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HOW KEY STRATEGY SHIFT SAVED DESERT SKY MALL

BY DEBRA HAZEL

How does an aging regional mall stay competitive with newer, flashier shopping centers cropping up all around? A renovation may help, but finding a niche and offering consumers a unique concept goes further toward re-establishing a strong market position, says the management of Desert Sky Mall, in Phoenix.

The 23-year-old mall, located eight miles west of downtown, was once a market leader. But changing demographics and increased competition slowly eroded its standing. Today, after a comprehensive repositioning, the 1 million-square-foot Desert Sky is a haven for Hispanic consumers.

“This is an outstanding example of how a center got out of whack with its trade area,” says Michael Baker, principal of Syracuse, N.Y.-based Independent Retail Research, which was hired to help the mall.

Desert Sky’s troubles began in the early 1990s. Many non-Hispanic West Valley residents began moving to newer suburbs, even as extensions of major roadways made the competing malls more accessible for those who remained. By 2000 the J.C. Penney anchor had jumped ship.

When The Macerich Co. acquired Westcor Partners, Desert Sky’s developer and owner, in 2002, the mall’s occupancy rate was about 80 percent, of which temporary tenants comprised a high proportion.

To turn things around, Westcor and Macerich commissioned studies of the West Valley market, and learned that the trade area is 70 percent Hispanic.

The mall’s executives visited Mexico City and Texas border towns in search of tenant candidates and an understanding of what Hispanic shoppers expect. The mall also recruited Hispanic-owned retailers, such as Joyer’a del Pueblo, a jewelry vendor, and persuaded Broomfield, Colo.-based Sonora Entertainment Group to open a Cinema Latino there. The cinema joins existing anchors Burlington Coat Factory, Dillard’s, Mervyn’s and Sears.

Westcor needed a one-stop shop with service providers and retailers in one place, says Judy Cherry, a senior leasing manager at the firm. The leasing team brought in a post office, a check cashing service, a travel agency geared to Hispanics, and cell phone providers.

The leasing team also brought in non-Hispanic tenants that reflect Hispanic preferences and shopping habits, Baker says.

The center is recruiting new tenants with a moderate-priced fashion focus, with PacSun and Lerner New York being the latest additions. A Steve & Barry’s University Sportswear took over the J.C. Penney space this year. “Their value clothing fits right in with this market,” said Cherry.

The center also has a new marketing strategy. In September Desert Sky launched a Spanish-language Web site. Mass e-mails and newspaper and TV ads are done in both languages.

So far, it's all working, executives say. The mall has seen a double-digit increase in both sales and traffic in recent months. Sales per square foot are now $300, says Macerich, up from $275 last year.