Adapting to change
Westfield pumps millions into Wheaton, while smaller venues struggle to survive
Wednesday, Nov. 16, 2005
As smaller malls limited to retail shops and a food court are struggling nationally, some companies are pumping hundreds of millions of dollars into places like Westfield Wheaton to make it a full-service destination.
Some mall owners are knocking down their walls, adding theaters and restaurants or creating time-efficient floor plans for shoppers to keep their malls viable. Companies that aren’t willing or have the capacity to reinvent themselves in a big way will find their malls going out of business. That’s the circle of life in the retail world, said Roxanne Letkoff, professor of marketing at the University of Maryland’s Robert H. Smith School of Business.
‘‘The world of retail continues to evolve,” Letkoff said. ‘‘... I’d say that the old-fashioned kind of mall would definitely be a thing of the past. Malls are revitalizing and are taking new sizes and shapes.”
Westfield Wheaton is taking the mega-route — Sunday, the mall celebrated its $140 million expansion and renovation. The new look, complete with glass ceilings and baby-bottle warmers, includes a shopping town experience that spans beyond the shops of the main building. That’s in stark contrast to the days when it was the open-air Wheaton Plaza with no roof.
‘‘In the last several years, Westfield has been kind of at the forefront of incorporating non-traditional tenants. Wheaton has some pretty good examples there,” said Katie Dicky, a Westfield Shoppingtown spokeswoman.
Start your day at Bally Total Fitness, grab coffee at Starbucks, pick up ingredients at Giant Food and get your cell phone serviced at Nextel Wireless — all in one stop. Come back later for an appointment with your allergist or dentist and make a bank run before shopping at Target or Macy’s. End the day with dinner and a movie without ever moving your car.
‘‘Our philosophy is to provide a range of retail and services,” Dicky said.
Australia-based Westfield owns 130 shopping centers in Australia, the United States, New Zealand and the United Kingdom, valuing at more than $33.2 billion. The group is currently investing $2 billion into renovating 10 malls in the United States. In about three years, it will start to renovate 10 more, Dicky said.
Westfield is in the business of acquiring and renovating or expanding malls, which always keeps the company at the top of its game, she said.
Westfield Wheaton opened Macy’s this spring, which is expected to bring at least 1 million more people annually to the downtown, followed by about 50 other retail and dining shops. Since Westfield acquired the property about eight years ago, it has invested more than $250 million into its mall, said Westfield representatives.
While Westfield infuses its Wheaton location with cash, malls sales have dropped nationally, according to a 2000 study by Pricewaterhouse-Coopers and Congress for the New Urbanism, a Chicago-based group dedicated to urban renewal. The groups describe those declining neighborhood and regional malls as ‘‘greyfields,” meaning annual sales per square foot dropped to less than $150, or about one-third the rate of sales at a successful mall. By that definition, 140 regional malls were greyfields and 250 were headed in that direction, the study said.
CNU wants to guide struggling malls toward a town-center approach with mixed-use, walkable developments, said Lee Crandel of CNU. Tear down the walls, break down the large blocks, connect streets with the downtown and build some homes next to restaurants and shops.
Revitalizing downtowns serve as the leading competition for malls, Crandel said. In the ’90s, malls in California faltered when downtowns in Pasadena and Longbeach got a boost, luring people to their open-aired walkways.
‘‘We think people want to live somewhere with more character, where things are more accessible.” Crandel said. ‘‘... It doesn’t help to draw people in when there is a large wall in the middle of a city.”
Westfield Wheaton doesn’t have that problem. In fact, many area business owners in the downtown say they sit in the shadow of Westfields’ success. The county plans to link the Westfield half of the downtown with the marketplace half by using walkways and landscaping that make the parts unified.
But that doesn’t mean Westfield Wheaton has to start knocking down walls. It already has a town center look, in a way, with small strip centers surrounding the main part of the mall. Also, a potential housing project could help add a neighborhood feel.
Westfield is considering an upscale five-story apartment complex to be built on a 3.4-acre lot located off University Boulevard near Findley Road and Faulkner Place.
The company has also learned to work with its other competitor, stores called ‘‘category killers” like Best Buy, Target, Wal-Mart and Borders. Instead of competing, Westfield Wheaton moved one in as an anchor store: Target. The formula of putting a department store like Macy’s in the same mall as a discounter like Target is growing more common and has worked for Westfield, Dicky said.
‘‘We’ve been doing this for 10 years ... by taking the pulse of the consumers and seeing what their wants and needs are,” Dicky said.
Malls have to be bigger and stand out to survive in the changing retail market, said Patrice Duker with the New York-based International Council of Shopping Centers. The first mall in the United States was built in Edina, Minn., in 1956 at 325,000 square feet. Now, the 1 million-square-foot mall competes with its neighbor, the Mall of America, a tourist attraction that spans 4.2 million square feet, Duker said.
Greyfield malls sit on properties that average just more than 45 acres while the nation’s best-performing malls average more than 70 acres, according to the CNU study.
If malls can pack in a variety of shopping experiences — food, retail and services — on its site, people will come, Duker said. Customers have increased their trips to malls to three times a month and since 2004, visitors spend about 80 minutes during each trip, indicating that people want to cram in all their errands in one visit, she said.
That’s good news for Westfield Wheaton, which sits on 82 acres of land with room to build on. The company is always looking for a way to respond to its different consumers and while the bulk of the Westfield Wheaton’s renovation is complete, Westfield is never done generating new ideas, Dicky said.
Westfield is on the right track, at least for its Wheaton mall, Duker said.
‘‘Malls are going to continue to change, which is exciting in the fact that the consumers are going to be the beneficiaries of that,” Duker said.