Los Angeles-based developer Rick Caruso is responsible for some of the most productive shopping malls in the world. Caruso created The Grove, one of the most productive malls in the US, with 90% of visitors purchasing and with sales averaging $2,200 per square foot. The Grove is second only to Miami’s Bal Harbour, where sales average over $3,000 per square foot.
“People have written endlessly about how The Grove has a Disneyesque feel. Caruso was already [doing] experiential reality long before everyone else wanted to jump on the bandwagon,” Garrick Brown, Vice President of Retail Research for the Americas at Cushman & Wakefield, told BOF. “Retailers are willing to pay the highest levels of rent there because it pays off. Experience drives foot traffic, it drives sales.”
His latest venture, Palisades Village, is a 125,000-square-foot shopping center nestled in the chic neighborhood on the west side of Los Angeles between Santa Monica and Malibu, and has cost $200 million and two years to bring to life. It will open with 22 stores, 10 restaurants and cafes, a park, underground and valet parking, a community center, a bike-share program, and the reopening of the Bay Theatre. There’s room for an additional 13 restaurants or stores. The project is smaller and more upscale but only time will tell if this modified format will deliver on experience.
So what is Rick Caruso’s recipe for retail success? Caruso told BOF, “I have a theory that I operate on, and the theory is that humans have never changed since the beginning of mankind,” the developer says matter-of-factly. “The things that were important in the beginning of mankind are still important today.”
Rick Caruso’s Formula for Retail Success:
- Put Locals First: Align brands with community needs.
- Build the Best Version of Real Life: It’s crucial to keep that feeling of an authentic pedestrian walkway alive.
- Data Drives Sales: Recruit data-driven direct-to-consumer upstarts and collect data through everything from WiFi beacons to parking and Uber check-ins to understand traffic patterns and visitor behavior.
- Community Relationships Count: You have to know demographics and psychographics, and you have to have relationships.
- Rethink Store Formats: Smaller footprints with inventory storage built below ground so the main floor operations are focused on selling and customer activations.
- Every Tenant Must Pay Rent: Charge a fair rent and a sales percentage on top of that in exchange for marketing support.
“We want to have retailers and restaurateurs on our property that are going to be highly profitable and productive,” Caruso told BOF. “It’s about the sum of the parts. We can drive marketing and we can push traffic in and out. Things go south when pricing and revenue are disconnected.”
Read the full story in Business of Fashion.
Photo Credit: Gerry Roarty via Unsplash