Malls get a holiday makeover
Traditional malls are hard to beat when shopping in comfort and style and owners are investing heavily to keep it that way
Dec. 2, 2006. 01:00 AM
DANA FLAVELLE
BUSINESS REPORTER
It's the first Saturday in December and malls across the GTA are gearing up for the Christmas crush. Faced with increased competition from online stores and big-box retailers, malls like Square One in Mississauga are investing millions in dramatic facelifts.
General manager Nance MacDonald, who has been with Square One since it opened 34 years ago, says a lot has changed since the farmer across the street parked his horse on the bike rack to do his shopping.
"Everyone thought the developer was insane," said MacDonald, referring to legendary Mississauga developer Bruce McLaughlin, of The McLaughlin Group, who began building Square One when it was still surrounded by farmers' fields. "I was marketing to a market that didn't exist yet."
Now, the mall gets 22 million visitors a year, including walk-in traffic from the forest of condos that circle the parking lot and MacDonald figures sales have nowhere to go but up as suburban growth continues.
Owned by Oxford Retail Group, which also owns Yorkdale Shopping Centre, Scarborough Town Centre, and dozens of others beyond Toronto's borders, Square One is the latest proof that neither retail power centres nor Internet retailers have replaced indoor shopping in comfort and style.
With the exception of Vaughan Mills, no one in Canada has built a new enclosed mall in more than 14 years. But owners of traditional regional malls, most of them cash-rich pension fund management firms, have been pouring millions into existing properties.
"I think we're in a period of intense buoyant optimism with the vast majority of regional shopping centres across the continent, from coast to coast, having invested heavily over the last several years to upgrade their facilities at every level," said Anthony Stokan, a principal with the consulting firm Anthony Russell Inc., in Toronto, and author of Naked Consumption: Retail Trends Uncovered.
"The vast majority of retailers have recognized that even though they may have gone into power centres, or opened factory outlets, no one delivers traffic consistently like a regional shopping centre."
"That's really the key to the whole thing; the absolute pleasure of one-stop shopping in a controlled environment," Stokan explained. "That's not to say warehouse clubs like Costco aren't busy. They are. But the market place is big enough to appeal to the extremes. There are people who cherish the functionality of warehouse or big-box shopping. And there are millions of consumers who enjoy the luxury of the regional shopping centre."
Besides, Stokan asks, where else are you going to find Santa?
Sales data at enclosed malls in Canada are hard to come by as the industry lumps power centres in with traditional indoor malls. But they're generally considered to be somewhat more productive than their U.S. counterparts, Stokan said.
If sales at U.S. malls on Black Friday, considered the start of the holiday shopping season, are any indication, Canadian mall owners could be in for a robust season. Sales south of the border rose 6 per cent last Friday, according to the International Council of Shopping Centres, quoting independent research firm ShopperTrak.
Over a three-year period, ending next year, the Oxford Retail Group and its owner, OMERS Realty, the municipal employees pension fund for Ontario, will have put $33 million into Square One, one of the country's largest malls at 1.7 million square feet.
The makeover in Mississauga, at Hurontario St. and Burnhamthorpe Rd., is typical of the new direction malls are taking. Higher ceilings, cleaner signage and less clutter are all aimed at making the mall easier to navigate. Distinctive colours divide the mall into three "neighbourhoods" — north, south and central. Specialty menswear retailer Harry Rosen has moved into the mall. European cosmetics retailer Sephora has opened a shop. Casual-wear chain Eddie Bauer opened its latest prototype store a few days ago. The mall is also home to the largest Wal-Mart store in North America, at a staggering 240,000 square feet, nearly twice as big as the average Wal-mart in Canada.
"We have almost every store you can imagine in the middle-range," said MacDonald.
In three decades, Square One has undergone three renovations and three expansions. But this latest is the most extensive one in MacDonald's memory.
It's now home to 360 retailers and 5,000 employees, including 100 mall administrative and maintenance staff. For now, traffic in the mall is steady but the real crush won't come until later this month.
Altering an age-old formula that saw discounts rise in January as merchants try to clear shelves after Christmas, MacDonald said she thinks more stores will stock new and full-priced goods in January as gift cards send a second wave of holiday shoppers to stores.
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