Tuesday December 28 4:41 PM ET


As Shoppers Log On, Malls Think Web

By JUSTIN BACHMAN Associated Press Writer

BUFORD, Ga. (AP) - As Americans do more shopping from the convenience of their computers, mall owners are working to make their brick-and-mortar investments doorways to a retail world where Web sites, catalogs and stores converge.

The expansion of Internet retailing this holiday season spooked some mall operators who are worried about potential losses as more consumers shop online instead of strolling through malls.

The issue was brought to the forefront in November when one mall owner, Hycel Properties of St. Louis, banned Internet advertising from the Saint Louis Galleria. Hycel did a quick turnabout after a tenant threatened to sue.

Analysts say Hycel merely expressed publicly what many retailers fear privately - a shift in traffic from malls to the Internet could decimate profits.

Others contend that owners and developers have already begun adapting by transforming malls into diverse centers that sell themselves not just as retail centers but recreation destinations.

One of the Southeast's biggest malls, the 1.7 million-square-foot Mall of Georgia near Atlanta, offers a sporting goods store with a rock-climbing wall, IMAX movie theater and ice rink.

The mall's owner, Simon Property Group of Indianapolis, has been among the most aggressive at incorporating Internet commerce into its long-term strategy.

Simon, the nation's biggest mall operator, has formed a subsidiary, clixnmortar.com, to develop new Internet ventures for retailers and plans to begin wiring its 176 malls next year for high-speed Internet access, allowing stores to add multimedia kiosks, Web videocasts and other marketing tools.

Clixnmortar.com, which is based in Chicago, is founded on the premise that soon ``people will be online all the time,'' president Melanie Alshab said.

``We believe it'll be a very effective way for people to shop,'' she said of the merger of cyber and retail spaces.

Clixnmortar.com began testing its first online product, FastFrog.com, in November at two suburban Atlanta properties, Mall of Georgia in Buford and Gwinnett Place Mall in Duluth.

FastFrog.com offers teen-agers a way to make electronic gift registries by scanning products at eight mall stores with a handheld ``zapstick'' after they register at a kiosk dubbed the ``frog pond.'' The service then loads the list onto the user's personal Web page, which clixnmortar.com hosts for free. The users also can link products from 24 other retailers' Web sites into FastFrog.com.

The company, which promotes FastFrog as a way for kids to ``wish louder,'' had 7,760 youngsters registered by Christmas.

Many are like 13-year-old Christine Morahan, who was so giddy about zapping clothes at the Mall of Georgia's Abercrombie & Fitch outlet that she began jumping up and down.

``She's going to zap everything because she wants everything,'' said Christine's mother, Audrey Morahan.

``Is there a toy store I can zap in?'' Christine's 8-year-old sister Erica asked manager Marlo Oliver. The answer, sadly, was not yet.

Clixnmortar's other venture, YourSherpa.com, began in mid-December at Lenox Square mall in Atlanta and is targeted at adults, Ms. Alshab said. The concept is to eliminate the need for purchasers to wait in a check-out line and schlep shopping bags through the mall.

YourSherpa.com is currently aligned with only one store, FAO Schwarz, but the system works like this: Shoppers register for the service at a ``base camp,'' leave a credit card number and then receive a Palm III personal organizer equipped with a scanner. Shoppers scan products they want to buy or are considering and the products are listed at the shopper's personal Web site.

The products scanned into the Palm III can be bought and picked up at the mall, or, the shoppers can have YourSherpa.com pick up the items and even gift wrap them. Then, the goods can either be picked up from one central location by the purchaser or delivered to the buyer's house for an additional fee.

For those who aren't sure, the items can be left on the Web site and purchased later online.

While shopping, the YourSherpa.com Palm sends programmed flash messages asking if shoppers want to stop for lunch or a latte, and directs them to the mall's nearest restaurant or coffee shop, Ms. Alshab said.

``It's the type of stuff people used to do when there was a lot more (retail) staff to serve their needs,'' she said.

Emmanuel Weintraub, a management consultant in Fort Lee, N.J., likens mall owners' anxiety to the advent of television, when many predicted the demise of the motion picture industry.

``They said, `Here comes television, nobody's going to go to the movies,''' he said. ``What you had was a dip. There was a point where the movies - with these mammoth theaters and ornamentation - were not appropriate for what the public wanted. And so that industry reinvented itself and is doing better than ever.''

Moreover, Weintraub believes e-commerce is still ``eight to 10 years'' from having a significant effect on malls.

So does Jerry Welch, chairman and chief executive of California-based The Right Start Inc., the Saint Louis Galleria tenant who threatened a lawsuit over the mall's anti-Internet advertising mandate.

``The Internet's going to enhance activities at the malls. It's not going to take away,'' said Welch, whose company sells toys and other products for young children. He considers the Internet an ideal complement to Right Start's 48 stores.

``You have an ability to have a showroom in your customers' homes 24 hours a day,'' he said. ``The notion that it's a zero-sum game and that the Internet is going to close all the malls - it's really ill-founded.

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