Minnesota malls get creative to lure shoppers as holidays approach

The Maplewood Mall was literally a zoo.

Goats stretched their necks above their fences to steal treats as prairie dogs perched and lemurs sprung from their swings inside the mall's Sustainable Safari.

But, the rest of the mall wasn't nearly as lively.

Malls across the United States have scrambled to attract shoppers after the coronavirus pandemic and state restrictions shut down stores earlier this year with shopping centers, such as the Mall of America, falling behind on their mortgages and risking foreclosure. Now the country's first indoor mall, Southdale Center, could also be in trouble.

However, as the holiday shopping season approaches, new stores have begun to open and Twin Cities malls and their tenants have gotten creative on everything from product pickups to photos with Santa Claus as they work to stir up sales and regain the business they lost.

"We have been trying different things to get people back in," said David Harvey, president and chief executive of Sustainable Safari.

Sustainable Safari (formerly called Cock-a-Doodle Zoo) just finished a Renaissance Festival-inspired medieval fair complete with costume contests and live musicians. The indoor petting zoo plans to host a trick-or-treat event, and the owners also have an idea for a photo holiday display likely to incorporate the zoo's furry friends.

Traffic has seen a slow-but-steady uptick since Maplewood Mall reopened at the end of May after abruptly closing in March along with many other retail outlets as state officials issued a stay-at-home order to try to ebb the spread of COVID-19.

Sustainable Safari co-owner Bob Pilz, who goes by the name "Safari Bob," had originally gotten the idea to open the space one day when he was walking through the Mall of America.

He and his wife, Mishelle, had hosted mobile petting zoos, but the Minnesota cold limited the seasons and anchoring in a mall gave the business a chance to expose a larger audience to exotic animals.

"It's just going to really bring people to the mall," Pilz said, as ring-tailed lemurs pilfered marshmallows from his fingers. "We are really hoping that it really brings the mall to life."

This year's holiday shopping season is difficult to predict with some experts saying spending will likely be more subdued because of virus concerns and economic worries, but online shopping is expected to continue to boom.

According to a report released earlier this month by professional services firm PwC, 40% of those surveyed will spend less this holiday season with 42% expected to spend the same and just 13% expected to spend more.

As they worry about the risks of in-store shopping due to COVID-19, more than 60% of consumers surveyed said they will do most of their holiday shopping online.

Many of the older or less-trafficked malls have suffered the most because of shoppers not visiting stores, and high-end malls that usually serve as large attractions with added experiences and events are also limited in their abilities to draw crowds, said Christopher Perrigo, a Twin Cities-based partner for PwC who consults on retail, technology and media.

"It's just a tough time for retailers and mall operators," he said.

Twin Cities' regional centers or malls are nearly 14% vacant, according to a July report from commercial real estate firm Cushman & Wakefield.

Analysts have estimated it will take retail real estate across the country about three years to fully recover from the pandemic whereas industrial and office real estate will take less time, said Sam Newberg, a research analyst for commercial real estate firm CBRE. The pandemic has continued changes that were already happening in the retail industry, including the repurposing of obsolete space.

"COVID has already accelerated all of it," he said.

Property managers at the Twin Cities' largest malls would not share traffic numbers, but it is clear walking through them that they have noticeably fewer shoppers than they did before the coronavirus pandemic hit the U.S.

Deserted department stores. Nearly empty food courts. In some corridors of the Eden Prairie Center, it appeared more employees could be found than consumers one day last week. Inside Burnsville Center, numerous storefronts, including an H&M that closed earlier this month, were shuttered and dark. At Rosedale Center in Roseville, the once bustling Potluck food hall looked pretty desolate during a weekday lunch hour.

"This is how it is every day of the week except Saturday and Sunday," said James Burnett, who gestured toward the empty floor of Rosedale Center where he manned his kiosk of Triple Crown urban apparel.

In the midst of the pandemic, Burnett left his job at a cellphone company to partner with Triple Crown creator Desmond Stubblefield and help with the Minneapolis brand that sells T-shirts, caps and other clothing.

Weekdays at the popular mall have been "hit or miss" in terms of traffic, but mostly "dormant," Burnett said. While Triple Crown has been able to make the rent and grow, Burnett said he hoped the holidays would provide a surge in sales.

"It's hard on us as a business," he said. "You have to constantly try to sell to keep afloat."

Malls throughout the country have languished as a host of retailers have recently filed for bankruptcy. protection. Months of shutdown orders exacerbated an already rapid decline of mall staples.

Earlier this month, Fitch Ratings reported that Southdale Center, which already had been experiencing occupancy and cash-flow issues pre-pandemic, had a total mall occupancy of 67% based on the June rent roll. After J.C. Penney closed in 2017, followed by Herberger's in 2018, Macy's has been the only one true anchor retailer at the mall.

Southdale Center's issues aren't immediately visible as there are still busy storefronts such as the Apple store, but empty kiosks dot its open court, and numerous empty shops can be found on the outskirts of the center. Yet still Southdale shows some signs of life.

Last year, Life Time opened a massive athletic club, co-working offices and soccer practice facility that replaced the J.C. Penney. There have also been plans for Life Time to build an apartment tower at the former Herberger's department store site as well for a Kowalski's Market to be built and a library. While Life Time still intends to complete the apartment project at a later time, Southdale Center owner Simon Property Group hasn't applied for or obtained the city zoning approvals needed to redevelop the Herberger's site as of yet, according to Edina Economic Development Manager Bill Neuendorf.

Owner Simon Property Group did not respond to requests for comment.

In addition to Southdale, revenue declines have pushed the Mall of America's owners to fall months behind on its mortgage, according to data firm Trepp. The owner, the Triple Five Group, entered into an agreement with the loan's special servicer that includes increased reporting requirements, and a long-term resolution is under discussion. The mall has had to lay off more than 200 employees.

CBL Properties, which owns the Burnsville Center, announced it would cooperate with foreclosure proceedings after it fell behind on the mall's mortgage. The suburban shopping mall has had to deal with a growing dearth of anchor tenants including Sears, which left in 2017; Macy's, which sent a notice to the mall in May that it would close; and J.C. Penney, which has filed for bankruptcy.

Despite the issues at some malls, most metro shopping centers have reopened the majority of their stores. Some have even begun to welcome new tenants.

In July, the new 250,000-square-foot Scheels store opened at the Eden Prairie Center, taking the place of a former Sears store. The sporting-goods store includes a massive saltwater aquarium and an indoor Ferris wheel.
The Mall of America, whose foot traffic has improved since the summer, recently opened Community Commons, a rent-free space for more than a dozen small local retailers, and has other upcoming tenants including classic candy company M&M's.

Even during the pandemic, some development projects at malls have continued as well. The Rosedale Center is currently reconfiguring its ring road so that it can accommodate its ambitious redevelopment that is planned to include apartments, hotels and offices.

Mall owners have been creative with how they assist their tenants and attract shoppers while keeping people safe.

At Rosedale Center, an augmented-reality experience will replace the traditional photos with Santa Claus that children look forward to during the holidays.

Many malls — including the Eden Prairie Center, Maplewood Mall and Northtown Mall — have introduced curbside pickup areas for tenants to share.

In addition, mall tenants have had to be experimental with different ways to market and sell their products similar to what Sustainable Safari has done with events. Others have expanded their online offerings and social media efforts.

Some entrepreneurs have even launched entire new businesses in the middle of the pandemic. Amanda Serfling and her husband, Jordon, just opened a colorful sock store, Sock City, in September in Maplewood Mall after operating Addie's Gourmet Mini Donuts in the Northtown Mall in Blaine for several years. The front of their store has been lined with orange and black long socks with spider webs, ghosts and pumpkins just in time for Halloween.

"Thanksgiving and Christmas for retailers has always been good," Serfling said. "I think everybody is coming up with ideas and trying to think about how to keep going."

Perrigo, the PwC partner, said malls could provide alternatives this winter for Minnesotans wanting to escape cold temperatures and the boredom of their homes, he said.

"I think there will be a need just for people to get out of their homes," Perrigo said. "There aren't a lot of spaces that have the size [of malls]."