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Foreign affairs

By Maura K. Ammenheuser

Shopping center experts in the United States know Americans love to shop. Some marketing directors, however, have discovered there's an even bigger world of potential customers out there.

Almost 90% of the 21.5 million people who visited the United States in 1997 from outside North America shopped while in the States, reports a study by The Taubman Co. and the U.S. Department of Commerce.

Certain centers, blessed with the right location and tenant rosters, are huge magnets for tourists visiting the United States from around the globe. That's no accident. Marketing whizzes say that aggressively promoting their centers beyond U.S. borders has drawn a healthy stream of additional shoppers to their stores.

For example, international visitors to New York City take hour-long bus rides to Woodbury Common Premium Outlets, in Central Valley, N.Y. The center, which is located about an hour northwest of New York City, is owned by Chelsea GCA Realty, a Roseland, N.J., real estate investment trust. Some 10 million people visit the 843,000-square-foot outdoor outlet center annually, said Michele Rothstein, Chelsea's vice president of marketing.

While Rothstein declined to offer specifics on the center's percentage of international tourists or its sales figures, she said that some shoppers have told her, "I'm just in from X country. I haven't seen the Statue of Liberty ... I'm coming here first."

To get that customer, Chelsea advertises the center in foreign magazines, and offers specialized services, including Japanese translators, to the busloads of non-North American shoppers who arrive daily.

None of this is cheap. But while few marketing directors could or would quantify exactly how much money they spend wooing the international traveler, or how much additional revenue their centers pull in as a result, most say the practice is well worth their efforts.

"Shopping is the No. 1 thing people do when they travel," said Rosemary McCormick, of McCormick Marketing, Napa, Calif., and the first tourism director for Mall of America.

"Eating's No. 2."

A 1997 study by The Taubman Co., Bloomfield Hills, Mich., and the U.S. Department of Commerce found that 21.5 million people visited the United States that year from outside North America. Nearly 90% shopped while in the States.

Taubman's Woodfield Shopping Center, Chicago, draws visitors from around the globe.

Currency fluctuations and economic downturns abroad don't generally affect international business at U.S. centers, experts said, perhaps because tourists' travel plans are made in advance.

And, "our business is so big in terms of tourism, if one country drops off a little bit," typically traffic from another picks up, said Evette Caceres, marketing director at Beverly Center, Los Angeles, a 1 million-square-foot Taubman center anchored by Bloomingdale's and Macy's.

Shopping center experts say they've begun marketing themselves to these travelers because the tourist traffic already flowing to their cities could help boost revenues, by at least a small degree.

"In the last three-and-a-half years, we made a concentrated effort to seek the tourism business because that's where incremental growth in sales is," said Paula Guiliano, marketing director of Woodfield Shopping Center, a 2.7 million-square-foot Taubman center in Schaumburg, Ill., 23 miles from Chicago. Anchored by JC Penney, Sears, Marshall Field, Lord & Taylor, and Nordstrom, the center draws 26 million visitors annually, roughly 10% of them tourists, including those from the United States, Guiliano said.

"It's when you're looking at the bottom line and saying, how do I grow the business? ... what are the areas that will produce incremental sales?," Guiliano said. Woodfield's sales are close to $400 per square foot, she said.

International visitors like Yankee malls "probably because the selection of goods is so much better than in their home country," and exchange rates often make U.S. goods less expensive for them, said Beverly Center's Caceres. The mall attracts 13 million shoppers annually, including roughly 4 million tourists.

And size matters, Guiliano said. "People are lured to the biggest and best. They're lured to the Sears Tower, or the Empire State Building."

Those already marketing themselves overseas say the backbone of their efforts is working with tour operators and travel agencies that create package deals, vacations linking airfares, hotels, transportation and visits to a slew of sites and attractions within a city or region. The Taubman-Commerce Department study found that in 1997, 5.1 million people, constituting 26% of the overseas travelers who shopped in the United States, had booked a travel package.

Shoppers/tourists spent an average of $290 per person per trip on gifts and souvenirs alone, according to the report. The study did not indicate how much more of the average $1,593 each visitor spent on consumer goods. But the gifts and souvenirs category ranked third, behind $407 spent on food and $380 on lodging.

So, "even though the majority of the visitors are coming to the U.S. without a prepaid package, it is clear that promotional offerings to the overseas visitors should include shopping opportunities," the report said.

Personal contact also helps to draw foreign visitors. Attending travel industry trade shows, especially those held in countries whose citizens they hope to attract, is another fundamental strategy, marketers said.

On the local level, shopping centers should cross-promote themselves with nearby attractions such as museums, historical sites and entertainment venues, several experts said. Other common strategies: joining travel industry associations; offering incentives for tour operators; running a shuttle to hotels; and even including a foreign currency exchange office at the center.

Some malls have taken even more creative steps. In October, the Houston Galleria began offering "GalleriaMiles," additional frequent-flyer miles for Continental Airlines passengers who spend certain amounts at the center.

Owned and managed by Hines Interests, Houston, the Galleria has 2.8 million square feet and 330 stores, including anchors Neiman Marcus, Saks Fifth Avenue, Lord & Taylor and Macy's.

Tourism accounts for about 30% of both the mall's 16 million annual visitors and its sales, said JoAnn Henry, director of marketing. While she declined to reveal specific dollar figures, or how many tourists come from other countries, she noted that the Galleria draws heavily from Latin America. Continental Airlines recently added flights from those countries to Houston, she said.

But perhaps no other retail developer has made as great a commitment to attracting foreign tourists as The Mills Corp., Arlington, Va., owner of eight value-oriented malls.

"Every one of our centers has a director of tourism" within its marketing department, said Anne Lipscomb, group vice president of marketing.

Six years ago, The Mills Corp. began surveying its shoppers to track tourist levels and spending. At Sawgrass Mills in Sunrise, Fla., for example, 40% of the business was from tourists, Lipscomb said, more than half of them from outside the United States.

Today, the company advertises in consumer publications in the countries yielding the most shoppers, such as Brazil. Last year it hired a sales agent in that country to work with tour operators to route visitors to Sawgrass and other Mills properties. Lipscomb recently traveled to Asia to hire a similar sales rep for the Far East and said the company may eventually use experts in Great Britain, Germany and Mexico.

Sawgrass Mills, meanwhile, won an award from the Travel Industry Association of America for a contest it ran for tour operators. The winner, a Brazilian company, earned a Plymouth Breeze for bringing some 20,000 tourists to Sawgrass, more than any other travel company during a seven-month period in 1997, said Ana Maria Pelayo, Sawgrass' director of marketing.

The mall tracked the travel companies' productivity through its VIP brochures, given to travel agents and marked with their names. Customers visiting the mall redeemed the brochure for coupons. Redemption of the VIP brochures rose from 35,900 in 1996 to 63,000 in 1997 thanks to the contest.

That doesn't mean capturing the international tourist market is easy, or dirt cheap.

McCormick said that among companies she works with, individual shopping centers spend perhaps 10% to 15% of their marketing budget on international tourism. Those new to this market should first deal with local hotels and travel organizations before tackling industry conventions abroad, she advised.

Marketers should be realistic about the numbers of foreign visitors they can reach. To draw the overseas visitors, a center should be near an international airport in an area that already attracts plenty of foreign visitors, such as California, Florida, Hawaii, Texas or New York.

"It's very geography sensitive," said Denise Anton, senior vice president of operations with Taubman. "You have to be in an area already getting a significant amount of traffic from an identifiable market."

And while Guiliano says the number of tenants in a center is important, "I don't think size is the only issue," Anton said. "It's really just the destination quality of the center." For example, upscale malls and outlet centers seem to draw strong foreign interest, she noted.