There will be hundreds of stores and an indoor ski slope. More surprising is the possibility of sea lion shows, submarine rides, and which group will likely be the most important customer base.
If a proposal first revealed this week in the Miami Herald is approved and actually built, the suburbs of Miami would become home to the largest mall in the U.S. It’s been estimated that the megamall will cost $4 billion to complete, but that’s hardly the only eye-popping factoid attached to the monumental project. Here are a few more:
It’ll occupy a whopping 200 acres. That’s roughly double the acreage of the Mall of America in Minnesota. The Miami megamall, dubbed the American Dream, has been proposed by a Canadian company called Triple Five. The firm also owns and manages the Mall of America, as well as another American Dream, a much-maligned complex near the East Rutherford, N.J., sports venues once known as Xanadu that’s taken more than a decade to develop and still isn’t open; and North America’s largest mall, the 5.3-million-square-foot behemoth with two hotels, a water park, and 800+ stores in West Edmonton, Canada.
The project is supposed to employ tens of thousands. Construction will reportedly require 25,000 workers, and about that many permanent jobs are expected to be needed to keep the complex running as imagined, according to Triple Five. As for the criticism that many of these jobs would be low-paying retail and tourism gigs, Miami-Dade Mayor Carlos Gimenez told the Miami Herald that all jobs are good jobs, though there seems to be some confusion as to how many jobs will actually be created. “Everybody is focused on high-paying jobs,” Gimenez said. “Not everybody is qualified for them. Twenty-thousand jobs are twenty-thousand jobs.”
There will be sea lion shows and submarine rides. Triple Five isn’t in the business of creating mere places to shop. Instead, it develops “tourism retail and entertainment complexes,” and points to a quickie Time.com post as proof that the Mall of America is the country’s “Most Popular Attraction,” drawing some 40 million visitors annually. (Meanwhile, a story from sister publication Travel & Leisure left the Mall of America off its “Most Visited Tourist Attraction” list because it wasn’t deemed culturally or historically significant.)
In any event, Triple Five markets its malls as full-fledged destinations, not simply shopping centers; one particularly ambitious plan envisioned chartered flights heading to Newark, N.J., just so rich folks the world over could visit the American Dream in the swamps of Jersey. Among the over-the-top features in the works for the American Dream Miami are an indoor ski slope, skating rink, water park, amusement park with a roller coaster, Ferris Wheel, live sea lion shows, hotels, condominiums, and submarine rides.
It’ll be neighbors with two other enormous malls. As the Miami New Times pointed out, the proposed American Dream mall is planned to be built in Miami Lakes, at the intersection of the Florida Turnpike and I-75. Given the location and scope, it would likely compete directly with two existing monster malls in greater Miami, the Aventura Mall and Sawgrass Mills—which currently rank, respectively, as the third- and seventh-largest malls in the U.S.
The mall isn’t necessarily aimed at Floridians. Instead, the key demographic that may lead to the American Dream Miami’s success (or failure) is that of wealthy international tourists. Foreign visitors constitute one-third of foot traffic at shopping hubs like the Aventura Mall, according to Miami Today, with an outsized portion coming from Brazil, Colombia, and Argentina. Canadians and Europeans come in abundance as well, and the foreigners tend to spend far more time and money during their shopping excursions than Americans because 1) they’re rich foreigners; and 2) it’ll likely be a while before they get another opportunity to go on a wild spending spree in America in the future.
Foreign visitors have even begun flocking to South Florida around Thanksgiving, and it’s not for turkey dinners. “More and more South Americans now really understand that because of the great discounts, Black Friday is a terrific time to travel to the U.S. to shop,” a Saw Grass Mills executive explained.
Mike Kercheval, president and CEO of the International Council of Shopping Centers:
I write in response to Kerri Anne Renzulli’s January article, “Why Teens Hate Shopping at ‘Teen’ Clothing Stores,” and in particular to her contention that “Malls Are No Longer a Hangout.” In arguing this point, MONEY joins a steady stream of voices to incorrectly write-off the shopping center industry.
Renzulli accurately points out that e-commerce sales are increasing at about four times the growth rate of physical retail establishments. But a closer look at the stats shows that actual e-commerce sales still amount to just 6% of total retail sales (with the balance happening at brick-and-mortar locations) and that consumers make 78% of their purchases at shopping centers.
It is true that some major teen-oriented retailers have announced store closings recently, but teenagers remain a driving force in the retail industry—and, yes, they still visit the mall. Teens are simply shifting where their spending dollars go to. In fact, their demand for new brands and styles has generated a need for more retail space from fast-fashion brands such as Zara, H&M and Forever 21, each of which have recently announced big expansion plans—mostly in shopping malls. And when teens have been asked—as they were in this recent survey by Teen Vogue—they point convincingly to an omni-channel approach, one which still puts brick-and-mortar (or the mall) retail at the core of their purchasing habits.
Like shoppers of all ages, teens will use mobile and online to complement their shopping experience, but they still prefer to walk into a store and feel the merchandise before they buy that next pair of designer jeans. They also go to malls to enjoy the social experience. During the past holiday shopping season, Jason Wagenheim, vice president and publisher of Teen Vogue, said, “the mall remains the most important part of the overall omnichannel shopping story” for the millennial shopper, especially 16 to 26 year-olds. He pointed out that even though millennials are shopping more online and through mobile, “the brick-and-mortar experience still greatly matters.”
The bottom line is that consumers today want to choose where and when they can shop, and they are using online technologies to enhance their shopping experience, but malls and shopping centers will continue to be the number one distribution channel of goods, services, and entertainment.Retail tastes change over time, and brands will come and go, but people of every generation clearly want to shop in stores.
Kerri Anne Renzuli responds:
My article was focused not on the state of shopping centers or malls but rather on the growing disinterest of teens in teen-targeted retail brands, a point that was underscored by the ongoing management shake-up at—and disappointing earnings released today by—Abercrombie & Fitch.
That said, I stand by my contention that teens are less likely than in past decades to use the mall as a nexus of social gatherings. The numbers seem to paint a pretty clear picture: Teens are spending less of their leisure time at malls and ascribe decreasing cultural importance to them. In 2014, according to Piper Jaffray, teens visited the mall an average of 29 times a year—still a lot, as you point out, but down from 38 times in 2007.
As I note in my article, so-called “fast fashion” brands like H&M and Zara that are aimed at a broader demographic have indeed absorbed some of the teen traffic lost by Abercrombie and the like. But teens tend to see these retailers as primary destinations, much like large department stores. By contrast, many of the struggling teen brands like Wet Seal and Aeropostale have historically benefited from incidental foot traffic from teens wandering the mall with friends—which they are doing less of now. The number of stores visited per mall trip has dropped from five to three since 2007.
While teens still gather at the mall, other types of retail establishments, particularly “fast casual” eateries like Chipotle and Starbucks, are growing in popularity. And with teens choosing to spend more of their time and income in restaurants, it’s become even harder for teen brands to attract the attention and wallets of their core audience.
Target's job cuts come on top of the ones linked to its retreat from Canada. No word yet on the impact to #AlexFromTarget.
Macy's, Target, J.C. Penney, and other stores are getting creative in their quest to boost sales, or at least stay alive and relevant, in an increasingly crowded and complicated marketplace.
The all-purpose American department store is “dying.” We’ve heard this for years, to the point that the retail category is not unlike the old man in the classic Monty Python scene who is loaded up on a cart of corpses despite his protest, “I’m not dead!”
Yet while we’ve witnessed the collapse of Radio Shack and various teen fashion retailers, as well as the larger struggles of malls as a whole, the old-fashioned department store is, well, not dead yet. In fact, this week, a round of earnings reports revealed generally good sales performances in the fourth quarter—and during the all-important holiday period in particular—from Dillard’s, Target, and Kohl’s, among others. Sears sales were down for the 11th quarter in a row, but even its report was viewed as decent because the company lost significantly less than it did in the same period a year prior. J.C. Penney surprisingly posted a loss for the quarter as well, though comparable store sales were actually up 4.4%.
Even with the mostly positive earnings reports, Target’s failed expansion in Canada, as well as the trend to shutter more and more Target, Sears, Macy’s, and J.C. Penney stores in the U.S., demonstrates that while department stores are alive, they’re hardly kicking butt.
To avoid being written off for dead alongside Radio Shack, here are a handful of strategies you’re going to see more of from department stores:
Trying out new store models. This week Macy’s announced intentions to create a new off-price retail brand that would compete with discounters like TJ Maxx and highly successful “fast fashion” chains such as H&M and Forever 21. Meanwhile, Kmart is testing out a smaller store format, and Target is expanding its “Express” small-store model to more markets. Walmart has been going small too, with more non-supercenter “market” locations. Overall, the strategies show that the large department stores and discounters acknowledge that the one-size-fits-all approach is flawed, especially when the size in question is a hulking big box store.
Pushing web sales hard. Target offered free, no-minimum-purchase shipping for all online purchases throughout the 2014 winter holiday period. The move helped long-struggling “Tarjhay” increase digital sales by 30% for the year as a whole. Now it looks like Target is doubling down on its e-retail offensive, with this week’s decision to cut the minimum-purchase threshold for free standard shipping from $50 to $25—a change that undercuts Amazon, Best Buy, and Walmart, among others.
For its part, the world’s largest retailer is well aware that more shoppers are “omniconsumers” who make purchases via all channels, and it’s trying to win their sales at every turn. “No doubt business is going increasingly mobile and increasingly online,” Walmart CEO Doug McMillon told the Associated Press recently. “We don’t really care how the customers want to shop. We want to be in the position to serve them in any of those ways.”
Going old school with marketing. While virtually all retailers are seeking to juice web sales to compete with the likes of Amazon, J.C. Penney is trying to achieve this goal in an old-fashioned, seemingly unorthodox way. Starting in March, the department store that’s undergone several (mostly unsuccessful) makeovers in recent years will start mailing its oversized catalog to customers yet again. And one reason why they’re using this tool is that consumers are more likely to order merchandise online with a catalog in front of them.
Going invasively new school with sales pitches. Macy’s, Neiman Marcus, and Lord & Taylor are among the major retail chains that have taken the potentially creepy step of deploying wireless beacons that detect shoppers’ precise locations inside stores and send them info via smartphone about discounts, promotions, and special events.
Discounting in ways old and new. Discount-heavy Kohl’s, where you can “save” $2,136 on a $242 shopping excursion, and where no one in their right mind pays full price for anything, had an especially strong holiday quarter with 3.7% growth in sales, beating expectations of 2% to 3%. One thing this tells us is that the age-old sales tactic of “price anchoring,” in which “regular,” “original,” “suggested,” and “compare to” list prices are inflated so that the inevitable discounts seem all the more impressive, remains a surefire way to sucker shoppers into buying.
On the new frontier of discounting, Target is testing out a strategy from the playbooks of supermarkets and drugstore chains, quietly launched a rewards program mobile app in beta. Members get 10 points for every $1 they spend at Target, and 5,000 points can be traded in for 5% off your next total purchase at the store. For now, the program, called REDperks, is available on an invitation-only basis, and only in select markets.
Target just cut its minimum purchase requirement to receive free shipping in half, from $50 to $25. That's $10 less than what you have to spend at Amazon or Best Buy for free shipping.
Target has a long history of being in the crosshairs of Amazon, what with the world’s largest e-retailer routinely undercutting Target’s prices, combined with a wide range of strategies to woo moms in particular away from “Tarjhay” with speedy one-click shopping. Perhaps Amazon’s most deadly weapon—causing trouble not only to Target, but nearly all brick-and-mortar retailers—is Amazon Prime, the subscription program that provides free two-day shipping, among other perks, in exchange for a $99 annual fee. Above all, what Prime membership does is dramatically increase one’s spending at Amazon.com because nearly all purchases made on the site will ship for free. And the purchases made at Amazon.com are purchases that are no longer taking place at Target, or via another retailer.
On Monday, Target went on the offensive by tweaking its own free shipping policy, with the hopes of stealing some business back from Amazon, among others. The new shipping policy, Target boldly claims, “Will Change Your Life,” presumably in ways not unlike how Amazon Prime is known to dramatically change one’s spending habits and errand schedule.
The new policy grants free standard shipping (3 to 5 business days) on all Target.com orders of $25 or more. Previously, the purchase threshold for free standard shipping was $50. The minimum purchase requirement for free shipping at Walmart.com, for instance, is set at $50, while Amazon and Best Buy offer free shipping on most orders if the total is $35 or more.
Clearly, the move gives Target a little leg up on the competition, and it could very well start a free shipping pricing war among retailers—a war that would obviously benefit shoppers. But how big of a deal is Target’s policy change really? And is there a prayer it could actually change your life?
The truth is that Target’s new policy won’t affect its best customers at all. That’s because the most loyal Target shoppers are highly likely to be in possession of the Target REDcard, a debit or credit card that providers the user with 5% off on all Target purchases, as well as free, no-minimum-purchase standard shipping on all online orders. What’s more, Amazon Prime subscribers who are happy with the service aren’t likely to be wooed away by Target.com—which has fewer items for sale than Amazon (who doesn’t?), and whose free shipping is slower than that of Prime.
The consumers being targeted by Target’s policy change, then, are those who aren’t regular Target shoppers and don’t subscribe to Prime, or those who do subscribe to Prime but have been thinking that maybe the annual membership fee isn’t worth it. Also, for Target’s offer to seem truly compelling, you must be someone who would regularly want to make online purchases of $25 but not over $35. Once you’ve hit the latter price point, after all, you can get free shipping from Amazon or Best Buy alongside Target, so Target’s free shipping is a wash.
All that said, there are probably some consumers who will view Target’s new policy as an appealing alternative to Prime and Amazon.com in general. Just as Target’s decision to offer a free non-minimum-purchase shipping promotion during the recent winter holidays gave its web business a boost, the retailer will certainly juice e-retail sales by cutting its free shipping purchase threshold in half. Some tiny portion of shoppers will probably “change their lives” by placing a few more small-money orders at Target.com now that shipping is free.
It seems unlikely, however, that the policy change will move the needle much in Target’s ongoing battle against Amazon, nor will it cure Target’s larger problems, including its failed expansion in Canada and the fading of its reputation among shoppers and the industry as retail’s cheap-chic darling.
Wal-Mart announced pay for new employees will be $9 starting in April and current employees will make at least $10 by next year.
Pay attention to how much speed you're paying for—and what you really need.
You can cut your land line and sever your cable TV, but if you want to stream the new season of “House of Cards,” you need to hang on to your Internet connection. Whatever savings you might achieve by ditching other services, you will almost certainly give them back as your bill for Web connectivity inexorably creeps up.
Consumers now pay an average of $50 a month for a broadband connection to the Web, which is up from a monthly average of about $40 a decade ago. But costs can vary widely—ranging from $10 to $120— depending on whether the service is bundled with cable and phone, is an introductory rate, and depending also on your connectivity speed.
Cutting costs for Internet starts with understanding what you are currently paying. Most people cannot even parse this out because their bills are a jumble of bundled pricing and fees, says Kim Komando, who has hosted a national radio talk show on computers and technology for more than 20 years.
“If you haven’t looked at your whole internet package, then it’s time to go through it A-Z,” she said.
The items to look for include: the base price, speed surcharges, and equipment. If you cannot figure it out based on the arcane coding on your bill, call and ask.
One potential way to save is to buy your own modem/router combination—at $50 to $100, you could quickly make up the $5 to $10 a month rental fee you may be charged.
Another variable to control is your speed. A study released recently by the Federal Communications Commission says standalone Internet service that delivers 10-25 megabits per second (Mbps) is becoming the standard for the typical family that streams video. Many, however, opt for even higher speeds.
You could be paying for more than you need, or getting less than you expect because the wiring to your home simply cannot deliver.
The bottom line, according to savings expert Andrea Woroch, is do not pay for more speed than you need. Someone who goes online mainly to check email could make it work with a connection of 1 Mbps rather than the typical offering of 10 Mbps or more.
Some of the biggest cable providers are offering “basic” Internet connections for about $15 a month for these light users. The same deal applies for DSL, a slower Internet connection offered by phone companies and delivered over traditional phone lines. Light users will enjoy a decent price compared with those who pay for high-speed broadband, but the trade-off is that they cannot expect to stream movies without frustration or engage in video game battles online.
For those who want to make sure they are getting the speed they are paying for, numerous websites such as SpeedTest.net measure the actual speed of your connection.
If it turns out that you are paying for one speed but are receiving far less, Komando said it is important to go back to your provider and ask for an adjustment.
Vote With Your Feet
The next step is to call the competition, if you have alternate service providers in your area. If you do not, Woroch said it is still worth calling your provider to ask for a lower rate.
If you price out a cheaper plan, you can ask your current company to match it.
If they balk, all the better. The best deals can come from the cancellations department, says Ian Aronovich, 42, of Great Neck, New York.
Aronovich, who runs the website GovernmentAuctions.org, says he first went to Cablevision Systems Corp, his provider, about four years ago and asked for a rate that would match the introductory offer of a competitor. That deal bundled phone, TV and Internet for about $90 rather than the more than $150 he was paying.
After following up yearly to ask for better rates, Aronovich is still receiving about the same discount today—which works out to $29.99 for a high-speed connection with a free router.