Hispanic Developer Leads Retail Innovation
Posted: January 13, 2015
Currently there are about 1,100 malls in the United States. There has been no new mall construction since 2006 or so, and about 400 malls have shut down since 2007, with another few hundred likely to close within the next 20 years.
With shopping malls in decline, there is one shining beacon of success that continues to resuscitate these archaic commercial properties.
The Legaspi Company, manned by advertising executive turned developer Jose de Jesus Legaspi, has revitalized 10 failing properties by converting them into Hispanic Cultural Centers. Mr. Legaspi is all too aware of Hispanic and Latino spending power.
Legaspi’s first success story resulted in turning around a distressed shopping area in downtown Santa Ana, California in the late ‘80’s, and he turned it into a Latino community center.
Part of the problem is that consumers are looking for more of a community feel, Legaspi believes.
“The mall model still can work,” Legaspi says. “If they become more like cultural or community centers that also offer shopping opportunities, malls can continue to thrive.
In 2013, his company filled nearly 240,000 square feet of vacant retail in an Atlanta mall with the likes of Planet Fitness, Ross, Shopper's World, and dozens of other local merchants. According to Legaspi, Hispanic households buy 20% more shoes and clothing than non-Hispanic ones, so the mall's store mix is geared accordingly. Knowing your audience should be the mantra of all retail and Legaspi has the formula down: boots, quinceañera shops, and country-western stores are popular. Easter, Christmas, the Day of the Virgin of Guadelupe, and other holidays are celebrated there also, and bishops and priests lead services. But special promotions and sales events that take place on Sunday, never start before 3pm – so there is no outside interference with Mass.
Hispanic consumers tend to shop at malls more often than non-Latinos, according to Legaspi, and they spend more on groceries, cosmetics and clothing than other groups do.
“A lot of the problem now with malls has to do with their business practices,” he said. “There isn’t much seating in common areas because the idea is to get consumers into the stores.”
And because of the nature of franchising, with stores across a country or state looking the same and selling the same goods, “there’s no flavor of local merchants in most malls.”
Because of this, Legaspi isn’t concerned with big chain stores anchoring his revived malls, since he wants to get variety of price point and merchandise, and ensure that a supermarket is included in the mix to create one-stop shopping.
He also provides stages in his shopping centers so musical and cultural events can take place, while mall-goers can linger and relax in large built-in seating areas. Additionally, job fairs and health fairs are among the venues people can participate in. And the attraction is multi-generational. Grandparents can sit and enjoy themselves for hours, while their children and grandchildren are actively occupied shopping or browsing. Extra wide aisles are also a prominent feature, so families can congregate to watch an expert butcher carve up a whole pig.
Legaspi notes that his success at revamping malls across the country ‘is part of a broader phenomenon of the growth of our community, of its people, its votes and its money.’
The results are in, and not only have net operating income and foot traffic gone up in these revived retail areas, but sales per square foot have increased between 8% and 30%. When you account for the fact that these malls open in distressed retail areas, the numbers are pretty amazing.
Taking a cue from Mr. Legaspi, this kind of culturally directed marketing could be the magnet that draws people back into malls, saving them from extinction.TAGS: retail, retail trends, retailers,