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SPECIALTY LEASING: Cream of the kiosks

Shopping center owners discuss the latest trends and traditional favorites in specialty leasing.

Specialty leasing has evolved into a multi-million dollar operation for shopping centers. Temporary tenants built a thriving business based on a unique mix of merchandise ranging from aqua massages and cellular phones to herbal supplements and scooters. The magnitude of the sales power derived from the compact carts, kiosks and retail merchandising units has attracted industry-wide attention from mall owners and retailers alike. And everyone has an eye out for that next big seller.

"This is definitely a fad-driven business. So anything hot, we try to get into as quickly as we can," says Marla Parr, divisional vice president, specialty leasing, for Indianapolis-based Simon Property Group. "We are constantly looking at what people are selling and buying, what people want."

One of the biggest challenges for owners and managers is finding fresh specialty retail concepts. "I think we're losing sight of what made us great in the beginning," says Heidi A. Maybruck, director of specialty leasing at Columbus, Ohio-based Glimcher Realty Trust. These days the same kiosks displaying scooters, candles and watches can be found in almost every mall across the country.

The key is finding new ideas, or at least giving tried and true concepts a new look. Hickory Farms recently gave its kiosks a face lift. "Short-term tenants of today have to change their look to make it fresh," Maybruck says. "The consumer is yearning for something new and different and that's what every specialty retail entrepreneur needs to start thinking about."

New concepts One of the hottest new temporary tenant concepts is "That is a great concept. It looks great, and it is price-pointed well," says Deborah Georgetti-Piro, vice president of business development at Chicago-based General Growth Properties. uses temporary showrooms to promote its online furniture sales. The Internet retailer offers fine imported furniture and accessories from all over the world at significantly discounted prices. uses what it calls "temporary Internet mobile showrooms" across the country to enhance its online shopping experience. The retailer leases upwards of 8,000 sq. ft. for 30 to 45 days to allow consumers to touch and feel the product. The brand-new concept debuted in December at malls such as Woodfield Shopping Center in Schaumburg, Ill., and City Center in Columbus, Ohio. "We didn't have space for them this holiday season, but we are looking to try to do something with them in 2001," Georgetti-Piro says. If's mobile showrooms prove to be successful, it could pave the way for similar short-term deals from Internet-based retailers.

Other new specialty retailers proving to be popular include Tupperware, Avon and Disc Gear. Disc Gear features CD holders carrying anywhere from 10 to 40 CDs, which are useful in taking CDs on a car trip. Tupperware is another product that is a hit with mall shoppers. "Consumers are thrilled that they can buy this without going to a Tupperware party," says Arleen Dalton, national director of specialty retail at The Rouse Co. in Columbia, Md.

Tupperware began rolling out its shopping center kiosks about two years ago. "That is a good solid operation," Maybruck says. The traditionally home-based sales business brought its products to shopping centers to reach a broader audience.

Avon is another home-based retailer following Tupperware to the malls as Avon opened new kiosks across the country over the past year. The company has done a great job of designing attractive kiosks, creating strong visual merchandising for the unit, and finding and training good operators, Maybruck says.

Year-round favorites Specialty retail tenants target all age categories from the latest in toy merchandise to apparel, jewelry and household accessories. Merchandise that is more self-use rather than gift-oriented is successful in maintaining strong year-round sales. "I think a lot of the impulse items are really what is selling," Georgetti-Piro says.

The top-performing carts and kiosks are consistent in shopping centers across the country. Comparing specialty retailers at malls in Florida, California, Boston and Chicago will show that 80% to 90% of the products are the same, while 10% to 20% of the mix is represented by local or regional merchandise, notes Jim Allen, a senior vice president of retail development at Simon Property Group.

"Home accessories is an area that has really picked up," Parr says. Items such as picture frames, potpourri and vases are big sellers. Gift items from specialty retailers such as the San Francisco Music Box Co. also do well. Jewelry brings in attractive sales numbers in large part due to the high mark-up on most merchandise. "Silver jewelry has been hot all year round," Parr says.

Cellular phone and accessory sales remain strong due to the high demand. "Because of the huge amount of players, rates are dropping so low that they are affordable for everyone," Georgetti-Piro says. "The rates are becoming so affordable that people are now buying them for their kids or their nannies," she says.

Sales of polar fleece items ranging from vests to hats have been soft in recent years, but the cold weather in the Northeast and Midwest has helped to spark a surge. "Polar fleece merchandise has made a comeback," Dalton notes.

Trendy items ranging from Razor Scooters to Bungee Balls are popular specialty retail items. However, the trendy items aren't always the biggest sellers. Scooters are certainly a hot item, but they have not been among the top performers. One reason is because the scooters are widely available at in-line stores ranging from The Discovery Zone to women's ready-to-wear shops such as Deb, Maybruck notes.

Retailers that have an active merchandising strategy to showcase products such as Rainbow Art and Bungee Balls go over big with shoppers. "Demonstrable products do well in our common areas," Dalton says. "The fact that they are demonstrable makes it fly."

Holiday hits November and December are the busiest two months of the year for specialty retailers, and most holiday sales are geared toward gift items. National retailers that sell from carts and kiosks during the holidays are always solid performers, Maybruck notes. Retailers such as Spencer Gifts, Wilson's Leather, Walden Books, Calendar Club and Hickory Farms consistently post solid sales, she adds. Personalized items also do well with gift buyers during the holiday season - everything from personalized Christmas ornaments to t-shirts are big sellers.

Apparel sales tend to dip during the Christmas season. Sales are great from January through October, but performance typically trends down in November and December, Georgetti-Piro says. "People are not buying clothes during the holidays, they are buying toys," she says. The latest toys are often represented on specialty retail units ranging from Power Puff Girls to Harry Potter merchandise.

Traditionally, cart and kiosk programs are more active during the holiday shopping season. Simon's specialty leasing program averages 100% occupancy during November and December, and closer to 80% to 85% occupancy the remainder of the year, Allen notes. However, that picture is changing at many properties as owners focus on enhancing year-round leasing.

"We are still trying to maximize our year-round occupancy, and we see potential for growth from January through October," agrees Georgetti-Piro. Although specialty leasing kiosks at some General Growth Centers are fully occupied year-round, other properties experience 80% to 90% occupancy or lower throughout the year. General Growth is concentrating on local and regional concepts to fill those vacancies from January through October.

The key to specialty leasing year-round is bringing in a diverse mix of concepts. "We try to look for retailers that complement our centers and are not directly competitive with each other or with our in-line tenants," Georgetti-Piro says.

- All Star Carts & Vehicles Inc. - Alusett Precision Manufacturing - B&C Mortensen Wood Prod. Inc. - B & W Woodcrafters - Beaver Machine Corp. - Cab-Tech Manufacturing Inc. - Carriage Works Inc. - Corsair Display Systems Inc. - Creations at Dallas - Design Performance Group - EIDE Industries Inc. - Global Entertainment Industries - Handi-Hut Inc. - Merchandising Frontiers - Penwal Industries Inc. - Sand Mountain Inc. - The Sequoia Group - Spartan Showcase Inc. - Supreme Products Inc. - T L Horton Design - Thomas Brady & Associated Artists - VanSan Corp. - Waymatic Inc. - Wesnic

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