Atlanta Developer Woos Customers Away From Online Retailers | WABE 90.1 FM

Atlanta Developer Woos Customers Away From Online Retailers

Nov 23, 2016

Black Friday is this week. For years, it's been a day when sales attract shoppers to area stores.

More recently, it's had to compete with Cyber Monday. That's a day retailers offer big discounts online.

That takes money away from brick-and-mortar shops. This season, forecasts says holiday internet sales should rise at least 7 percent. 

To compete, a few malls are moving beyond the annual visit from Santa to try to attract customers. One developer in Atlanta is making notable strides to remake the shopping experience.

Experience Economy

Hundreds of malls have closed in the last decade and dozens more are struggling, but Atlantic Station in Midtown is doing pretty well. It charges retailers about 20 percent over the market rate and rarely has vacancies.  It attracts about 9 million customers a year, but it wasn’t always that way.

The story of Atlantic Station’s turnaround starts in 2009. Back then, mall developer Mark Toro didn't have much work and was kind of bored. 

“Our industry was literally dead,” he says. “I spent a lot of time walking the streets of Midtown and reading books and didn't go to the office much because there wasn't much to do." 

One of the books Toro read was called “The Experience Economy." Toro says it changed the way he thought about his industry. So, what was the big revelation? 

The book's co-author, Joe Pine, started his explanation with something people already know: “It just becomes so easy to sit there at home and do all of your shopping, and have all of the packages just magically arrive at your door. You have to have a reason to go to stores."

That reason had been sale prices, but Pine calls those a "death spiral" for modern stores. Online retailers have lower overhead costs, so they tend to win price battles.

Here's the part of Pine's explanation Toro and others hadn’t considered as much: “You’ve got to choose the opposite way of let's provide a reason for people to come into our stores other than just the lowest price. That reason is provide events and experiences that engage and create memories.”

Pine says some retailers have been doing this for years. At the American Girl store, children can attend tea parties with their dolls. Some REI outlets have rock-climbing walls, but Pine says only a few malls have started using experiences. He says Mall of America in Minneapolis and The Grove in LA routinely use experiences to attract customers, but they’re rarities.

Atlantic Station

Here's where Mark Toro comes back into this story. He's managing partner of North American Properties, and, in early 2011, his company bought Atlantic Station. 

It has a fair amount of outdoor space, like a grassy plaza called Central Park.

"Central Park was a perfect place to host concerts, yoga, Mother's Morning Out,” Toro says. “We actually brought on a U.S T.A. tennis tournament to host on the property."

Toro's company trademarked the term "ExperienceMaker." They're four employees whose entire job is to create retail experiences.

They also invite outside groups to hold events at Atlantic Station. Cirque du Soleil uses its special event site regularly.

Creative Loafing hosted Crafts & Drafts at the mall recently. Caroline Long was there with a drink in one hand – and a shopping bag in the other. 

"So, I heard about the Crafts & Drafts event and then I wanted to come check it out, but I decided to go to H&M while I was in the area because I wanted to do some shopping for myself," she explains. 

Long says she usually gets earrings from websites like Etsy. Today, she bought them here. 

Multiply her story by millions of customers, and it adds up to big profits. In early 2016, Toro's company sold Atlantic Station – for double its investment price.

Expansion

Now, Toro and his company, North American Properties, are building up other developments around Atlanta. They’re behind Midtown’s Colony Square and Avalon in Alpharetta.

They're getting ready to take their vision of the retail experience to other states.

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