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Malls see sales slide after outlet centers open in Chesterfield

2014-03-07T06:00:00Z 2014-11-10T11:09:05Z Malls see sales slide after outlet centers open in ChesterfieldBy Kavita Kumar kkumar@post-dispatch.com 314-340-8017 stltoday.com

It was not the best of times for many St. Louis area shopping malls last year.

But don’t blame the Internet — at least not yet.

The more likely culprit? Those upstart outlet malls that opened in Chesterfield in August.

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That’s what Tennessee-based CBL & Associates points to as a major contributing factor in the slip in sales per square foot last year at all of its five malls in this region. The sales numbers for its malls were included in CBL’s annual report, filed with the U.S. Securities & Exchange Commission earlier this week.

As you might expect, the malls closest to the new outlet centers took the biggest hits.

So not surprisingly, the biggest dip was at Chesterfield Mall, whose sales per square foot declined 9 percent last year to $273. That mall is less than four miles away from Taubman Prestige Outlets and a little more than six miles from St. Louis Premium Outlets.

The next biggest slide came at West County Center in Des Peres, which saw a 6 percent drop to $448 in sales per square foot. That is its lowest level since 2009, when the country was entangled in recession.

Mid Rivers Mall — in St. Peters, which is about a 15- to 20-minute drive from the outlet malls — saw its sales productivity slip 4 percent to $296.

Meanwhile, South County Center in south St. Louis County and St. Clair Square in Fairview Heights, the local CBL malls the farthest from Chesterfield, saw sales per square foot drop just 2 percent. (Nationwide, CBL said its sales per square foot at malls open for more than three calendar years slipped 1.1 percent last year.)

But this slide is not happening across the board in other parts of the country. The national average in sales per square feet at U.S. malls went up 3 percent last year to $468, according to the International Council of Shopping Centers.

Dan Summerlin, CBL’s director of corporate relations, said the outlet malls in Chesterfield did take a toll on the St. Louis area malls. But he’s not too worried because he expects things to settle down now that many people have checked out the newcomers.

“It does take a little time to absorb,” he said. “But ultimately the grand openings will die down. … Folks want to try it out and then it resets.”

He said it’s not unlike when a new restaurant opens and people go to check it out, briefly abandoning their old stomping grounds for a time but then coming back.

That is, after all, what local mall operators expected when the outlet malls opened here. But time will tell whether the outlet centers will end up bringing in enough new business to the region so all retailers can share in the bounty. Or in another scenario, the malls will just have to make do with a smaller piece of the pie.

In addition to the challenge brought by the outlet malls, Summerlin noted that many of the teen retailers that are the mainstay of many malls have been struggling nationwide. That impacted last year’s numbers, too, he said.

“That’s a big hit — not just in the St. Louis market,” he said.

But he said he expects those retailers to rebound once they tweak their focus and merchandising.

It should also be noted that sales per square foot is just a snapshot of a mall’s overall health. It does not include the performance of the big anchor stores such as Macy’s. And it only measures results at stores under 10,000 square feet. So the two-year-old American Girl store at Chesterfield Mall — the only one in the region and apparently pretty successful so far — is not included in the mall’s sales per square foot number because that store is 10,850 square feet.

General Growth Properties, which operates St. Louis Galleria and Plaza Frontenac, does not break out sales per square feet of its malls in its annual report. But that company said in a recent news release that its overall tenant sales had increased 3.6 percent to $564 per square foot in the previous 12 months.

Jesse Tron, an ICSC spokesman, noted that while the national average in sales productivity at malls was up 3 percent last year, that is a bit of a slowdown from the year before when it went up 7 percent.

“But that’s to be expected,” he said. “When you go through a big dip out of the recession, you have larger pops of growth. … But the growth will moderate.”

For now, he said online sales, while growing, have not been making a big dent in the sales of shopping malls.

But what he does expect to see in the future is that malls may not be as crowded as they have been in years past. But the upside is that that doesn’t necessarily mean sales will drop accordingly.

“I think what you saw over the holidays is probably more likely what is going to happen over time,” Tron said. “Traffic may decrease. Or may not increase as much as we’ve seen, but sales were still healthy.”

People are just busier than ever and are making fewer shopping trips or stops along the way, he said.

“They have less time to shop,” he said. “But they’re still consumers. There’s still a need to consume.”

Kavita Kumar covers retail and consumer affairs for the Post-Dispatch. She blogs on Consumer Central. Follow her on Twitter @kavitakumar.

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