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HOW ONE MALL LOOKED BEYOND RETAIL TO SAVE ITSELF

By Susan Thorne

The center will contain offices, a call center, shops and a library, shown here.

David Hall has faced some stiff challenges recently, to put it mildly. When he stepped in as general manager of Galleria London (Ontario) in April 1999, he inherited an ailing, 10-year-old downtown mall. With nearly 1 million square feet of high-end retail, it was losing local shoppers to two successful suburban malls.

The center’s overall occupancy stood at about 70 percent, and The Bay department store was threatening to leave. The local market for retail was being eroded as London — population 300,000 and formerly a prosperous financial and institutional center — lost government jobs and suffered the takeovers of key employers London Life and Canada Trust in the late 1990s.

It got worse: The anchors left. The Galleria’s four-story Eaton’s department store closed in October 1999 following the T. Eaton Co.’s bankruptcy, and The Bay moved to Masonville, a mall to the north of the city, in early 2000. Many tenant leases reached the end of their 10-year terms around this time, and a number of merchants departed. Hall jokes that at this point he felt “like the captain of the Titanic.”

Fortunately, he is not easily discouraged; indeed, he enjoys turning tough situations around, as he demonstrated in the early 1990s when he reinvented Toronto’s troubled Dufferin Mall, turning it into a mixed-use property. Sizing up the Galleria’s position, Hall concluded that the mall could not survive as a purely retail facility.

“This is a car-oriented, suburban community with fewer than 3,000 people living downtown, and it’s in the process of changing in character from middle management to gray-collar,” he said. “We know we’re not going to be a mainstream shopping center, and we can’t attract the nationals. But that’s OK.”

The new marketing strategy focused on the available retail customer market in London’s downtown: office workers, hotel guests and convention visitors. Hall and his property and operations director, John Dennis, formed a plan to convert the Galleria to a town center concept, mixing unusual retail offerings with institutional and commercial uses and creating “a place where you go to work, where you go to meet people for food and drink and entertainment, a real center of the community,” Hall said.

The idea has taken off. The mall has undergone a C$10 million ($6 million) retrofit to create office space within the 200,000-square-foot Eaton’s structure, and 60,000 square feet has been leased to TeleTech, a Denver-based call center company that brought 850 new jobs to the center and the city. The former Bay premises were sold to the city and are now the home of an enlarged municipal library. The University of Western Ontario opened a continuing studies department on 6,500 square feet of former store premises. Management hopes to expand the educational component; talks are under way with the State University of New York and D’Youville College, Buffalo, N.Y.

A former Harry Rosen apparel store now serves as the Galleries at the Galleria, where the University of Western Ontario, Forest Hill Gallery and the London Regional Art & Historical Museum display their collections. Such a facility attracts people who wouldn’t otherwise come into the center, Hall said.

As for retail occupants, Hall kept on any tenants that wanted to stay, but set out to fill vacant retail sections with one-of-a-kind destination stores. Many have an emphasis on art and culture, like Studio Celtia, which offers Irish/Celtic-themed merchandise; London Village Candlemaker; Jonathan Bancroft-Snell, a shop specializing in emerging Canadian artists; and Stamp Shack, which sells handmade paper items and rubber stamps. Restaurants are also a strong focus; there are currently 11 eateries plus four food court outlets, including an Elephant & Castle English-style pub and The Second Cup Coffee Co.

The retail mix covers a variety of price points, and chains are strongly represented; examples are a Hallmark card shop, Pharma Plus Drugmart, Black’s Photography and RadioShack.

In some cases new retailers are brought into the center on highly favorable lease terms to start, with rent graduated upward as sales grow. At present the majority of the 73 tenants are paying full rent.

The Galleria still has many vacant retail spaces, but it puts a positive spin on this by offering them temporarily for community group activities. Current uses include a classroom for high-risk students, run by the Thames Secondary School; a youth drop-in center operated by the City of London Parks and Recreation Department; and rehearsal and performance space for local amateur theater groups.

Despite the mall’s unfinished state, regular events such as community fund-raisers, radio broadcasts and auctions are scheduled in its Centre Court.

Such activities help keep the center in the public eye during its transition and forge closer connections with the wider London community. Hall said he feels strongly that looking beyond the mall and getting to know the community at large is key to implementing a successful town center concept, and he has consulted regularly with city government and local organizations.

“Shopping centers really are the focal points of their communities,” he said. “It’s important to understand how your community looks at you.”

That openness to the community came across in last year’s media marketing campaign, titled Faces, which featured giant blow-up photos of downtown businesspeople, including some who are not Galleria tenants.

Retailers concur with Hall’s optimism about the Galleria’s future. Cherry Chen-Egan, proprietor of a fragrance shop called Message in a Bottle, said she chose the Galleria precisely because The Bay and Eaton’s had departed, thus eliminating competition for the cosmetics customer. Chen-Egan, whose store sells vintage and unusual perfumes as well as popular contemporary brands, said she feels the Galleria’s new identity is appropriate for its Main Street location.

“When you shop downtown, you’re looking for things that are not in the typical mall,” she said. “You expect to find unique stores, unusual specialty stores.”

John Fleming, manager of the policy section at the City of London’s planning division, commends Hall for his innovation and community spirit, and predicts that the mall will become a huge draw for the downtown. Fleming also said he sees brighter times economically for London; government employment is improving, he pointed out, and new private companies have been locating in the city recently. Downtown London is also gaining new attractions, including a new sports arena and the Covent Garden enclosed market. Further, the resident population is growing with the construction of two apartment buildings.

Hall admitted early on in the process that the Galleria’s full rehabilitation is going to take a long time.

“I’ve been here two years,” he said. “And with Dufferin it took five. I wouldn’t be surprised if this took just as long.”

In the meantime, he added, “we’re having a lot of fun.”

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