2011 finished strong for retailers taking advantage of what appears to be a strengthening economy, but what's in store for them in 2012?
While Westfield Co., the owners of Old Orchard, are still waiting for official December sales figures, the National Retail Federation announced Thursday that holiday sales were up across the United States 4.1 percent when compared to 2010, totaling $471.5 billion. No doubt deep discounts and longer hours aided those numbers and the midnight openings on Black Friday also helped, both in Skokie and malls across the country.
“People’s shopping trends seemed to be consistent,” said Tim Geiges, Old Orchard’s general manager. “The biggest difference for me this year did spread out that shopping on Black Friday as opposed to having it condensed into a 10-hour day.”
“It is almost impossible to compete effectively on price with online retailers because price comparisons are so easy to do for the consumer."
Among the Old Orchard tenants that opened up at midnight on Black Friday for 2011 were Macy’s, Ann Taylor, The Limited and Gap. Geiges believes all these chains plan to make the same hours available for the next holiday season and wouldn’t be surprised if other stores followed suit.
“I’m sure it is going to become more popular next year,” he said.
The spending increases this year were not a matter of more volume in terms of customers, but customers digging deeper into their wallet, according to anecdotal evidence Geiges received.
“From some of the retailers we talked to it seemed as if their traffic was a little light at times but their transaction amount was actually up so it seemed as if customers were spending more in the stores they were shopping in,” Geiges said.
One of the hallmarks this season were the huge discounts retailers were offering to challenge the online shopping world that had a sharp increase in sales in the 2011 holiday season. One expert said those steep discounts were a necessary to driver consumers into stores.
“It is almost impossible to compete effectively on price with online retailers because price comparisons are so easy to do for the consumer,” said Mary Ann McGrath, a professor of marketing at Loyola University Chicago, who researches retail and consumer behavior. “That is what you have seen this Christmas season. These huge reductions are being done to get the consumer in the mall because the longer you are there, the more you will buy.”
Geiges maintained that even though online shopping is certainly popular, those same consumers may still be willing to drive to the local mall if the circumstances are correct.
“I don’t know if all of those people aren’t still visiting the center,” Geiges said. “I think a lot of our retailers have done an excellent job in shipping to the store. People buy things online and then come to the store and pick it up. They then encourage people to accessorize when they pick up their merchandise.”
The $10 million facelift
Now the focus shifts to the $10 million facelift scheduled to start later this year at Old Orchard, possibly as soon as March or April depending on the weather. Geiges predicts a new play area and trellis will be in place by the end of 2012 and holds out hope that an event pavilion will also be available to customers by that time.
“I think that is going to be a great addition for us in the winter months,” he said.
The only controversial matter the renovation faced was the construction of a 50-foot sign on Old Orchard Road. The village trustees overrode a plan commission recommendation and permitted the sign. Geiges said it could be up as early as this spring.
At the end of the day, all of the changes are to bring more customers into Old Orchard, which already draws 13 million visitors a year.
“By revitalizing and enhancing the common areas, we are hoping we can provide areas where we can provide more events and create a gathering place for the community and our customers,” Geiges said of the mall, which was originally constructed in 1956.
If the renovations work, it will add to the legacy of Old Orchard which has seen a turnaround in the last generation.
“What is interesting with Old Orchard is that people took it for dead 10–15 years ago,” McGrath noted. “Resources were being put into covered malls. The models were the vertical malls in the city and the covered malls in the suburbs. What happened at Old Orchard is they attracted a variety of stores that people found attractive. They got a couple of big anchors and it became an interesting place to be. There are a variety of things to do and it is like a park in Skokie.”
Geiges hopes Old Orchard becomes one of the top producing malls for the Australian-based Westfield chain, such as the Garden State Plaza in Paramus, NJ. But that can be a double-edged sword.
“The problem you see with all of the Westfield malls is they become repetitive,” McGrath cautioned. “They all have the same look and the same stores. That is a problem because nothing there is geographically unique about shopping in any location in the country.”
In terms of the feelings at Skokie’s Village Hall, officials are happy with what is going on at Old Orchard, which generated approximately 40 percent of the village’s sales tax revenue in 2010, and the rest of the northern portion of the village.
“My feeling is Old Orchard does have positive spillover effect on that Skokie Boulevard corridor,” said Village Manager Al Rigoni. “I think they all feed off each other. The Doubletree and the Performing Arts Center and some of the smaller centers around there do well because of Old Orchard and vice versa. That is the way commercial districts are supposed to operate.”