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OUT IN THE OPEN

Kiosks increasingly find a home in open-air centers

By Steve McLinden

Kiosk retailers, long established in malls, are becoming increasingly ubiquitous at outdoor centers.

But don’t call them carts, at least not within earshot of their owners. They are RMUs, if you please (short for retail merchandising units), and they’re rolling out at a furious pace in a variety of warm-weather venues — and even some cold-weather ones.

Apple carts they ain’t. Rather, you’re far more likely to find Apple iPods on them these days — plus a wide assortment of bells and whistles. Many outside RMUs now have heaters, overhead fans and Wi-Fi service while others have pull-out shelving, track lighting and waterproof teak framework. A growing number even feature translucent roofs that usher in light by day and cast a soft glow by night.

The proliferation of RMUs and their more stationary cousin, the kiosk, mirrors the rapid rise of new open-air centers over the past decade, say industry observers.

The specialty retail industry has tripled in size over that time span, according to Patricia Norins, publisher of Specialty Retail Report. “We are seeing more and more lifestyle centers start to factor these into their plans,” she said. “Specialty retailers are always hungry for new opportunities.”

Outdoor RMUs are far more expensive and nuanced than indoor ones, notes Blake Sandberg, president of Newport Beach, Calif.-based Sand Mountain Inc., a designer and manufacturer of RMUs and kiosks. “You can’t just roll a cart outside and declare yourself open for business.”

Though the topside of indoor RMUs are generally 40 percent to 70 percent open so they can be reachable by fire sprinklers, outside units must be weatherproofed on top, bottom and sides, he says. Hence, “outies” are significantly pricier. Permanent outdoor units, ranging in cost from $13,000 to $50,000, can easily be more than twice as expensive as indoor units, says Sandberg. “These days, it seems, most clients are spending $18,000 to $25,000 ... and they obviously want to get the most for their money.”

Even in warm-weather venues, RMU manufacturers and developers have to factor in heat, humidity, salt air and the potential for rust in the materials they use, particularly in such places as Hawaii and Florida, where it rains every day. Sandberg’s firm constructs RMUs out of dual-coated aluminum with a steel base to combat such concerns.

Indoor units can utilize their exterior areas for additional display space, but outdoor units are generally restricted to counter-level displays. “That’s because dirt and direct sun can damage items,” he said. “You just can’t put as much on them.”

Overly warm weather can constrict cart patronage as much as weather that’s too cool, particularly in metro areas such as Phoenix and Dallas, where temperatures hover around 100 degrees or higher for most of the summer. Some cold and rainy metro areas such as Portland and Seattle aren’t very conducive to outdoor carts either, say manufacturers and center owners.

Until recent years, few landlords even considered placing outdoor RMUs in cold-weather markets. But with the advent of better heaters, efficient designs and more year-round events at centers, that’s changing. “This has been a program that has always been designed for warmer weather,” said Wendy Chapman, a leasing manager for Kansas City, Mo.-based RED Development, which owns, develops and operates open-air shopping centers in the Midwest and Southwest. “But centers are finding they are missing opportunities. In the proper venues, we are researching how we can utilize more carts and kiosks in cold weather.”

However, only a small percentage of weather-challenged centers have addressed that issue thus far, she concedes.

Operating RMUs at open-air centers presents some challenges. Owners of some colder weather properties simply can’t justify an investment in outdoor RMUs that are only usable over a span of about six months that doesn’t even include the prime winter holiday selling season, notes Sandberg.

Some centers that are willing to add RMUs for a year-round program find they’re not prepared to accommodate the demand on the power supply. “Heaters use a lot of power and malls aren’t always equipped to supply that much juice,” Sandberg said. “They can easily blow a circuit.”

Typically, electric heaters can be mounted on the floor or up near the RMU’s awnings. “Some are even too powerful — your head will get really hot in the 7-foot-tall RMUs,” said Sandberg. Sand Mountain produced a heated mobile unit for a Chicago operator that enjoyed a moderate degree of success around the holidays, but its operators had to cart it nearly a mile away at day’s end to stow it, at least until they figured out a way to tow the unit.

Trade publisher Norins says one cart program in Virginia Beach operating during the 2005 holiday season had to shut down because workers couldn’t tolerate day after day of unseasonably cold weather. “Thus far, I have seen very few [successful] cart programs in colder climates,” she said. “It just presents so many challenges.”

The common areas best suited for outdoor RMUs are those that are designed to accommodate them all year long, says Norins. Many of those don’t even implement their outdoor cart-and-kiosk program in their first year of operation. Instead, they wait a few years to gauge traffic patterns, she says.

When RMUs are introduced, they should be clustered to form a small outdoor bazaar, says Chapman. “If the carts are placed very tastefully and the program is well thought out, it can actually add atmosphere to the center,” she said. For example, Fashion Island center in Newport Beach, Calif., has incorporated rows of outdoor RMUs and kiosks successfully into its extensive common area to create a festival atmosphere. “Above the revenue these generate, we feel it’s important to look at how they affect our projects aesthetically and whether they favorably reflect the center,” said Chapman.

Outdoor RMU vendors seldom drive their own traffic, says Dan DiCillo, vice president of new business development for Cleveland-based Developers Diversified Realty (DDR). “They will fail miserably if they are not clustered in an area where people are gathering already,” he said. “Most rely on existing traffic.”

DDR’s Town Center Plaza in Leawood, Kan., and its Deer Park (Ill.) Town Center don’t have outside RMU programs, in part because of the weather and also because there is no obvious main common area. The company’s open-air California properties, such as the Pike at Rainbow Harbor, in Long Beach, and Paseo Colorado, in Pasadena, plus its under-development Shops at Midtown Miami, are much more conducive to RMUs, he says.

Open-air center configurations where shoppers drive from store to store are generally inhospitable to outdoor carts and kiosks, again because there is no heavily utilized promenade, he says. To remedy that, DDR is pondering closing off a few central roads at such locales on weekends and holidays to create temporary programs and reduce traffic congestion. The company would transfer RMUs from other properties for such events to accomplish that, utilizing excess units or older units it has replaced.

At DDR’s properties in Puerto Rico, where DiCillo says shopping “is more of a national pastime,” outdoor carts and kiosks are numerous and popular, and offer a broader blend of products. Unlike RMUs in the U.S., which feature mostly local retailers, the Puerto Rico units are occupied by an almost even blend of local and national tenants, he says.

The art of the outdoor cart is still obviously a work in progress. RMU manufacturers continue to tweak their formulas according to the latest specs, which are changing fast.

Most of the units produced by RMU designer Creations of Dallas — and most other RMU manufacturers — are the more expensive custom jobs, says Alex Goldfarb, the firm’s sales manager. A big challenge, he says, is to tailor RMUs “to fit surroundings and seem like more of a backdrop ... so that people only see the product.” The other trick, he explains, is to make them durable. “Some are outdoors 24 hours a day.”

Though increasingly expensive, today’s outside RMUs are built to last. “Some of our outdoor units have been out there for eight years,” Sandberg said. “With the durable materials and regular standard maintenance, they can last as long as indoor units.”

Every venue dictates a little different RMU approach. For example, units at Westfield’s Century City Mall, in Los Angeles, employ a special hardwood frame to match new outdoor seating in the adjacent plaza area, Sandberg says.

Other new hybrid RMUs, such as those found under a large overhead covering at General Growth’s Queen Ka’ahumanu Center in Hawaii, have elements of indoor and outdoor units because they are not exposed directly to the elements. Instead of roll-down doors, the Ka’ahumanu units have custom mahogany louvered awnings that are lowered with a geared hand-crank system, according to Sandberg. Tiki torches are added for local flair.

Some common areas require less shade and smaller awnings, such as units located between a center’s buildings that may only get direct sunlight from about 11 a.m. to 1 p.m. Others, such as Westfield’s Mission Valley Center in San Diego, sit in large, open plazas that are exposed to the sun all day and must come equipped with more expensive crank-out awnings that stretch out five feet or more from the RMU, Sandberg says.

At its new Miami property, DDR will frame its outdoor carts with highly durable, powder-coated aluminum to protect them from rain and salt air, says DiCillo. At other locales, the landlord is considering using a new specially coated wood “that will create a little bit of cost savings but still have the same durability.”

Goldfarb says the industry expects continued growth in sales of both indoor and outdoor units. “RMUs are a way for the developer to bring in additional revenue without making a huge commitment ... and paying a lot of rent and overhead.”