The Beverly Center is shedding its image as a mid-market mall and turning itself into a high-end shopping center in a bid for a bigger chunk of the Beverly Hills luxury retail market.
The mall is ousting underperforming stores such as Gap and Hallmark Cards and replacing them with upscale brands such as Christian Dior. For comparison: Gap's purses sell for $40 to $118; at Dior they start at $495 and climb as high as $7,790.
"It is our company's vision to create the second luxury destination to Rodeo Drive in the area," said David Weinert, senior vice president of leasing for the mall's owner Taubman Corp., which has 26 shopping centers in the United States. "With the incredible affluence of the area, we always thought we could create a high-end fashion mall. We are going to do a lot of heavy marketing geared toward luxury shopping."
It was the success of Louis Vuitton, which opened in 1998, that convinced Taubman executives that they could position the Beverly Center differently. Thanks to high sales volume, Louis Vuitton expanded within five years. Taubman added Montblanc, a German writing instrument manufacturer, in 1999. Four other boutiques recently opened at Beverly Center Ferrari, Custo Barcelona, Christian Dior and Gucci as part of Taubman's new merchandising strategy.
The mall opened the Ferrari store on the fifth floor, replacing space abandoned by Gap, which left when its lease expired. Beverly Center's Ferrari store is the only one in a U.S. mall. It sells expensive apparel and accessories typically with the carmaker's logo on them.
Also, Custo Barcelona, a Spanish clothing retailer, has opened its first mall store there. And Ed Hardy, a vintage clothing line known for its tattoo designs, recently signed a lease for its first mall store.
Taubman has been reviewing sales with the retailers as their leases most often for seven to 10 years approach expiration. Often, stores have to shut down because they cannot pay the high rent. Weinert said the rents are 20 percent higher than they are at other malls in the area. Beverly Center competes for customers with the Grove and the renovated Century City mall.
"We turn over 5 to 8 percent of the space every year, and if there are some stores that are not performing up to speed and our standard, it is easy to replace those with something more exciting," he said.
Taubman could have renewed its contract with Gap, but when the mall operator saw the struggling store could be replaced with Apple and Ferrari stores, it was an easy choice, Weinert said.
Before Gap moved on, a Hallmark card shop was replaced by handbag and jewelry designer Jacqueline Jarrot in 2003. Kipling, a travel bags and accessories designer, opened in 2005, replacing See's Candies. A Discovery Channel store was replaced by Sony in 2003. Guess is going to be moved to where Williams-Sonoma used to be before it closed last year. TheWilliams-Sonoma departure is an example of the mall's transformation: One of the shopping categories that suffered most from the combination of sagging sales and increasing rent was home furnishing. Three out of four home furniture stores have closed: Z Gallery, Williams-Sonoma and Pottery Barn. This leaves Restoration Hardware as the sole survivor.
"Pottery Barn is a home category that you want to have in any kind of shopping mall," Weinert said. Nevertheless, the store was not selling up to expectations, so it was replaced by Calvin Klein, which is paying double Pottery Barn's rent.
Other newcomers: Christian Dior opened last year. Gucci opened in May and already has expansion plans. H & M; has replaced a children's toy store and Walden Bookstore. Burberry has also recently signed a lease.
The brands aren't cannibalizing sales, either. Louis Vuitton, Christian Dior, Gucci and Montblanc say they are maintaining their sales on Rodeo Drive since they opened at Beverly Center.
"There would not be any sales transfer because it's a totally different market," Weinert added. "If there'd been a great transfer, we wouldn't be doing deals."
Another factor in the mall's transformation is tourism; a third of its business is tourist-driven. That's why some of the premier designer boutiques are doing better with the sales than the ones in other shopping centers. For example, Beverly Center's Louis Vuitton has three times as many products in stock than the one in Century City's Westfield shopping center.
Taubman is also working with the anchors, Macy's and Bloomingdale's, to make sure that they don't carry merchandise that is represented by another retailer in the mall. Also, Taubman had persuaded Bloomingdales that the department store needed a more prominent designer brand. In response, Bloomingdale's brought in Fendi, a premier Italian premier designer label, last year.
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