When the Mall of America opened three years ago this month, doomsayers circled it like vultures over a mortally wounded elephant.
Each critic picked apart flaws, intent on out-predicting other experts on which suspected miscalculation would bring the hulk to its knees.But three years later, the Bloomington mall hasn't been boarded up or converted into a maintenance hangar for nearby Northwest Airlines. Indeed, the mall seems to have defied dire predictions and the laws of financial gravity. And its effects on U.S. retailing trends and Minnesota shopping habits are increasingly apparent.
"There are people who will shoot me for saying it, but the mall is serving as a new downtown," said Larry Carlson, a Minneapolis retail consultant who until about a year ago worked as vice president for research and planning for the mall's arch rival, Dayton Hudson Corp., owner of Dayton's and Target. "People from out of the city who used to go downtown now go to the Mall of America."
The mall continues to attract about 38 million visits a year. It is 94 percent leased, and mall owners nationwide are studying what part of its entertainment formula they can copy to steal market share from their competitors.
Meanwhile, retailers are using the mall of malls as a kind of laboratory to test and tinker with a new generation of "entertainment retail" concepts they hope to roll out nationally.
The new stores sell thrills in settings intended to give shoppers a taste of adventure, entertainment or even education.
"The combination of retail and entertainment is the new wave, and the Mall of America was on the front end of the curve," said Stuart Ackerberg of the Ackerberg Group, a Minneapolis retail leasing and management firm.
"The mall has been successful because it started with things like Camp Snoopy and the 14-screen movie theater and it continued to expand and innovate with (new entertainment retailers such as) Planet Hollywood, the Rainforest Cafe and Tempus Expeditions," he said.
These entertainment retailers are in hot demand. Experts say malls got boring during the 1980s, when every shopping center seemed to have the same stores.
Ackerberg and others say that newness is one factor that keeps people returning to a store or mall. The megamall continually attracts new tenants and weeds out those that don't work.
One expert summed up the megamall this way:
"It was a big, bad idea that was done right."
"The mall is more than just a gimmick to attract tourists there one visit," said Erik Nordstrom, one of six copresidents of the Seattle-based retailer and former manager of its megamall store.
Nordstrom said his company's stores need a loyal customer base to succeed. The Mall of America store, which has fared the best of the mall's anchors, had sales of more than $81 million last year and is expected to do as much as $90 million this year.
Nordstrom said the megamall store had the biggest percentage increase in sales of any store in the chain last year.
"That kind of growth isn't coming from tourists," said Nordstrom. "The big question for us had been whether local shoppers would go to the mall. And the answer is, yes."
But if Nordstrom and others are gaining local sales, who are they grabbing them from?
Retail consultant Steve Claytor, who works for retailers in the Twin Cities area, said the megamall's effects have not been great on competitors.
"Based on our assessment, we don't see a huge market-share drain in the Twin Cities," said Claytor, of Chicago-based MAS Marketing Inc. "And Dayton's (and Target) continue to be astoundingly dominant in this market. They have lost little or no market share."
When the Mall of America opened, retailers in other locations expected to lose sales as shoppers checked out the new attraction. The question was how long it would take for shoppers to return to their usual shopping habits.
"This could be a watershed year for the megamall," said Harold Brandt, a senior vice president of Brookfield Development, which manages two downtown Minneapolis retail centers. "Most people in the metro area have visited it by now and know what it is. And they will decide whether it is their first-choice place to shop or a once-a-year thing."
Beyond entertainment, the megamall locked onto another trend: superstores. The mall encouraged stores such as Linens N Things and Eddie Bauer to build their biggest, grandest stores.
But the picture of the megamall isn't completely flawless. It did $675 million in sales in 1994, still significantly short of its goal of $1 billion by the year 1997. The four anchors - Bloomingdale's, Macy's, Nordstrom and Sears - say publicly they are satisfied, but insiders say they expected higher sales. There's a lingering rumor in retail circles that Bloomingdale's, which has done the worst of the lot, wants out. But Bloomie's, which has denied the speculation, would run into resistance getting out of its lease.
In addition, some retail experts say that overall the success of retailers in the mall is "a mixed bag."
As Sid Doolittle of McMillan Doolittle, a Chicago-based retail consulting firm, sees it:
"A few retailers are doing well, and others aren't. The entertainment part is successful. Maybe over time the retail venture will become successful. But at this point we don't think it is."
Others disagree. Joe Meisles, executive director of retail development for U.S. Shoe Corp., owner of Casual Corner and LensCrafters, sees the megamall as a success. He said the retailers that have the right product mix at the right price are doing well. Weak retailers, he said, can't blame their troubles on the megamall.
When the megamall opend in 1992, it seemed to defy economics and reason. The 1990-91 recession had sobered the spending promiscuity of the 1980s. Many national retailers were closing rather than opening stores. Two of the megamall's key anchors (Bloomingdale's and Macy's) danced with bankruptcy. And all manner of national surveys came up with the same finding: Consumers were spending less time and money in malls.
Retail experts say the megamall is successful because Melvin Simon & Associates looked beyond such grim statistics to predict lifestyle changes that would affect spending patterns in the 1990s.
Yes, the 1990s consumer is time-pressed. So Simon offered one location where consumers could combine shopping and dinner with a movie or an outing with the kids.
"The more variety you can provide to a consumer, the more reason they have to come back the next time they want to spend money," said U.S. Shoe's Meisles.
In addition, retail experts say that entertainment encourages consumers to stay longer in a mall or even a particular store. And the longer people stay, the greater the psychological investment. That investment creates a powerful motivator to buy, experts say.
But in 1992 critics scoffed that it was absurd to build four anchor stores and about 52 football fields' worth of retail around a 7-acre amusement park and top it off with a 14-screen movie theater and a throng of nightclubs.
At the same time, the mall's hype wizards spun bizarre visions of planes carrying Japanese tourists, lines of Winnebagos from Arkansas or beyond and buses of Iowans making shopping pilgrimages.
"The bottom line is that they have found a formula for rales success and bringing people to the metro area that works," said Carlson, the consultant and former Dayton Hudson executive. "The question is: Can they continue it?"
As Carlson and others see it, the Mall of America has become the new town square, the new downtown retail district of the Twin Cities. The combination of entertainment and retail has given people the wide variety of choices that they used to find only in downtown Minneapolis. In addition, megamall parking is ample.
But entertainment, the new buzzword of retail, is considered by some experts to be the big traffic builder at the mall.
"The entertainment brings traffic, and that traffic is good for us," said John Pawley, director of real estate for Barnes & Noble, which also owns B. Dalton, which has a store at the mall. "In fact, the summer is so good it's like getting two Christmas seasons a year."
But consultant Claytor cautioned that too much entertainment can hurt retail sales.
"The serious shopper doesn't want to traverse Disneyland to get to Ann Taylor," he said.
In addition, he noted that much of the entertainment attracts teens, who typically are not big spenders and can deter the power-shopping habits of a retailer's most desired group: women, usually working women, ages 25 to 50.