General Growth Properties: Still alive and kicking

In last week’s Omaha World Herald, as in many newspapers nationwide, I suspect, a page two story speculated about what the General Growth Properties bankruptcy filing would mean for the shoppers and retailers who visit and inhabit, respectively, the two Omaha-area malls owned by the shopping center giant.

I knew the story’s ending before I reached it. Nothing. Because Westroads and Oak View malls weren’t among the 160 malls listed as part of the bankruptcy filing -- and even those that are likely won’t notice a blip; GGP’s legal insolvency will be virtually imperceptible at the mall level.

But that hasn’t stopped the rumblings. Ever since the Chicago-based developer filed for Chapter 11 in the U.S. Bankruptcy Court in the Southern District of New York on April 16, the media and the bloggers have been busy. Would GGP crumble? What of the mall in my hometown? Would mall and corporate employees be sent packing?

General Growth owns some of the premier malls in the country, and its occupancy rate is 92.5%. The Chapter 11 filing is a tactical move to allow the company to regroup and restructure which, when the company exits bankruptcy in about a year, can lead to a stronger entity.

The New York Times called the bankruptcy the “biggest real estate collapse in American history,” and analysts said it’s a harbinger of troubles to come. That may be true. But General Growth can’t worry about that. It’s got malls to lease and manage and tenants to deal with. And so far it’s done a pretty good job of both. Despite the downturn, General Growth’s properties appear to have held up better than many.

And to those who would say the bankruptcy is an indicator that more troubles are on the way and that the mall industry as a whole is on the brink of disaster, Stephen Sterrett, CFO of the nation’s largest mall owner Simon Property Group, was quoted as saying, “It’s important for people to understand that [General Growth’s bankruptcy] is totally distinct from the business of the mall business. This is all related to their balance sheet and their capital. The fundamentals of the mall business are pretty good.”

I don’t mean to minimize the filing, the reasons behind it, or the foretelling of struggles ahead. General Growth’s bankruptcy, say analysts, is likely to negatively impact mall values -- this at a time when real estate operators are already grappling to stay ahead of their debts and keep their centers leased. But, at the same time, the event certainly won’t go unnoticed -- and could even motivate measures that would help the industry as a whole.

Did it take a giant to fall to advance an industry’s cause? Let me know what you think.

And, yet, when General Growth emerges from bankruptcy -- albeit a little leaner but likely a lot healthier -- and if real estate will have benefited from additional government intervention, this story may have a happy ending after all.

-- Katherine Field

Lost business

Sears lost my business yesterday. So did T.J. Maxx. Here’s what happened:

As soon as I walked into Sears (in Plainfield, N.J.), I noticed that the store was warm. It was hot outside -- an early blast of summer -- but that was no excuse. I stopped at several stores prior to Sears, including Walgreens, Target and A&P, and all of them were fine. I’m a hardy sort and the heat typically doesn’t bother me, but after about 10 minutes in Sears, I decided to pack it in. I wasn’t warm anymore: I was downright hot. And I noticed I wasn’t the only one. “I thought I was having a hot flash,” I heard one woman say to another, “until my son asked me, ‘Mom, why is it so hot in here?’”

As I was leaving, I stopped at a check out to ask if there was a problem with the air-conditioning: Was it broken? One of the sales people told me, “We don’t know. They don’t tell us anything.” Another associate added that the air-conditioning hadn’t worked properly for most of last July, “and I hated coming to work every day because once I got here, I had no energy.”

I’ve written for years about how important a store’s heating, ventilation and air-conditioning level is to the overall shopping experience, and about how a malfunctioning HVAC system translates into lost sales. But not until yesterday did I really experience it first hand. I would hope that Sears has enough respect for its customers and employees -- because they are the ones who suffer most in these type of situations -- to get its air-conditioning fixed and back on track before summer really kicks in.

After leaving Sears, I stopped at T.J. Maxx (in Union, N.J.), where the indoor comfort level was remarkably better. After trying on a couple of items, I made my way to the check out. The line was long, and not moving very fast (actually, it wasn’t moving at all). Then I saw the cause of the problem: only one -- ONE -- register was open (this in the middle of a Sunday afternoon). And it was staffed by a harried-looking young man, who looked only 17. I heard someone say he was waiting for a price check. I looked at the merchandise in my hand, all discretionary items, and decided it wasn’t worth the wait. A young woman who was about to get in line came to the same conclusion. “Forget it,” she said to her friend. “There’s only one guy working and the line isn’t moving.”

I’m hoping my experiences yesterday at the Sears and T.J. Maxx stores were out of the ordinary, and that they respect their customers enough, in Sears’ case, to provide an optimum temperature environment, and, in T.J. Maxx’s case, to provide a better level of store support. Because if they don’t, ultimately, it’s not the customers who suffer, it’s the companies themselves.

-- Marianne Wilson

Glass to retire as Wal-Mart director

“Mephistopheles” is retiring from the Wal-Mart board of directors, effective June 5.

Actually, it’s just David Glass, and he’s not really the Devil. If you’re a Wal-Mart fan, you probably think he’s more like an archangel, considering all the positive things that occurred during his watch as a board member since 1977 and as president and CEO of the Bentonville, Ark.-based giant from 1988 to 2000.

In many ways, Glass was instrumental in making Wal-Mart into a retail giant. He was one of Sam Walton’s early disciples, joining the chain when it had just 123 stores. It was to Glass, not Jack Shewmaker, that Walton entrusted the legacy of his chain. Glass helped engineer Wal-Mart’s vaunted distribution system, its reliance on information technology, and the launch of Sam’s Club and the company’s supercenter format. He also began Wal-Mart’s international expansion, with an acquisition in Mexico. “Retail is detail,” it is often said, and for Glass the “devil was in the details.”

During Glass’s 33-year tenure, Wal-Mart grew from $340 million in sales to $401 billion. Global store count grew to 7,873 stores.

Known for his dry wit, Glass was not flashy. He appeared uncomfortable doing many of the public appearances a corporate leader must endure. In that way, he was no Sam Walton. But in his deep baritone voice he rarely faltered in defense of Wal-Mart.

Which brings me to why I called him Mephistopheles: In 1992, Glass was interviewed by NBC’s “Dateline” news show about the company’s “Buy America” sourcing program and its purchases of goods made in overseas factories that allegedly employed underage workers.

Clearly not prepared for the questioning and the video evidence presented to him, Glass cut off the interview. But what struck many observers at the time was the tone NBC set for the interview. Its own correspondent was filmed straight on. But Glass was filmed from a camera angle just above the floor that dramatically accentuated his thick and bushy eyebrows and his quavering jowls. He came off like the devil incarnate.

Wal-Mart, and David Glass, learned from that experience that they needed to be more media savvy. Not angelic. Just savvy.

Check out Chain Store Age's story on Glass here.

-- Murray Forseter

The Bridal Registry ‘A-Ha Moment’

These days, it’s more common than not for a chain to offer a gift-registry service. But a recent shopping trip sparked an “A-Ha Moment” for me: Those retailers that want their registry service to stand out from competitors -- and even be viewed as “special” -- need to pay attention to the smallest of details when closing a “gifting” sale.

It all started with an invite I received to a bridal shower. It contained an insert listing the stores where she and her fiancé were registered: Fortunoff’s and Bed, Bath & Beyond. Since the invites were mailed after Fortunoff’s demise, my choice was easy.

I hit www.bedbathandbeyond.com to get some ideas and there it was -- an 8x10 Lenox frame that had the right combination of elegance and price.

Upon arriving at my local Bed, Bath & Beyond store, I made a beeline straight to the bridal and gift-registry section, an impressive department filled with a complete assortment of fine china, everyday-ware and other fine gifts. The department supervisor welcomed me, and printed out my friend’s bridal registry.

We chatted briefly about the details of Susan’s upcoming shower, including venue, date and whether it was a surprise. Then I pointed out my gift, and within minutes she returned with the frame. We were off to a good start.

As she handed me the frame, I asked, “You don’t gift wrap here?”

“Of course we do,” she said. “Did you need that wrapped?”

I was suddenly confused. She knew it was for a shower. That should have been her first question before even handing over the frame.

This all got me thinking: Now, more than ever, chains need to focus on customer service. Paying attention to even the smallest of details makes all the difference. In-stock merchandise and attentive associates are great, but ensuring that I am set with wrapping, greeting cards and gift receipts are just as important.

Not to mention, I was a prime candidate for a little upselling. Did I need a wishing well suggestion? Did I want to consider any wedding gifts? Unfortunately, the associate missed her opportunity to find out.

Clearly, the chain has the fundamentals of a successful gifting program in place. By following my aforementioned suggestions, however, I think Bed Bath & Beyond could move beyond a retailer that merely offers a gift registry, and establish itself as the gifting destination.

-- Deena M. Amato-McCoy

Sears revives buyer protection plan

Sears has a new KidVantage Club program that offers “user” protection to parents. The program will replace an apparel item that wears out before a child outgrows it.

It’s an interesting idea, especially at a time when parents are looking to extend the value of their investment in their children. But it’s not the first time Sears has tried this tactic. Some 20 years ago Sears made the same offer for its Toughskins denim children’s line. That guarantee failed to excite sufficient allegiance during a period when the appeal of brand name jeans -- even for toddlers -- far outweighed Sears’ private-label offering.

This time Sears has extended buyer protection to almost all labels carried. In addition, buyers will receive 15% discounts on future purchases once they buy $100 worth of clothing or shoes.

Sears is pushing in-store activity. KidVantage can be accessed only through a store visit. It’s not available online. Considering that comp-store sales tumbled 9.5% in 2008, and an even greater 11% in the fourth quarter, Sears might have felt compelled to do something to generate more in-store traffic.

— Murray Forseter

Celebrating Walgreens

In past issues of Chain Store Age, we have written about Walgreens’ inclusive hiring policies, which focus heavily on employing the disabled. But witnessing the chain’s commitment in person really drives its consequences home.

On Saturday, I visited my neighborhood Walgreens for a couple of sundry items and, during checkout, chatted with the elderly cashier who is usually there when I shop. With measurable snow predicted for the rest of the weekend, our amiable conversation inevitably wandered to the incoming weather, and soon “Norman” was offering me advice on how to protect my fledgling tulips and daffodils from six inches of wet snow.

Although I’ve been talking with him on and off for several years, I had no idea Norman was an accomplished gardener. And, in our five-minute conversation (there was no one else in line), I learned something else about him: He has Alzheimer's Disease.

With no prompting from me, Norman went on to say what Walgreens has done for him. When he was diagnosed about a year ago, he went straight to his manager and explained the situation. He said there was no hesitation on the part of Walgreens about his job security. He was to keep working and he would have their full support.

“I’ve made a lot of mistakes,” he told me. “Sometimes I have trouble remembering which keys to press on the cash register.” But, in times of difficulty, another associate will step in and assist, without making him feel badly about his confusion.

“I’ve actually gotten better because of Walgreens,” he said. “My doctor said it’s because I’m keeping busy and continuing to exercise my mind.”

We’re all better because of Walgreens. Despite an economic downturn that saw Walgreens announcing in January it would cut 1,000 jobs and slow store openings, the company has stayed the course in continuing an innovative hiring program that aims to have 3,000 disabled people on the payroll by 2015.

I’m not sure that Norman falls under the customary “disabled” classification, but he faces many of the same challenges that would make him unemployable by most organizations’ standards. That Walgreens has not tolerated, but rather embraced, his disability speaks volumes about the retailer.

-- Katherine Field

Toys ‘R’ Us sells peace and quiet

My children are 30 and 27 years old, and I am not yet blessed with grandchildren. Thus, my visits inside a Toys “R” Us store are not as frequent as they were decades ago. So it was with a little bit of bemusement and nostalgia that I read that Toys “R” Us is adding a low-cost department in the front of its stores featuring approximately 100 items for $1, $2 or $3 with themes such as dinosaurs, games and fun toys, princess dress up, musical instruments, art supplies and party favors.

The company is calling the new departments “$1-$2-$3 Fun!” shops, but old timers might recall that Toys “R” Us used to have a power alley that customers had to traverse before getting into the belly of each store. Stocked with low-priced items similar to what will go into the $1-$2-$3 Fun! shops, the merchandise had a slightly less politically correct name. The goods were known as “shut up toys,” meaning parents would bribe their kids to behave properly inside the toy emporium by buying them a low-priced plaything.

Toys “R” Us says it believes parents “will appreciate the exceptional values found in our $1-$2-$3 Fun! Shops.” I believe they’ll equally appreciate the peace and quiet a few bucks will buy.

— Murray Forseter