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Wednesday, Feb 21, 2024

More Friction in Store at Rival Malls?

Glendale Galleria weathered the arrival of Americana at Brand across the street but now faces the departure of its high-end anchor, Nordstrom, to the ever-expanding rival shopping center owned by Rick Caruso.

However, the sprawling Galleria – which serves as an everyday shopping haunt for younger customers and families – remains attractive to some hot retailers. In fact, several trendy clothing retailers have moved there, and some of the mall’s existing retailers have been sprucing up their stores.

“We appeal to so many different markets and neighborhoods all over Los Angeles. We are in what they call the battlegrounds,” said Shoshana Puccia, senior marketing manager at the Galleria, which opened in the heart of Glendale in 1976. “Our retailers have an opportunity to test the market before they move forward, so it’s a great place to be from a retailer perspective.”

Popular fast-fashion retailers Foreign Exchange and Love Culture, and healthy fast-food eatery Stone Oven are set to open at the Galleria in coming months. Meanwhile, several retailers have launched concept stores during the previous several months – including fashion-forward teen and young women’s clothing store BCBGeneration, women’s apparel retailer Limited and lingerie boutique Candid Intimates. In addition, Target has added a grocery section to its three-level store.

Shopping center consultants said the retail complex is boosting its position with teens and 20- and 30-somethings as the new retailers complement Americana’s higher-end stores.

“They are taking a little bit more of a moderate and younger approach to tenanting and that’s exactly how that mall should be,” said Jeff Green, president and chief executive at Phoenix retail consultancy Jeff Green Partners. “A moderate income, younger customer is actually the customer of the future.”

With 1.5-million square feet, the Galleria is Los Angeles County’s fifth biggest mall.

The addition of stores at the Galleria comes as developer Caruso expands Americana’s footprint. Caruso lured Nordstrom away from the Galleria to his new wing of Americana last month, and his Caruso Affiliated Ltd. purchased the Nordstrom building from the department store. That means Caruso controls one of four anchors at his competitor.

He has reached out to Galleria owner General Growth Properties Inc. and has been floating ideas on how to revamp that section of the mall, which is home to fast-food restaurants, clothing and accessories stores, and an anchor building left vacant by Mervyns.

Caruso’s plans

The developer said his renovation plans for the entire wing of the Galleria would include either razing or tearing down part of the Mervyns building.

“There’s an incredible opportunity to reinvent that whole section of the mall,” Caruso said. “I’d like to see it come down and opened up, make it much more exciting and more relevant to the way people shop today.”

He said it’s too early to tell what will move into Nordstrom’s Galleria building.

Puccia declined to comment on Caruso’s renovation ideas, but said the two shopping centers work well together.

“We have a symbiotic relationship with Americana in terms of our retailers,” she said. “They have a lot of luxury brands and we carry a lot more mainstream brands. We have a crosswalk that connects us and people go across the street – hundreds cross the street – every hour.”

General Growth and Caruso share a rocky history.

Caruso sued General Growth claiming the mall operator tried to prevent Cheesecake Factory from signing a lease at Americana before the mall opened in 2008. General Growth settled the matter in 2009, paying Caruso Affiliated $48 million.

Now Caruso has lured Nordstrom away from the Galleria with plans to move the Seattle-based retailer to the south end of Americana on land that’s currently occupied by a hotel and vacant former recording studio that he recently purchased.

Despite the past conflict, consultants said it is evident that Caruso and General Growth understand that the two retail centers feed off each other and therefore are better served if each is operating at the top of its game.

“It’s a complicated relationship,” said John Fransen, president at Newport Beach retail consultancy Fransen Co. “But suffice it to say, I don’t think Caruso is concerned about the Galleria’s success taking away from him. Their success will spin off to him. So I don’t think it’s incongruous for Caruso to be making that kind of overture.”

Still, Green and Fransen said it is difficult to measure whether a renovated Galleria would result in a boost in traffic or sales.

Setting up shop

The Galleria has become a major shopping destination – Puccia said it draws more than 26 million visitors annually – for customers looking to buy items such as clothes in addition to everyday needs, especially now that the Target sells groceries.

“You can shop everywhere from Target to Macy’s and find what you need,” Puccia said.

Several of the Galleria’s soon to open and recently opened retailers said the high level of foot traffic and diverse customer base drew them to the mall.

Reseda lounge wear and lingerie maker Candid Intimates opened its first-ever retail store in January at the Galleria near Target.

Robin Levitt, a veteran retail executive who founded Candid and serves as its president, said she wanted to open the company’s shop at the Galleria because it’s an ideal location for the up-and-coming retailer to test its merchandise. For example, its bras retail from $30 to $52.

“Our goal is to get product in people’s hands and introduce them to the brand,” Levitt said.

Other retailers are testing concepts at the Galleria as well. In November, BCBG Max Azria opened BCBGeneration, a fashion-forward apparel and accessories store for younger women. The Vernon apparel maker has launched 12 additional BCBGenerations nationwide.

Women’s apparel maker Limited, a Columbus, Ohio-based retailer, opened a flagship store at the Galleria in November with enough room to house a runway for special events.

Fast-fashion retailer Foreign Exchange recently started construction on a Galleria shop, set to open this summer in 6,000 square feet with an array of women’s and men’s fashions that are manufactured by Foreign Exchange and other brands.

Albert Hahn, chief financial officer and director of business development at Foreign Exchange, is a Glendale native. He has been looking to open a location at the Galleria for several years but was waiting for the right space to become vacant.

“The tenancy and basically the merchandising of the Galleria was something that appealed more to me because of the demographics we are after,” Hahn said. “Our target demographic, we call it the young working professional. We want the 20-year-olds and the 30-year-olds.”

Foreign Exchange has 20 locations throughout California, and plans to open 10 additional stores this year including the Galleria.

Love Culture, a downtown L.A. apparel maker and retailer founded by former Forever 21 executives, is set to open at the mall early next year.

‘Tired’ center?

The Galleria’s food court is also getting a new tenant.

Stone Oven, a made-to-order salad and sandwich restaurant, is planning to open by June.

Steve Suh, founder of the Calabasas company that has eight locations throughout Southern California, said he has been looking to open at the Galleria for several years, but it has been difficult to snag a vacant space.

“It’s one of the busiest malls in L.A.,” Suh said.

The retail center has been raising its profile through social media and e-mail newsletter campaigns, and it has been improving its customer service operations.

“We really have been concentrating on communicating via social media, via e-blasts and to maintain an ongoing conversation that way,” Puccia said. “And we started to shore up our customer service staff, reaching out to folks and listening to what their needs are. Sometimes people just need to know where there’s an ATM or need directions to their next location.”

Meanwhile, there’s still the topic of Caruso striking to update a section of the Galleria now that he owns the Nordstrom building.

“I think it’s a great shopping center,” Caruso said. “But it’s tired. And great malls need to be reinvented and refreshed – Taubman did that with the Beverly Center. There’s no doubt it’s a great mall, but it could be a lot better.”

Listening to Puccia, however. It seems the old wounds might not have healed.

“He only owns the one building,” Puccia said. “He doesn’t own the rest of the mall or control what comes in here.”

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