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Megamall seeks temp tenant talent

By Jim McCartney

There's a bit of the carnival barker in Jason Houck when he calls over shoppers at the Mall of America in Bloomington, Minn., to watch him wield his amazing onion slicer.

"It's easy to clean, no fumes in your eyes -- no more tears," Chop Chop salesman Houck tells customers as he demonstrates the chopper.

More important, it's new, it's different and it's entertaining. So the megamall decided to lease a pushcart to the vendors of the $23 onion choppers. Since it opened in March 1997, Chop Chop has been one of the top-selling carts at the Mall of America, which is managed and co-owned by Indianapolis-based Simon DeBartolo Group.

"They're a little fair-like, they bark a little, but they have phenomenal sales people," said Kathy Rusche, director of specialty leasing and sales for the mall.

Yet another pushcart at the center, Lure Me In, sells nothing but fishing lures. The winner of the megamall's 1997 contest for the best new retail concept, Lure Me In received a year's free rent in a sales cart. Another of the contest's more than 200 entries included an oxygen vendor, Ms. Rusche said.

While some of the concepts may seem to be examples of extreme niche marketing, specialty leasing is one way the megamall can keep attracting 40 million or more visitors every year. Ms. Rusche's mandate is clear: find fresh new concepts and retailers for the mall. This is particularly critical for a center with the Mall of America's draw.

"The challenge for them is to keep it fresh -- people aren't going to come back from 100 miles away if it's just the 'same-old, same-old,'" said Mike Scott, a retail leasing broker with United Properties, a Bloomington, Minn.-based commercial real estate firm.

Finding such tenants isn't easy. Ms. Rusche and her staff canvass the United States looking for promising entrepreneurs and concepts, spending much of their time in tourist destinations like Myrtle Beach, S.C., Gatlinburg, Tenn., and Duluth, Minn. They also make a point of going to most of the arts and craft shows in the Midwest on the weekends.

Despite a national focus, Ms. Rusche said about 80% of the tenants in her small tenants program have been from Minnesota. Some recent concepts include Legacy Cigar Co., a cigar accessories shop, and Raising Cane, a cart that sells walking canes.

"The goal is to fill in what the Mall of America needs or lacks," said Ms. Rusche, who has been director of specialty leasing and sales since the center's opening in 1992. The 4.2 million-square-foot mall (2.6 million square feet of which is retail space) offers temporary tenants in 61 carts, 12 wall units and 30 temporary in-line stores, also called bumpbacks.

Ms. Rusche's cart program turns over about 50% per year. Many of them simply go out of business -- but others go on to larger permanent space, she said. In fact, a secondary aim of the program is to find and incubate potential in-line tenants, in essence, the chains of the future.

To that end, the center is willing to give promising new merchants a helping hand. The megamall's entrepreneur program, in which Simon DeBartolo helps tenants improve or build out a store space, has converted about 40 retailers from temporary or cart space into permanent leases, Ms. Rusche said. Among the "graduates" into permanent spaces are Magnetic Attractions, Into the Woods, Wild Birds and Hologram Land. Overall, more than 200 retailers have come and gone in Ms. Rusche's specialty leasing program.

The megamall isn't a typical regional mall, and its temporary tenants also can be somewhat out of the ordinary. A key to success for Mall of America is to find retailers who understand the tourist business. Those that focus just on the holiday shopper, such as the typical cart tenant selling Christmas ornaments in a regional mall, are not as good a fit for the megamall, she said.

"You have to have the right product and the right sales person," Ms. Rusche said.

Predicting what will work is an inexact science at best, even for the experienced. Ms Rusche has seen a few flops over the years. An artist who made women's clothing found that her merchandise's appeal was too narrow for the megamall. A scuba gear concept found a similar lack of interest from the center's shoppers -- there just isn't much call for scuba gear in the Midwest, where most of the 10,000 lakes either are shallow and murky, or deep and cold.

Others have surprised her. She thought that a retailer selling only shoelaces would have a tough time making it; now called Shoelaces You Never Tie, it has successfully expanded into a wall unit. A hologram store that struggled at Riverplace and Calhoun Square, two specialty malls in the Twin Cities, was an immediate hit when it opened a cart at the megamall.

The mall gets about 50 applications a month for its specialty leasing program. Many are rejected simply because a similar concept already exists at the mall, Ms. Rusche said. But a rejection may not be final: applicants who appear to have a strong potential for the business are encouraged to bring back other ideas. In some cases, the staff will help them create a concept.

The need for diversity and entertainment isn't exclusive to major tourist attractions such as Mall of America. Both industry professionals and shoppers have bemoaned the lack of differentiation among regional mall tenants. Thus, the goals and techniques of specialty leasing also are critical for truly regional centers. As a result, one of the first things Simon DeBartolo did when it took over management of Maplewood Mall in the Twin Cities in 1996 was replace the large glass kiosks on the floor with smaller carts for temporary tenants.

Not only did the change improve sight lines for shopper and traffic flow through the mall, it helped the center freshen up its retail offerings, cash in on seasonal trends, and spruce up rent revenues. Maplewood Mall's cart tenants include: Gold Country, which sells University of Minnesota items; an income tax and retirement planning specialist; and Absolutely Nuts, a retailer that sells gift boxes of assorted nuts.

Flexibility is important with such programs -- retailers can lease for a day, a weekend, a holiday season or up to a year, said Tom Martin, Maplewood Mall's general manager. At presstime, many of the mall's 18 temporary tenants, including 12 carts, were likely to be gone by mid-January. The turnover is intentional.

"It's good to rotate tenants, come up with new ideas, hit on seasonal concepts," Mr. Martin said. "Some retailers want to jump on what's unique or hot, ride it to the crest, then go on to the next hot trend."

As at Mall of America, though, an additional goal for Maplewood Mall's specialty leasing program is to help find permanent tenants.

"Over the years, a lot of developers have used carts as incubators for retailers who may eventually become in-line tenants," Mr. Martin added.

But some retail experts, such as United Properties' Mr. Scott, argue that the malls can overdo cart programs -- there can be an "overabundance" of kiosks selling souvenirs, beads and t-shirts. Sight lines for the in-line tenants can be destroyed, and the appeal of the specialty tenants devalued. A mall can have too much of a good thing.

"Sometimes it feels like you have to fight your way through them," Mr. Scott said. "It sort of cheapens the place -- it starts looking like the state fair."