Fashion square/garcia//dt1st/mark2nd

By SHELLY GARCIA

Staff Reporter

At first, the closure of the Sherman Oaks Galleria seemed like good news for Fashion Square, another shopping mall just a few miles to the east.

But retailers and mall management noticed a disturbing side effect.

“We had people in here a couple weeks ago, and they said, ‘We thought the mall was closing,’ ” said Barbara Rock, manager at Osim Global Health Care. “Obviously, they didn’t know the difference.”

The closure of the Galleria several months ago for renovations has driven home a long-standing challenge for Fashion Square. While sales have increased steadily since the current owners, ERE Yarmouth Retail Inc., acquired the center about three years ago, some shoppers still don’t know it exists.

“A lot of people in our focus groups called us a well-kept secret,” said Alison DiLeva, director of marketing.

For one thing, the mall’s location, in a residential community of Sherman Oaks, makes it hard to advertise its presence. To appease local residents, the center was erected without big display windows facing the street, and signage has been kept to a minimum.

“We think part of the confusion is, you can’t see us,” DiLeva said. “So that’s been a challenge.”

Because of its size and location, Fashion Square is not likely to add a movie component. Instead, it concentrates on its strengths: a convenient location with plentiful, easy parking and a selection of stores that appeal to the demographics of the market.

“We know because of size limitations that we’re not going to be all things to all people, so we really want to focus on the stores that we think will appeal to our trade-area customer,” said Ruth Otto Tewalt, Fashion Square’s vice president and general manager.

She describes the customer as somewhat older than shoppers at Beverly Center or Century City, and though they are fashion-forward, they are not as cutting edge as the shoppers who frequent those Westside malls.

Beginning last summer, the mall has added Betsey Johnson and Planet Funk for women’s apparel, Bose for consumer electronics, and Osim, which sells health-related products like massage chairs. Pottery Barn installed one of its prototype design studio stores and Footlocker combined its men’s and women’s units into a larger format and adding kid’s footwear.

So far, the new retailers say business is good. “Christmas-time way exceeded our expectations,” said Stacia Heath, director of West Coast retail for Betsey Johnson. “Since then, our business has been pretty much to goal.”

Bose also reports brisk business, especially because of the store’s design specialists who customize audio systems for individual customers, said Terry McWhirter, the store manager.

And at Osim, sales are running about even with the chain’s larger stores in Santa Anita and Brea. “We’ve done well,” Rock said. “I’m hoping that the closing of the Galleria will bring a lot more stores and a lot more people into the mall.”

Comparable-store sales increased by 8 percent in 1998, and sales per square foot have been rising steadily. In 1998, sales per square foot increased to $362 a square foot, from $325 in 1997 and $306 in 1996.

That compares with an industry average of $301 a square foot in 1998, according to the International Council of Shopping Centers.

“The sales per square foot are more productive in terms of volume against square footage than we were three years ago, so we’re very happy with where we’re headed,” said Tewalt. “We’re replacing weaker tenants with stronger tenants and we’re seeing the results in sales productivity.”

Still, competition remains stiff. The mall may be the only game in town between Topanga Plaza to the west and Glendale Galleria to the east, but it still must vie with those centers as well as the malls over the hill, including Beverly Center and Century City.

To keep customers on the Valley side, two incentive programs have been instituted. One, geared to the many buyers and stylists from the nearby entertainment companies who shop for movie and television wardrobes and props, offers a $500 gift certificate to the buyer who spends the most money each month. Another, geared to consumers, offers a $100 gift certificate to shoppers who spend $1,000 or more in a calendar month.

About 100 studio buyers and 1,500 consumers are registered in the programs, which require that they log their purchases with the mall concierge. “The point is to increase loyalty,” said DiLeva of the two programs.

The retail mix is also being refined. “We think our shoppers really like to have specialty stores,” DiLeva said. “In the future, leasing efforts are going toward getting (stores) you can’t find anywhere else.”

Retailers don’t usually begin moving into malls until late summer, in preparation for the holiday season, and DiLeva said that while a number of discussions are underway to fill the mall, which currently has an occupancy rate of 88.5 percent, no deals have yet been signed.

Consultants said the merchandising strategy makes sense, particularly for a mall without the benefit of an entertainment center. “If you don’t have the space, you have to move on with what you can do,” said Richard Giss, a partner in the trade retail service group of Deloitte & Touche LLP. “You can assemble a very appealing group of stores that are responsive to your demographics and still have a very attractive mall.”