This is the case of basic “supply and demand,” in our opinion. There is limited spending power in any geographical region. These stores will not magically make money appear, nor will sensible people just “buy” just because it is there. We think this the American Dream mega-mall will attract attention for the short-term, then level off tremendously. A casino would have done better.
New Jersey’s “American Dream” Mega-Mall Set To Crush Nearby Retail Competitors
Via Zero Hedge
The American Dream retail and amusement complex, located at New Jersey’s Meadowlands, finally opens after 16 years of “false starts and multiple developers”, according to Bloomberg.
It’s arrival to the Northern New Jersey mall scene has nearby competitors scrambling to figure out ways to stand out.
The mall’s owner, Triple Five Group, is expecting 40 million visitors per year once the full map is up and running – a number that would surely devastate some of the nine nearby malls that are already competing for traffic out of the New York metropolitan area.
Poonam Goyal, an analyst at Bloomberg Intelligence said:
“There are shopping centers that are underperforming, and I think those are the ones that need to worry. Some of the smaller malls that are just surviving, with American Dream opening, they may have more struggles ahead of them.”
North New Jersey’s mall scene has survived off of a pulse from New York City, as New Jersey doesn’t implement a sales tax on clothing. In the city, shoppers pay 8.875%. This has helped fuel “continued demand” for malls in New Jersey, even as brick and mortar shops across the nation buckle. Nearby Paramus, New Jersey still boasts the busiest retail ZIP code in the country, despite the fact that many retailers stay closed on Sunday as a result of the county’s “Blue Laws”.
Whether or not the landscape will shift with the introduction of the American Dream mall remains to be seen. The mall will first see its theme part and ice skating rink open before its retail section opens up next year. The 3 million square feet complex is 45% retail and 55% entertainment, including indoor snow skiing and a DreamWorks water park.
Rick Rizzuto, vice president at real estate research firm Transwestern in New Jersey, said:
“I think the size alone is a pretty big draw.”
And so, other malls in the area are also looking beyond retail to try and retain business.
“All successful malls understand that you need more of a draw than just stores. And they’re adding bigger restaurants and more family friendly, approachable environments,” Rizzuto continued.
The Short Hills mall, about 30 minutes away, says it’s not worried about the new competition because it offers high end services and “experiences that enhance its appeal beyond just the merchandise itself.”
Short Hills mall General Manager Jamie Cox said: “Setting ourselves apart doesn’t necessarily have to do with the big roller coasters that American Dream is working on; it has to do with a differentiated shopping experience.”
Cox claims American Dream won’t be able to match features like the VIP lounge in its Chanel boutique and Canada Goose’s “Cold Room” where customers can test the company’s gear in temperatures as low as -13F.
Cox continued: “Our customers might go there once or twice for entertainment purposes, but when they want to shop they’re going to come to Short Hills.”
Analyst Poonam Goyal still thinks that higher end malls may be able to offer something that American Dream can’t. She said: “You go to American Dream for the entertainment. But I think if you want to go purchase something, you may not want that bigger presence where you might get lost.”
Paramus’ Garden State Plaza, about 20 minutes away, also strives to differentiate itself by becoming a “mini city”, complete with residential spaces, public gathering spaces, restaurants and traditional retailers. Currently, it offers high end services like valet parking and a concierge.
Karen Bednarz, a sales development coach from Hawthorne, New Jersey, says that she thinks American Dream will still draw a crowd; at least, at first.
She said: ”It’s like the Stew Leonard’s that opened up last month. American Dream’s going to attract a lot of people because it’s brand new, but that newness will go away eventually. Unless it has something that you can’t find anywhere else, it may lose its sizzle.”
Rick Rizzuto agreed that the mall would draw people in, and even postulated that it could help other nearby malls: “It will have a large enough reach that people from Pennsylvania and Connecticut will come to see it at least once. It will draw a lot more people than the area is used to, which should result in spending at the other malls in the area.”
