What's Wrong With Malls? Just Ask Mickey Drexler
The smell of popcorn wafting through the mall may make your mouth water, but it apparently makes Mickey Drexler cringe.
A spirited debate broke out during the question-and-answer session at this year'sFinanco Forum, a gathering of retail industry executives sponsored by the boutique investment bank, after Drexler challenged the upbeat tone of the evening's panel discussion.
Drexler, who isn't known to mince words, raised concerns about the need to keep racheting up of promotions each holiday season to woo shoppers, who have been heading to the malls less frequently. He suggested that mall operators and retailers need to do more to drive shoppers to the stores.
"We pay a lot of rent," Drexler said, from his chair in the audience. "I don't see any excitement or improvement in 98 percent (of the nation's malls)" Drexler explained without exciting reasons to go to stores, "there is a diminishing return" to adding new stores.
ShopperTrak, a shopper counting service, said Monday that holiday sales grew 3.5 percent by their measure, although the number of shoppers at stores fell 3.1 percent. ShopperTrak founder Bill Martin told CNBC he attributes this trend to more focused consumers who are doing their window shopping on their computers and mobile devices and come to the stores only when they are ready to buy.
Martin doesn't expect this trend to fade anytime soon, and that means retailers will have fewer opportunities for their sales staff to try and coax consumers to buy more.
Drexler, a lengendary figure in the retail industry and the current chairman and CEO of J. Crew, told those gathered at the Financo Forum that he discovered a popcorn stand had been placed near a J. Crew store during a recent mall trip, and the smell of the popcorn was overwhelming. Drexler said part of what retailers do is "theater" and popcorn stands and other kiosks can disrupt the image retailers are trying to achieve.
"I'm worrying when traffic is down at the mall," Drexler said.
The other problem he highlighted is the need to run promotions and advertise big discounts to drive consumers to the store, and some attribute this to greater price transparency that has come along with online search and the growing use of smartphones and tablets.
The exploding use of mobile devices is changing the business, according to Susan Lyne, chairman of the Gilt Groupe, who sat on the panel.
"It's a store where ever you happen to be," she said.
Lyne as well as several other panelists highlighted the need for retailers to differentiate their product from what others are selling with proprietary offerings. However, some noted that the window of time that retailers can enjoy this type of advantage is narrowing.