, supplier relationships,
ability to accept returns at stores, etc.) brick-and-mortar retailers launched
their own websites. These advantages quickly paid off for brick-and-mortar
retailers. In fact, in 1998, brick-and-mortar retailers’ websites captured 60%
of online sales.
In addition to buying
online, brick-and-mortar retailers discovered that their consumers were using
the web as a research vehicle. Consumers were logging on to retailers’ websites
to search for goods, and services, and armed with product information, were
making purchases at stores. Thus the Internet has transformed a large and
growing number of retailers into “multi-channel” retailers with all sales
channels (stores, web, and catalog) working as one to help retailers maximize
the value of their brands.
Understanding that there
is great synergy between the Internet and brick-and-mortar stores, shopping
centers owners have created their own websites and are working with their
retail tenants to create distribution channels to satisfy the consumer, whether
the consumer decides to shop at a shopping center, on the Internet or both.
In 1999, Simon Property
Group, the nation’s largest shopping center developer, created two separate
business units, clixnmortar.com and TenantConnect. Through TenantConnect, Simon
is installing broadband Internet connections inside its own malls and those of
other developers, so that stores can have high-speed access to the Internet.
Also, retailers at Simon malls can take part in two clixnmortar initiative:
FastFrog.Com and YourSherpa. In both programs, consumers carry handheld
scanners through the mall, and scan items they are interested in buying. When
shoppers are finished, the information is loaded into computer kiosks. From the
FastFrog kiosk, shoppers can have their list of items forward to friends or
relatives. At the YourSherpa kiosk, users can type in their credit card number
and check out immediately, or delay the final purchase until they go home. Mall
employees pick-up scanned items at stores in the mall and customers have the
option of picking-up the items at the mall or having them delivered.
General Growth
Properties, the nation’s second-largest mall developer is also incorporating
the Internet into their malls. General Growth’s Mallibu.com website links
retailers in each of the company’s malls, allowing consumers to buy online
directly from those retailers and have their purchases delivered to them.
Other shopping center
developers are also working with their retailers to incorporate the Internet
into their businesses model. Many shopping centers have their own websites and
have added their web address to their advertising and promotional vehicles.
Most shopping center websites have maps and directions to the center, a list of
tenants and a calendar of events. Some shopping centers are even providing free
Internet access for their customers. The center can e-mail the customer
information on sales and special events that are taking place at the center.
As we enter the 21st
century, shopping centers continue to evolve and serve communities’ social and
economic needs. With the combination of fashion, food, entertainment, and
services, shopping centers have greatly expanded their role in the communities
they serve.