America’s Preeminent Mega-Mall Has Always Been Thinking Big…and Small

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America’s mid-20th Century suburban sprawl drove the first big wave of shopping center growth. With that, locally based single-store merchants who thrived in bustling downtowns saw huge opportunities to follow their customers to the “burbs” to cash in on the post-World War II baby boom.

The explosion of national specialty retail chains that followed between the late 1960s and mid- 1990s helped to feed the next iteration of the new department store-anchored, regional super-malls, along with the enclosed “malling” of previously open-air centers. Unfortunately, for many of the small locally based merchants, the market strength and sophistication of the specialty retailers priced the locals out of choice mall locations.

Despite all the many ebbs and flows of retailing over the past three decades, MOA has managed to distinguish itself as far more than just an excessively big mall. It has been a phenomenon that both cultivates retailers and captivates audiences.

The Pendulum Thing

Three decades later, call it a karmic comeuppance or a pendulum swing, the pandemic hastened the shakeout of the now bloated and ubiquitous specialty retailers who focused on scale as a strategy rather than a tactic for long-term success. Enter the flood of empty storefronts in 2022.

Most of today’s best-performing (A, A-, or B+ class) malls are once again in search of fresh concepts and retail upstarts to occupy their empty storefronts. These include digital native, direct-to-consumer (DTC) brands, as well as local entrepreneurs whose unique styles and street cred lend authenticity to traditional malls. More importantly they become Gens Y, Z and Alpha magnets.

The Mega-Malls Mojo

Ironically, one of the leaders in “rebalancing” nationals and locals is none other than the Twin Cities’ nearly five million square-foot Mall of America. This is nothing new for them. In August 1992 when MOA opened their doors, there were a host of fresh players in addition to the expected national chains. Some of the newbies were literally “being hatched” through a retail incubator program developed by the mall’s innovative leasing group, led at the time by Melvin Simon and Associates, the predecessor of Simon Property Group.

These entrepreneurial startups received short-term leases in nominal footprints, called bump-backs, a term coined to describe these trial tenancies that occupied the front real estate positions representing 15 percent to 20 percent of a not-yet-leased tenant space. Despite the impermanence of these players, the mall owners insisted that the store designs and fit-outs be first-rate, as they often bookended tenants that were paying the full freight. These tests proved to be prudent investments for the mall, as many of the retail entrepreneurs ultimately became full-fledged inline tenants. I am proud to say that my own retail design firm was actively involved in the program, three decades ago. Today, these tactics of offering short-term leases to test the viability of a retailer or a concept are becoming commonplace among the leading mall owners.

Entrepreneurship Is in MOA’s DNA

Mall of America has always been an anomaly among retail properties. Beyond being one of the biggest malls in North America, it has always had its own playbook. As an international destination, its 40 million annual visitors travel greater distances than for any other shopping center. Besides being the host of over 500 stores and its signature Nickelodeon Universe indoor theme park, it has benefitted from a unique mix of retail, entertainment, live events and activities, and a broad range of great eateries.

Yet, thinking small as well as big is hardly foreign to MOA. In November 2018, MOA launched “Fourpost,” a Retail-as-a-Service (RaaS) concept. This unique collective of kiosk-like product presentations operated by the mall, became a launch pad for startups and digitally native brands. It offered offline exposure to the mega-malls’ throngs without painstaking processes and major development costs for the retail concepts. The mini marketplace featured a flexible product display system and offered short-term leases of three and six months, with no initial cash outlay.

Doing Right When It Really Matters

While MOA has always benefited from international tourism, it has never lost sight of being a good community steward in the Twin Cities. Mall of America generates about 10 percent of the City of Bloomington Minnesota’s tax base and has an outsized impact on the entire state economy. Think: Disney.

Two years ago, following the May 2020 murder of George Floyd, many of the South Minneapolis businesses were destroyed during the unrest that followed. With input and guidance of community leaders, Mall of America opened its Community Commons in October –a rent-free 5,000 square-foot collective for 16 displaced urban merchants and a new breed of entrepreneurial retailers.

The Commons just celebrated its “fourth rotational installation” of new retailers 18 months after its opening. I had the opportunity to chat with Jill Renslow, Mall of America’s Executive Vice President of Business Development & Marketing about the program’s evolution. Jill tends Community Commons like a passionate gardener.

Keeping It Real

Jill talked with enthusiasm about the experience of finding and helping develop the talents of locally based merchants who bring a sense of dynamism and authenticity to MOA. She also nurtures the handful of retailers, now about a half dozen, who have “graduated” from the Community Commons program to become full-fledged inline tenants.

One of Jill’s favorite success stories is Urban29, operated by Joyce Sanders. Joyce had been a successful South Minneapolis seller of urban streetwear since opening her store in 2019. That was before the twin slam of Covid-19 and the unrest and arson that followed the murder of George Floyd. It reduced Urban29’s inventory to ashes.

In May 2021, Sanders opened a permanent storefront on MOA’s second floor and continues to build her unique premium, luxury streetwear brand that caters to 18–35-year-old customers. Another Community Commons fashion superstar is designer Andre Sackman with his brand “Love Disorder,” who received an invitation to show his line on the runway at New York’s Fashion Week, in February 2022.

Building the Commons Brand

I asked Jill how the program has evolved since its inception. She said the biggest change has been reducing the number of retailers by about half. “This has given all of the retailers about twice the amount of space and has also allowed our staff to have more impact in fostering the success of the merchants.” The most recent group of “inductees” include six new retailers added to two holdovers from the last group.

Her team leverages the relationships it has built throughout the community to identify unique retail talents with fresh concepts that can benefit from the exposure MOA can provide them. They have developed an in-depth review process to qualify potential merchants and the selected merchants begin rent-free for three months. At the end of that period, they receive the opportunity to continue operating, based on paying a percentage of their revenue rather than a fixed lease rate.

Playbook for Success

The Commons entrepreneurs are mentored by the MOA team with staffing models and other operational assists. The Twin-Cities based creative agency, KNOCK, inc. which has a longstanding consulting relationship with Mall of America, also provides the Community Commons merchants with a wide range of pro bono services that helps position them for success.

According to Reginaldo Reyes, KNOCK’s VP Brand Experience and Environmental Design, paying a percent helps vet the Community Commons retailers and supports them with branding, identity design, social media, marketing, visual merchandising and store design. KNOCK also drew upon the talents of Juxtaposition Arts, a non-profit youth art and design education center, who collaborated in the design of the Commons space, introducing a bold, street-art inspired visual branding which became the perfect billboard for “the goods.”

JXTA, as they are known in the community, also offers JXTALABS, a workforce development program, that offers young adults ages 14-21 year-round apprenticeships in art and design. Apprentices are trained and mentored by adult practicing artists, designers, and architects in revenue-earning production studios.

Celebrations and Collaborations

Jill Renslow noted that MOA has offered the Commons retailers opportunities to collaborate around special calendar events. That currently includes Mall of America’s 30th anniversary, which will officially take place on August 11, 2022. The celebration has prompted several of the retailers to develop signature “merch” to commemorate the event.

Beyond the Community Commons program, Jill reaffirmed the fact that MOA has always been on the prowl for the hottest retail upstarts, nationally and internationally. They have developed an effective lead strategy, paired with flexible programs that include short-term tenancies as well as longer-term deals. These opportunities include seasonal and event pop-ups that last from days to temporary tenancies of six weeks to three months.

Despite all the many ebbs and flows of retailing over the past three decades, MOA has managed to distinguish itself as far more than just an excessively big mall. It has been a phenomenon that both cultivates retailers and captivates audiences.

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