American malls have faced with existential challenges in recent years. Mall operators focus their attention ever more acutely on foot traffic that translates to revenue. There was a time when these retail meccas once courted only the largest brand-name stores that offered the same products no matter where in the U.S. you were shopping. According to a Nov. 15, 2017 article from The Wall Street Journal, that time is no more. These days, the landlords who run America’s best malls are instead turning their attention to “lesser-known retailers and startups that started online but have amassed customers and brand recognition.”
This shift is of interest to Gordon Tang, who is the chairman of American Pacific International Capital (APIC), a commercial real estate investment company that owns and operates two shopping malls. One of them is the Saigon Village in Fremont, California. This multi-purposed development turns its Southeast Asia inspiration into a facility that houses various small retailors. Gordon Tang believes that tenant diversification is a lesson that entrepreneurs can learn from The Wall Street Journal piece. According to the article, the 1.3 million square feet that make up west Los Angeles’ Century City open-air mall is home to some stores that have no product for sale. Instead, they are showrooms that customers can order from and have products delivered to their home. “Such stores take up less square footage since they don’t need to hold inventory at the back of the store,” the article explains. The risk for landlords that rent out space to up-and-coming operations is that there is little track record to go on.
Gordon Tang comments that there will always be risks associated with any business strategy. However, as consumers’ shopping habits change, businesses must adapt accordingly. Otherwise, they risk being left behind.