Concept of Planned Shopping Centers

The expansion of suburbia brought with it planned residential developments. These new sub divisions were connected by many new city streets and through fares along which retail businesses could be established. The notion of the planned shopping center was born. Developers could plan multi store facilities that would serve the needs of these new neighbor hoods with grocery, drug, and apparel goods. With the availability of large tracts of relatively cheap undeveloped land located many miles from the inner city, but close to these new living areas, large centers could be designed that would offer one stop shopping to entire clusters of residential areas. The last thirty years witnessed the widespread development of multiunit retail strip centers and the construction of multiacre shopping malls/theme parks.

Several important issues surround the choice of locating a retail business in a planned shopping center. One important consideration is the nature of the business sharing leases space within the center. Recent research has shown that the image of your retail business will be either positively or negatively influenced by the types of business that surround you, a process that is called image transference.

Planned Shopping Centers

The term shopping center has been evolving since the early 1950s. Given the maturity of the industry, numerous types of centers currently exist that go beyond the standard definitions. Industry nomenclature originally offered four basic terms : 1) neighborhood  2) community, 3) regional, and 4) super regional. However, as the industry has grow and changed, more types of centers have evolved, and these four classifications are no longer adequate. The International Council of Shopping Centers (ICSC) has defined eight principal types of planned shopping centers.

1. Neighborhood Shopping Centers

This type is designed to provide convenience shopping for the day-to-day needs of consumers in the immediate neighborhood. Roughly half of these centers are anchored by a super market, while about a third have a drugstore anchor. These anchors are supported by smaller stores offering drugs, sundries, snacks, and personal services. A neighborhood center is usually configured as a straight-line strip with no enclosed walkway or mall area, although a canopy may connect the store fronts.

The relatively small size of the strip center means that it offers a rather narrow array of convenience or specialty stores. It is best designed to serve individuals living in the immediate vicinity or frequent passers by who would see the stores in the center as being “convenient”. The neighborhood strip center can be placed almost anywhere that land permits. Inter sections and main thoroughfares are the most popular sites.

Notably, recent changes in shopping patterns have seen a move away from urban and regional malls to these neighborhood formats. The gross leasable area (GLA) of these types of centers ranges from 30,000 to 150,000 square feet on a site of 3 to 15 acres, with the typical size being about 50,000 square feet. If the target market for a retail store matches the profile of the neighborhood center, and it can survive with the number of residents within the trade area served by the center, the this may be a suitable location for the business.

2. Community Shopping Centers

A community center typically offers a wider range of apparel and other soft goods than the neighborhood center. Among the more common anchors are super markets, super drugstores, and discount department stores. Community center tenants sometimes include off-price retailers selling such items as apparel, home improvement/furnishings, toys, electronics, or sporting goods. The center is usually configured as a strip, in a straight line, “L” or  “U” shape. Of the eight centers types, community centers encompass the widest range of formats. For example, certain centers that are anchored by a large discount department store refer to themselves as discount centers. Others with a high parentage of square footage allocated to off-prices. Retailers can be termed off-price centers. The community centers usually has 100,000 to 350,000 or more square feet of gross leasable area. Some 90 percent of the newer centers measure less than 150,000 square feet of GLA.

A retailer’s decision to locate with in a community center will be based on the ability to benefit from traffic drawn from across the entire community. Because the rental rates in the community center will be much higher than those for a neighborhood or strip center, the revenue benefits must be worth the additional costs.

3. Regional Shopping Centers

This type provides general merchandise, a large percentage of which is apparel, and services in full depth and variety. Its main attraction are its anchors: traditional, mass merchants, or discount department store or fashion specialty stores. A typical regional center is usually enclosed, with an inward orientation of stores connected by a common walkway. Parking surrounds the outside perimeter.

A regional shopping centers provides full depth and variety in apparel, furniture, home furnishings, and general merchandise. Regional centers typically contain at least three large full-line department stores supplemented by numerous apparel stores, shoe stores, house hold appliance stores, furniture stores, drug stores, and super markets. More recently off-price and discount anchors have appeared as mall operators respond to the need of retaining value-conscious shoppers. Gross leasble area for this type of mall ranges between 300,000 and 1,000,000 square feet. The typical size of a regional center is above 400,000 square feet on a 40-to 100 acre site. A trade area of 200,000 or more people is normally required.

A keep point of differentiation between the community and the regional center is the extent to which people are willing to drive from one city to another to patronize a regional center. In other wards, the shopping alternatives that are available in a regional center must not be present in surrounding communities. This case is often encountered in large urbanized areas that contain multiple large-scale malls, each of which contains similar anchors. A retailer’s decision to locate with in a regional mall is, again, dependent on the level of demand that is available given rental and utility costs. Another important mall location consideration is signage. As a non-anchor tenant, the lifeblood is not traffic drawn from the street by a sign or storefront but the inter anchor traffic generated with in the mail. This captured traffic, however, permits the survival of narrow niche marketers like specialty restaurants.

4. Super Regional Shopping Centers

This is similar to a regional center but because of its larger size, a super regional center has more anchors, contains a deeper selection of merchandise, and draws from a larger population base. As with regional center, the typical configuration is an enclosed mall, frequently with multiple levels. The super regional shopping center is the largest of the planned centers. It encompasses the largest, most complete assortments of goods and services backed by four or more department store in the 100,000 square foot and larger class. The gross leasable area of the super regional center ranges from 800,000 square feet to well over 1,000,000.

5. Fashion/Specialty Centers

This type is composed mainly of upscale apparel shops, boutiques, and craft shops carrying selected fashion or unique merchandise of high quality and price. These centers need not be anchored, although sometimes restaurants or entertainment can provide the draw of anchors. The physical design of the center is very sophisticated, emphasizing a rich decor and high quality landscaping. These centers usually are found in trade areas having high income levels.

6. Power Centers

Dominated by several large anchors, a power center includes discount department stores, off-price stores, warehouse clubs, or “category killers,” that is, stores that offer tremendous selection in a particular merchandise category at low prices. Some of these anchors can be freestanding (un-connected). The canter
has only a minimum amount of small specialty tenants.

Power centers are usually constructed as large strip centers with at-least 75 percent of the gross leasable area devoted to three or more high-traffic high-volume discount-oriented anchor-type tenants. Not all power centers are newly constructed. In fact , many viable “Power Centers” are traditional community shopping malls or older open centers that have been revived as discount shopping centers. In between the anchor stores are smaller leasable areas for independent or chain discount retailers. A major consideration will be price and assortments. The smaller tenant in the power center will need to be a niche discounter. While traffic counts will be very high for the power centers, the anchor stores will generally cover a broad spectrum of product lines. To successfully compete in the backyard of these discounts giants, a retailer will need to have carefully selected merchandise and services offered to be consistent with the needs of the power center shopper, but fall out side the competitive mix of the anchors.

7. Theme/Festival Centers

This center typically employees a unifying theme that is carried out buy the individual shops in their architectural design and, to an extend, in their merchandise. The biggest appeal of this center is for tourists; it can be anchored by restaurants and entertainment facilities. The center is generally located in an urban area, tends to be adapted from an older(some times historic ) building, and can be part of a mixed-use project. A theme/festival center normally contains from 80,000 to 250,000 square feet and covers 5 to 20 acres. Theme centers have common architectural motifs that unite a wide range of retailers. These tenants tend to offer unusual merchandise and have restaurants and entertainment centers that serve as anchors, rather than super markets or department stores.

8. Factory Outlet Centers

Usually located in a rural or occasionally in a tourist area, an outlet center consists mostly of manufactures stores selling their own brands at a discount. An outlet center typically is not anchored. A strip configuration is most common, although some are enclosed malls and others can be arranged in a “Village” cluster. Factory outlet malls draw a combination of middle and lower class socio-economic customers. Some contemporary factory outlet centers also include some off price stores, particularly newer multilevel mall – style formats. In addition, given the larger scale for mats of outlets centers, factory outlets seem ideally suited for tourist destinations.

Factory outlet stores provide manufactures with a way to sell the products that were over produced with out going through the traditional retail distribution channel. Sensitivity to location is a key issue here since many brands can be sold in both a factory outlet store and the traditional retail store. Factory outlet stores seem to be most popular among specialty clothing, sporting goods, leather goods, luggage shoes, and house wares manufactures. A factory outlet mall is typically located at least thirty miles from national retail chains in order to draw traffic.

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