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HECTIC HOLIDAYS

Facing rising competition, Europe’s malls try new ways to draw Xmas shoppers

BY SUSAN THORNE

European retailers, like their U.S. counterparts, are playing an escalating game of cat and mouse with consumers during the Christmas shopping season, observers say. Shopping centers are rolling out the seasonal decor sooner, even as shoppers wait longer to buy in the hopes of catching a last-minute sale.

“There is much more competition between shopping centers now, and the season is starting earlier and earlier,” said Fran�ois de Bonnières, manager of Beaulieu Shopping Center, a 322,860-square-foot (30,000-square-meter) enclosed mall in Nantes, France. “This year we will put up decorations in the second week of November.”

Bargain hunters, for their part, shop strategically to get the best prices, which they haven’t had much trouble finding. “For about the last three years, retailers have been holding sales before Christmas,” said Vanessa Forster, director of retail asset management at Hammerson, a London-based development firm that owns six U.K. malls. “The customer waits to buy to see if a sale comes, while retailers try to hold off as long as they can.” Because of such maneuvering, more store purchases are taking place closer to Dec. 25, Forster says. “It’s making the shopping season shorter and shorter.”

German retailers created a similar situation when they offered pre-Christmas markdowns for the first time in December 2002, after the government revised national laws prohibiting such sales. The retailers were responding to slow December sales that reflected Germany’s sluggish economy, but the practice seems to be here to stay.

But these price reductions are not helping retailers even if they do attract more shoppers, says Frank Pöstges, managing director of marketing at the 753,340-square-foot Centro mall in Oberhausen, Germany. “Margins, and therefore profits, have decreased proportionally because of the huge discounts,” he said.

Price cuts are making the whole retail market more competitive, which hurts mom-and-pops in particular, Pöstges says. In an effort to find less costly ways to attract consumers, Centro mall is going to innovative lengths, at least for a German mall. Distributing free coupon books, playing host to an ice sculpture exhibit and other seasonal attractions will help the mall draw 4.5 million shoppers from as far away as Belgium and the Netherlands this Christmas, says Pöstges.

Landlords elsewhere, too, are employing alternative marketing strategies to boost Christmas season sales. In some European countries, sales are restricted by law, making Christmas markdowns impossible. France has two nationally permitted periods of price discounting in January and July. Spain has similar regulations, with sale periods varying from province to province. In the face of these regulations, retailers use other types of promotional offers to attract shoppers, says Gilles Goldenberg, Paris-based industry head of consumer business at auditing consultant firm Deloitte. Alternative strategies include two-for-one specials and quantity-purchase discounts.

In France gift certificates have become increasingly popular as a means of deferring purchases to take advantage of post-Christmas sales. “We have seen a growing proportion of gifts acquired just after Christmas,” Goldenberg said. “On the 25th, people may say, ‘I’ll get you this,’ instead of presenting the gift itself.”

In France, Spain, northern Europe and Scandinavia, Christmas just wouldn’t be Christmas without the popular downtown street market, a grouping of barn-board stalls selling mulled wine, gingerbread and other refreshments, as well as crafts, toys, decorations and similar seasonal items. The tradition has been appropriated by many shopping centers, which have their own markets in the common area or on an adjacent site. Often landlords charge minimal rents, viewing the market primarily as a promotion.

But such Christmas markets have the potential to become a profit center. This year Centro will have 150 kiosks (up from 140 in 2002) on the mall pad, many of them leased to its own permanent tenants. Rents for the six-week pre-Christmas period are quite high, ranging from €3,000 ($3,775) for kiosks selling traditional crafts to €15,000 for a 190-square-foot catering unit. This is more than double the year-round rental rate for temp-tenant kiosks inside the mall.

“It’s a win-win-win thing for everybody,” said Pöstges, “because it gives our tenants an opportunity for extra income, and it’s a big attraction for visitors and an income and profit generator for us. Also, our market belongs to the top five Christmas markets in Germany.”

The market concept is spreading to the United Kingdom, where it is not an indigenous tradition. Thecentre.mk, a 1.4 million-square-foot regional mall in Milton Keynes, has had 20 seasonal booths in the center court since 1996, but is expanding this year to an outdoor German-themed market of 40 stalls. Downtown centers are getting in on the act too. Hammerson’s 800,000-square-foot West Quay, in Southampton, will have a traditional Christmas market outside its front entrance this year for the first time ever.

Mall owners are also trying to attract shoppers earlier in the season through efforts to cut down on crowd-related stress. Services that ease shopper stress are the best way to market a center and differentiate it from others, says de Bonnières. During the Christmas season Beaulieu has special staff to greet shoppers, carry bags and direct traffic outside; in addition, opening hours are extended from 9 a.m. to 10:30 p.m. seven days a week for the last two weeks before Christmas. “I think customers appreciate that,” de Bonnières said, noting that there is little need to advertise or stage special events to draw customers.

There is an added imperative for retailers and centers to make the holiday shopping period as attractive and stress-free as possible: that latest incarnation of Scrooge also known as the Internet. Though online sales remain minuscule compared to those of conventional stores, they have grown. Internet purchases in Spain jumped 60 percent for the 2003 Christmas season from the previous year, according to data from Susana Clarke, Barcelona, Spain-based associate head of property management at property consulting firm Cushman & Wakefield Healey & Baker.