By Rebecca Rose
Killeen Daily Herald
Coffee Beanery co-owner Teresa Reniker serves a steady stream of customers at the Killeen Mall daily. They stop for a brief caffeine infusion while shopping for gifts, perusing for trendy outfits, purchasing a household gadget or taking some time for well-deserved indulgence.
"When the mall is busy, we're busy," said the small-business owner, simplifying her key to success inside America's former retail culture darling - the regional mall.
When the Killeen Mall opened in 1981, the city was less than half the size it is today. It offered local shoppers one of the few centralized retail spots in less than 100 miles. Three decades and at least two recessions later, economic conditions and buying trends have changed the retail landscape.
In the 1980s, more than 16,000 malls were built in the United States. A 1990 Gallup poll reported that Americans made four mall trips every month; but eight years later, a Time Magazine headline declared "Kiss Your Mall Goodbye" about the demise of enclosed malls.
Today, only 1,437 of those 1980s-era malls remain and another 10 percent of all malls are expected to close within the next few years, according to the International Council of Shopping Centers, a trade association for shopping centers.
But Killeen's retail hub didn't join that mall boneyard in the 21st century, even though a lifestyle center, a retail development term for upscale open-air shopping-dining-entertainment centers, opened a few exits away in Harker Heights.
In fact, the Killeen Mall has done what many thought impossible - attract a new anchor store. New Jersey-based Burlington Coat Factory opened last week in a mall space left vacant by the former Steve and Barry's in 2008.
"We are also delighted to provide jobs and an off-price shopping experience for the Killeen community," said Thomas Kingsbury, president and CEO of Burlington Coat Factory, which has 47 locations in Texas. The discount retailer will bring 100 new jobs to Killeen.
For many long-time anchor stores, such as Sears and J.C. Penney, it's been a painful recovery from the last recession, and the smaller mall businesses, which rely on the anchors for foot traffic, are watching the progress.
"When you have the major anchors go belly up, and file for bankruptcy, like a Steve and Barry's, it affects everyone," said Reniker, co-owner of the coffee shop franchise for six years. "If you're only just barely making it, that's not good enough."
"Wet Seal didn't have enough business, so they left (the Killeen Mall)," she said. "Now they are back, but they're in Market Heights."
Wet Seal's relocation came on the heels of Old Navy, which followed a similar course in 2010.
"When Old Navy left, it made me curious," said Joey Solis, co-owner of Pro-Image, which opened its mall location in June 2009. "But they tend to go with the latest trend. That was something that trended well for them. This trended well for Burlington Coat Factory. They chose here, that says a lot."
While outdoor centers, like Market Heights and the planned Shops at Five Hills in Copperas Cove, are popular retail spots, Solis said they can be hit or miss for a smaller retailer.
"It depends on the infrastructure around it," he said. "Market Heights has elements around it, like the movie theater, that bring people in there. They're not just walking in to (one store) to grab something and go. It's a different mind set."
Vying for tenants
Like the Killeen Mall, the Richland Mall in Waco once housed an Old Navy until it jumped ship for Central Texas Marketplace, an outdoor shopping center that opened in 2004, with retailers, such as Ann Taylor Loft and Chico.
"We're all vying for the same type of tenants," said Kandace Menning, who manages the Richland Mall. "Those are tenants that I don't have."
In Killeen, the mall appears to have a stable store lineup without the retail defectors. With more than 100 retailers, Mardi Peaster, marketing and specialty leasing manager for the Killeen Mall, said she's not having any trouble filling store space.
"We have good traffic here at the mall," said Peaster. "We have more than eight million through the mall every year. We're well-established. Our sales still remain strong."
One reason the Killeen Mall has stayed afloat when many regional malls fell apart lies in the economic pulse of Fort Hood.
While the mall attracts a variety of customers, Peaster said it has a strong presence of younger soldiers, who seek popular stores like Aeropostle, American Eagle, Buckle and Pac Sun. "They're looking for the latest trends," she said.
Those Fort Hood shoppers insulated many of the mall's smaller businesses from the effects of the last recession, too.
Licensed sports apparel shop, Pro-Image, opened in the mall in June 2009, at the peak of the national recession. Solis said his mall business did well during that time, sometimes even exceeding initial expectations. "We opened to consistent numbers and have stayed steady," he said.
Like Peaster, Solis said military shoppers translate to a steady flow of customers. "It's unique with Fort Hood being here," he said. "A lot of our (fellow sporting-goods retailers) in other states were suffering. They weren't meeting their numbers, but it wasn't the same for us."
The Killeen Mall location works for Solis because his business depends on high-volume foot traffic. New customers can discover his store on the mall's main walkway, which might not happen if his shop was in an outdoor center.
"(At Market Heights) people don't walk from Bed Bath and Beyond to Target," said Solis. "The mall is a central hub. A lot of people come here to shop. The foot traffic generates buzz for us."
Peaster said she liked the healthy competition of outdoor centers, such as Central Texas Marketplace and Market Heights. "They have a different variety of stores," she said. "We like the competition around us. It helps keep the people shopping here, in our area. We like having extra stores."
Another benefit of operating inside a mall, said Solis, is his business doesn't have to do any advertising to attract customers. "As a start-up business, that's extremely valuable," he said.
The mall also provided limited overhead costs associated with moving into a new storefront. "We still had some construction costs for some remodeling," he said. "But they were minimal, compared to what a complete build out would be."
At Truly Texas, shop owner Terri Bauman, spends her days selling Texas-themed merchandise and gifts. The specialty shop has been a mainstay at the Killeen Mall for more than 19 years. Bauman purchased the location six years ago from the previous owners.
For her type of business, Bauman said the mall is an ideal location and relocating to an outdoor center wouldn't work as well. "We need foot traffic," she said. "People come here because there are multiple stores. If we went to Market Heights, we'd have to be very visible, and they don't have that location."
Rise of kiosks
Reniker said when she first started the coffee and tea store, the mall offered her the opportunity to grow and learn as a first-time business owner.
"It's fantastic for new business owners," she said. "They're a lot of specialized business owners, who are trying out their trade. If one concept doesn't work, they might change and try another."
Besides speciality and niche shops, most malls now use their ample floor space for micro-business enterprise, or kiosks, which are located in the center walkways.
Like Killeen, Waco's Richland Mall expanded its kiosk business in response to economic demands. "We started doing it in the early 1990s," said Menning. "It was just sort of a side income at the time."
When CBL & Associates Properties purchased the Richland Mall in 2002, Menning said they added more than 19 kiosks, known in industry terms as retail merchandising units. They usually have shorter term leases at lower costs.
"It's a great way for people who are wanting to starting up a business," said Menning. "For people who don't have the resource to jump into a big location, a cart in the middle of the mall can be an advantage."
With the national economy in recovery mode, some retail industry experts point to a resurgence in mall profitability that started, ironically, in the last recession.
For existing retailers looking to expand after waiting out the long recession, malls offer readily available space, with leasing terms cheaper than many outdoor centers, said Jesse Tron, spokesperson for the shopping centers trade association.
To capitalize on that potential, malls must create a more pleasing aesthetic environment. "From a national perspective, the real big trend is redevelopment," he said. "If they're smart, that's what they do."
To compete, malls have to offer elevated forms of entertainment and dining. "We're not just talking about another fast food option in the food court. Customers want higher end, sit-down dining establishments or cafes," said Tron. "That attracts consumers and tenants."
And, outdoor lifestyle centers don't have to mean doomsday competitive scenarios for the last-surviving enclosed malls.
"They offer a different niche," he said. "Malls are not necessarily going after the same shopper. It's different segments of the same consumer base. There's definitely the potential for both of those to work in a symbiotic relationship."
As for the future of current Killeen Mall tenants, Solis said it all depends on if the retail hub is able to keep customers coming.
"It's something we would pay attention to," he said. "If (our) traffic dies down, we may look at other options, once the lease comes up. If that's the trend, if more shoppers have gone to (outside centers), that might be the way to go."
But Solis said he's looking forward to the increased traffic a major retailer like Burlington Coat Factory could bring to the Killeen Mall.
Contact Rebecca Rose at email@example.com or (254) 501-7548.
By the numbers
107,823: Total number of U.S. shopping centers; the majority, 98.6 percent, are open-air.
12.1 million jobs: Shopping center-related employment in 2010.
$137.4 billion: Sales tax revenue generated by all shopping centers in 2010.
1,437: Total number of U.S. enclosed malls.
952,603: The square-feet of floor space in the average U.S. mall.
About 418: Total U.S. lifestyle centers, such as Market Heights.
14,096: California has the most shopping centers in the nation.
62: Wyoming has the least shopping centers in the nation.
Source: International Council of Shopping Centers