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Consumer Reports

Malls stripped by consumers' new spending habits | (KRT) Once the darling of the retail industry, the beloved shopping mall is approaching dinosaur status as developers look toward smaller formats to satisfy shoppers' tastes.

It's a transformation driven by consumers as time constraints and suburban sprawl reshape shopping habits. These days a trek to cruise the corridors of the big mall is considered a luxury among the grab-and-go crowd.

"Consumers are speaking and they want convenience," said David Bossy, a principal at Mid-America Real Estate Group in Oakbrook Terrace, Ill.

Crate & Barrel, for instance, is moving its stores out of shopping centers and into spots nearby to better serve its customers. In many cases, the retailer needs more space so it can offer furniture along with its mainstay of houseware items.

But the company also realizes that consumers have busier lifestyles, said Bette Kahn, a Crate & Barrel spokeswoman.

"People are so short of time, they don't have the time to walk through a mall anymore. We had a prime location in the center when we opened 15 years ago," Kahn said of the original space inside the shopping center. The new store, outside of the shopping center, is more than twice the size of the mall location.

Providing shoppers quick access has developers busy building power centers or lifestyle centers instead of traditional shopping malls.

A power center, or what some call a glorified strip center, typically consists of a cluster of buildings, each home to one or more big-box retailers.

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Lifestyle centers, on the other hand, tend to mimic downtown retail districts and can feature a "main street" where shoppers can park their car in front of their favorite store and dash in.

Neither approach embraces the traditional regional mall format of having two or more department stores anchor the project. Instead, the big draws are home improvement warehouses, grocery stores and discounters.

"More and more of the design is open air," said Yaromir Steiner, chief executive officer of Steiner & Associates, a mall developer in Columbus, Ohio. "You don't see six department stores with a hallway anymore."

The International Council of Shopping Centers is projecting three traditional mall openings this year, with five scheduled to open each in 2004 and 2005. It's a far cry from the 11 centers that opened in 2001 or the 13 opened in 1999.

Many industry analysts have said that after 50 years, traditional shopping centers have no choice but to evolve.

What was new and innovative in the 1950s and 1960s has sputtered out.

"The industry is maturing," said Patrice Duker, a spokeswoman for the International Council of Shopping Centers in New York. "Some centers that have not changed with the times are either going dark or being converted."

Such is the case with Brickyard Mall in Chicago. The nearly 1-million-square-foot shopping center is being demolished to make way for a new retail development.

Built in 1977, the shopping center once boasted tenants including Kmart, Montgomery Ward's and JC Penney, but they either went out of business or left the center in the past two years.

Vacancies swelled to 80 percent and only a combination Jewel and Osco store remained as the main draw. Now developers are creating a space for a new Jewel/Osco as well as a Target and Lowe's Home Improvement store.

There are other obstacles to building big, regional malls these days, including a lack of available land, high tenant costs and struggling department stores.

"We are way overbuilt from the perspective of regional shopping centers," said Cindy Ciura, vice president of marketing for Schostak Brothers & Co., a commercial real estate firm in Southfield, Mich. She added the dearth of new retailing concepts have made it tough to fill dozens of storefronts.

"When Old Navy came out, everybody had to have one and when Hot Topic came out, everybody had to have one," Ciura said. "Now there's only Coldwater Creek and a couple of other concepts."

Hot Topic vaulted from 68 stores in 1997 to its current 434 as teens snatched up its body jewelry, rock-band affiliated T-shirts, hair dye and clunky shoes. Coldwater Creek, the catalog clothier, grew from 21 stores in 2001 to 43 at the end of 2002.

At Sears, Roebuck & Co., necessity is driving the company away from traditional malls. Faced with the realization that construction of regional malls, where Sears has traditionally put its chain of stores, is stalling, the Hoffman Estates firm is testing out a stand-alone concept dubbed Sears Grand.

"We don't want to get out of malls," Alan Lacy, Sears' chairman and chief executive officer, has said. "We want to have more stores."

The new concept will give Sears an opportunity to sell a wider selection of merchandise from toys to soda and help the retailer capture new shoppers.

Lacy has said that Sears is strong in attracting customers that live within 10 miles of its stores, but the challenge is getting shoppers living beyond that radius to drive the extra mile.

In the meantime, shoppers just outside that ring are passing by a Home Depot, Best Buy or Kohl's and stopping in there to make their purchases. A stand-alone store would help fill in the gap and put Sears among its competitors.

But don't ring the death knell just yet, mall developers said.

Malls "are not going away," Ciura said. "There are a number of reasons - they are climate-controlled and it's a different kind of experience. You are not going to go see Santa or the Easter Bunny at a strip center."

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© 2003, Distributed by Knight Ridder/Tribune Information Services