CONTENTS

PRINT THIS STORY:

CHANGE TEXT SIZE:

Is Branding Working?
Developers hope the name game will pay off

By Debra Hazel

Simply Simon. Westfield Shoppingtown. Prime Outlets and Colonial Mall.

The "branding" initiatives begun by some of the shopping center industry's largest and/or highest-profile companies have been much discussed, receiving countless inches of newsprint. Signs have been changed, and commercials filmed and aired in an effort to create a singular image for an often disparate group of properties.

But is it working?

That may depend on whom you ask: shoppers or Wall Street analysts. A lot of work may still need to be done to reach the customer.

Wall Street is a bit more equivocal, taking a wait-and-see attitude. But how long the financial community will wait to see whether the massive sums invested in these programs bear fruit is anyone's guess.

The main question may be whether the efforts thus far, mostly the changing of names on center doors and advertising, actually constitute branding.

"It makes no sense to brand a regional shopping center for the shopper. What they're doing is not branding: it's closer to institutional advertising," said Stephen J. Moore, an Oxford, Md.-based marketing consultant who has served in senior marketing posts with The Rouse Co. and Horizon Properties. "It's a mistake for neophyte packagers to think you can put a name on a package and it becomes a brand."

It is, in fact, the consumer who makes the brand, according to Richard S. Tedlow, a professor of business administration at the Harvard Business School, explaining that a brand is a "promise" of a relationship between the product and the user. Tedlow recently invited Westfield America to present a test case on its branding efforts, which will be included in next year's real estate and marketing M.B.A. curricula.

Reaching the customer may be the greatest challenge: Asked if she knew what a "Simon" mall was, Ann Marie Spinosa, 34, answered in the negative, even though the Queens, N.Y., native is a shopper at the firm's Manhattan Mall in New York City, and Simon Property Group has been advertising its centers in the area (see sidebar).

"When something is labeled appropriately, why change it? Why reinvent the wheel?" Spinosa asked.

Gerri Miller, 36, a nurse and mother of two, said she doesn't care who owns Monmouth (N.J.) Mall, where she shops.

"What matters to me are the selection of stores. Basically, the mall has a lot of stores and all of the stores that I need are in one spot," she said.

The problem may lie in the products themselves. Both Tedlow and Moore noted that one of the most important attributes of a brand is sameness. Yet shopping centers, particularly regional malls, largely are not consistent in appearance, format or even retailers.

Often complicating the efforts is the firms' strategy of growth by acquisition. Existing facilities are harder to brand.

"I also cover hotels, and one of the major elements of branding is consistency," said James Sullivan, real estate analyst for Prudential Securities, New York. The customer usually knows what to expect from a Four Seasons or a Days Inn.

But the analogy may not work with shopping centers, Moore noted.

"Think about when the choice of where to shop is made -- when we're at home 30 minutes from the mall. It's about convenience," Moore said.

To get around the problem of different center types, Birmingham, Ala.-based Colonial Properties has in effect created three brands: Colonial Malls, Colonial Shoppes (for grocery-anchored strips) and Colonial Promenades (community centers), explained John Moss, CSM, senior vice president. The company has put the new banners in 27 of its 40 retail properties, with seven more to be renamed by the first quarter of next year. The name change had to have some meaning to the public beyond consolidating advertising costs, he said.

"We've tried to time the name change to a change in the property, whether a physical change or a tenant change," he said.

In order to reach the consumer, the brand, then, must become a promise of a certain type of experience, said Shari Simon, vice president of corporate marketing for Simon Property Group, Indianapolis.

"When you see a Simon center, you'll know that you can find quality retail; that you will be safe; and that when you get something, you'll get Mallperks," the firm's frequent-shopper rewards program, Simon said.

While Prime Retail develops outlet centers, its brand carries much the same meaning.

"Our brand is a simple promise: a clean, safe, welcoming environment to shop; a tremendous selection of great name brand stores with a great selection of goods at a great price; and prime amenities to make customers more loyal, whether it's a food court, coupon books and tourist information; and management by knowledgeable, enthusiastic employees," said David Phillips, executive vice president of Prime Retail, Baltimore, which launched its branding initiative, renaming all of its 50 outlet centers Prime Outlets, in September 1998.

While Los Angeles-based Westfield America has successfully branded its centers in Australia for 30 years, the idea is new to the firm's U.S. centers.

"Over three years, we developed a customer-service program that means that the Westfield Shoppingtown stands for something: quality retail, exceptional customer service, and community involvement," said Randall J. Smith, executive vice president of marketing.

While Smith admits that a long-time customer might always think of Westfield Shoppingtown Topanga Plaza as simply Topanga Plaza, he added that the Shoppingtown name may eventually mean a certain level of quality and service.

If nothing else, it will keep the developer/manager honest. "The brand helps you set a standard -- you can't hide from people knowing who owns the property, so you have to make sure that standards are set," Moss said.

And the efforts toward consumers may yet succeed. Once Spinosa was informed that Manhattan Mall was a Simon property, she said she might shop at other Simon centers.

"When I go there I always go home with something. So if I recognized the name somewhere else, I might stop," she said.

But Wall Street, with its quarter-by-quarter analysis, may be less easy to persuade. Analysts want measurable results to justify the expense of changing signage, doors, advertising and even letterhead.

"Sometime over the next year, these companies should be able to demonstrate how this is helping FFO [funds from operations] growth," Sullivan said.

Because the initiatives are so new, quantifying success is more of a long-term proposition, the developers say.

"We looked at a three- to five-year time frame to build the reception of the brand," Westfield's Smith said.

Simon Property Group spent $23 million on its branding efforts last year, including $500,000 in research alone, Shari Simon said. Early results seem promising: In the months since her company began its campaign in March, traffic at its centers has risen 16%, and Mallperks redemptions had risen 146%.

"In June [alone], redemptions were up 403%," she added.

The investment is still substantial even for smaller portfolios.

"It's pretty simple in one regard: We've spent $12 million to $15 million to brand the portfolio," Prime's Phillips said, explaining the range by noting that $3 million would have been spent on advertising in any event.

"If we want to make a 15% to 20% internal rate of return, we want to see net operating income increase by $1.8 million or more. So we would want to see rental rates increase 14 cents per square foot," Phillips said.

Moore, the marketing consultant, argues that if branding may really only be effective in reaching Wall Street, the money might be better spent elsewhere.

"If you're branding for the Street, that's a total of 15 people [the major analysts]. That's not very many people. You could sit and meet with each one individually cheaper," he said.

But branding of shopping centers isn't exactly new: Some development firms, such as Belz Enterprises and Tanger Factory Outlets, have been placing their names on their centers for years.

"We started this process 20 years ago, and we're delighted other companies are following our lead," said Steven B. Tanger, president and COO of the firm. All of their 31 factory outlets have borne the Tanger name from their opening. The Mills Corp.'s value megamalls, which were developed bearing the company name, also may be among the closest to establishing a shopping center brand, observers say.

And to be fair, none of the latest set of branding programs is complete. Westfield launched its program in November, and re-signing of the firm's 34 regional malls won't be complete until July 2000.

Simon, which began its initiative in March, won't complete the name change on its 200-plus center portfolio until sometime next year. Even then, the brand won't be extended to the entire portfolio, which includes community centers as well as regional malls, Shari Simon explained.

"I'd be a fool to brand 240 malls," she said.

Prime and Colonial also are still in the early stages of their efforts. But where all of this will lead remains to be seen.

"Obviously, the name change does not a brand make," Colonial's Moss acknowledged. "It takes time, like a Nike. We're just not there yet -- and neither is anyone on this continent."