Las Vegas shopping malls surf in uncharted waters

Phil Levine

Thursday, Sept. 16, 1999 | 11:14 a.m.

Las Vegas shopping mall owners are using the Internet to link their customers and properties nationwide in hopes of building brand loyalty.

The most recent entrant in the on-line retail battles is Chicago-based General Growth Properties Inc. With the fall launch of its Mallibu.com portal website, the company hopes to attract Internet surfers -- and shoppers -- from across America.

General Growth became a significant player in the Las Vegas retail market when it paid $625 million in 1998 to purchase six properties from U.S. Prime Property Inc. Included in the deal were the Meadows and Boulevard malls in Las Vegas.

Unlike many other websites, General Growth's Mallibu.com is not intended to generate direct sales. Rather, the company hopes the electronic link will act as a gateway to its 125 regional mall websites. As customers navigate through the site, they will be linked to an interactive environment; the variety of services offered will range from surfing local mall contents to downloading shopping coupons.

However, the information gathering will cut both ways. General Growth Properties Chief Executive John Bucksbaum said that customized tools will allow regional malls to "data mine information" gathered on the web. That information, he said, will then be used to help shape more effective advertising campaigns and "market to customers more on a one-to-one basis."

Still, Bucksbaum acknowledges that marketing malls on the web as a means of developing brand loyalty remains a work in progress.

"The idea of marketing on the Internet is still in its infancy, but ultimately it will likely become an integral part of our marketing strategy," he said.

General Growth isn't alone in its recognition of the need to develop brand-based mall loyalty. Earlier this year, Simon Property Group introduced its "Mall Perks" program. That initiative provides customers with the opportunity to buy mall gift certificates via the Internet.

Despite that well-publicized initiative, a Simon spokeswoman declined to discuss the company's Internet marketing policy.

"We view that as proprietary information," said Billie Scott. "Our current policy is not to discuss any Internet marketing strategy." In Las Vegas, Simon Property Group operates the Forum Shops at Caesars and the retail mall at the Stratosphere.

Internet marketing in advance of new properties is one of the strategies being used by Cleveland-based Forest City Enterprises. The company owns the Galleria mall in Henderson, is a partner in the Showcase mall on the Strip and has a management contract at the Venetian retail shops.

"We're opening a new property in California next month, and our website for that property has been up and running for quite some time now," said Forest City marketing manager Jane Lisy. "We attempt to use the web to maximize promotion of each individual property, rather than our corporate ownership. That's because each property is very different and it would be difficult to put the same umbrella over all of them."

Lisy said that measuring the success of web marketing remains a challenge.

"All you can really rely on at this point is the number of hits (on the website)," she said. "One of the challenges we face is trying to find trackable elements from the site."

Representatives of the Maryland-based Rouse Co., owner of Las Vegas' Fashion Show Mall and the Howard Hughes Corp., could not be reached for comment.

Industry experts agree mall owners need to tap into the burgeoning world of Internet commerce in order to prosper.

"I think that's really the way of the future," said George Connor, senior vice president of Colliers International's Retail Division in Las Vegas. "In the years to come, anybody not using the Internet won't be able to conduct business."

Still, Connor adds that electronic marketing strategies aimed at developing consumer loyalty to malls -- such as General Growth's Mallibu.com and Simon Property's Mall Perks program -- remain unproven.

"It's yet to be seen whether these types of corporate brandings will work," he said. "I'm not sure the general public is so astute that they will pay attention to developers' names. The jury's still out on this one."

And despite the boom in on-line shopping, it will likely be some time before the majority of consumers boot up -- rather than over -- to connect with their local mall.

"Internet sales constitute less than 1 percent of total retail sales, somewhere between $3 billion and $20 billion depending on whose numbers you believe," said Malachy Kavanaugh, spokesman for the International Council of Shopping Centers. "By comparison, brick and mortar shopping malls recorded $2.5 trillion in sales last year." The ICSC represents 38,000 members in 70 countries.

Kavanaugh agrees that shopping malls marketing on the Internet are surfing in uncharted waters. "At this point, nobody knows where the future (of Internet marketing) will go," he said. "But it's far more likely that it will develop as an addition, not a replacement, for existing retail malls. The challenge will be to try and form a synergy between their existing properties and this new form of commerce."