Mall of America Going Upscale

BLOOOMINGTON, MN-Given a recent influx of tenants such as J. Crew, Aveda beauty products, Coach and Hugo Boss, the Mall of America has taken a decided turn toward the chic and awayfrom its family entertainment-oriented roots. In the last two years, the mall has added a couple dozen stores that the mall’s management categorizes as upscale. In fact, the megamall has put a spotlight on these stores in its current marketing campaign.

Essentially, the megamall has undergone a gradual shift from T-shirt shops and dollar stores to pricey boutiques with internationally known labels such as Aromatique and Swarovski. Meanwhile, established tenants such as Ann Taylor and Banana Republic have expanded their presence. Next month, the Gap plans to open a two-level, 22,000-sf flagship store at the mall, which is managed and majority-owned by Indianapolis-based Simon Property Group.

The reason for the trend is simple: the upscale stores are racking up bigger sales than the novelty shops and discounters, and in most cases, the mall’s owners benefit by sharing a percentage of sales over a base lease rate, says Maureen Cahill, a spokeswoman for the mall. Another benefit of upscale retailers is the prestige they bring, she says. Finally, retailers attract upscale shoppers who are more likely to spend more at the mall than the average shopper.

The trend toward upscale stores is not restricted to the megamall–shopping centers from Baltimore to Beverly Hills are taking the same path, retail analysts say. Consumers flush with cash are more interested in cache than price, and manufacturers are building their brands by opening their own showcase stores at malls with high tourist draws, like the Mall of America.

But the mall also benefits from a Twin Cities loaded with young, high-income shoppers. Household wages in the Twin Cities have outpaced the rest of the nation, growing at 6% in 1998 and 4% in 1999, compared with 3% each year for the nation, according to the Economic Policy Institute. The average household income in the Twin Cities is $54,839, nearly 16% higher than the national average, according to Demographics USA. To be sure, the mall has no intention of scaring off its bread-and-butter, the moderate shopper; instead, it wants to appeal both to the bargain hunter and the fashion connoisseur.