Mall takes steps against E-Commerce BY JIM SALTER AP Business Writer Posted at 2:48 p.m. PST Wednesday, November 24, 1999 http://www.sjmercury.com/svtech/news/breaking/ap/docs/1120150l.htm RICHMOND HEIGHTS, Mo. (AP) -- As the Christmas shopping season gets into full swing, the Saint Louis Galleria is taking a drastic step to keep shoppers in the mall and away from their mouse. The Galleria, perhaps the most upscale and successful mall in the St. Louis area, sent letters to its 170 retail tenants last week informing them of a new policy against promoting e-commerce. Industry experts said they were unaware of any other mall companies taking similar action. The policy bans in-store signs, decals, advertising or displays promoting the purchase of merchandise over the Internet. Many retailers so far are ignoring the policy. At least one, educational toy retailer The Right Start Inc., has threatened to sue. Executives at The Gap, which operates five stores in the mall, are still reviewing what to do about the policy, spokeswoman Maria Moyer-Angus said. ``We think the Internet is a positive advertising tool that actually drives traffic to the stores,'' she said. The fast-growing world of e-commerce still makes up a fraction of all retail sales. Sales at traditional stores were more than $170 billion last holiday season, while online sales reached about $3 billion. Analysts this year are predicting everywhere from $3 billion to $8 billion for holiday e-commerce sales, said Emanuel Weintraub, a New Jersey-based consultant who works with retailers and suppliers. Still, e-commerce has grown faster than many bricks-and-mortar retailers anticipated, forcing them to respond. Many of the stores that line the corridors of the Galleria and other malls now sell goods online and use in-store promotions to direct shoppers to their Web sites. After all, as far as the individual store is concerned, the money all goes into one pot. But for the malls that house those stores, it's a different story. Money spent via the Internet bypasses the mall, which typically gets a percentage of sales from tenants. ``While e-commerce is a new transactional medium that is here to stay, it is important we protect our interest while initiating important dialogue,'' said Mark Zorensky, president of Hycel Properties Co. The mall is the sole property operated by the St. Louis-based company. ``We undertake considerable efforts to market Saint Louis Galleria and to bring people to the stores to drive sales locally. The stores benefit, as do we. Our primary interest is to maximize local store sales in our mall,'' Zorensky said. Weintraub said the mall needs to accept the inevitability of e-commerce, however. He likened the Galleria's policy to the beginning of the Machine Age, ``when people would stick wooden shoes in the machines to make them stop.'' ``This is such a dinosaur attitude. The mall owners have to deal with that in a more intelligent and rational way,'' he said. ``This isn't going to go away.'' Most mall companies are embracing the Internet, if somewhat reluctantly, said Malachy Kavanagh, a spokesman for the International Council of Shopping Centers. ``They're realizing that retailers are telling them that the Internet is creating an educated consumer and is actually driving consumers to stores,'' he said. In fact, the Galleria's own Web site lists Internet addresses for its stores, including sites that offer e-retailing. ``Visit our stores, shop our catalog, or order online at www.eddiebauer.com,'' reads the Eddie Bauer location on the Galleria Web site. More and more retailers are allowing Internet shoppers to make returns to their nearest store. That gives them an advantage over the e-retailers and also offering another chance to bring people into the malls. ``The subtext is if you don't like it, bring it back, and maybe you'll buy something else while you're there,'' Weintraub said. The Internet certainly doesn't seem to be keeping customers away from the mall. On Wednesday, drivers were circling the huge parking lot, waiting for a precious spot to be vacated so they could gain access to the crowded stores. Store managers, inundated with media inquiries since The Wall Street Journal broke the story Wednesday, referred calls to corporate offices. But many stores weren't backing off their promotions. At The Athlete's Foot, a 7-foot-tall sign at the front of the store urges customers to ``shop online anytime.'' The Sharper Image store includes banners urging online shoppers to register for a free chair. FAO Schwartz shopping bags include the company Web address. (PROFILE (CO:Right Start Inc; TS:RTST; IG:RTS;) (CO:Gap Inc; TS:GPS; IG:RTS;) (CO:Sharper Image; TS:SHRP; IG:RTS;) )
