By Kris Hudson
Shopping malls, threatened by the rapid growth of online retailing, are experimenting with mobile applications to help consumers navigate their stores and parking lots and, in some cases, find sales and special discounts.
Simon Property Group Inc., the biggest mall owner in the U.S., offers Shopkick Inc.'s shopper-rewards app in about half of its 338 properties, and is developing its own app to offer group discounts.
Mall owner Westfield Group launched its mobile app at most of its 55 U.S. malls last year. Yet another mall landlord, Glimcher Realty Trust, is discussing a similar app it hopes to introduce in time for this year's back-to-school season.
The industry's efforts are just getting off the ground, and none of them are expected to entirely prevent malls from losing more shoppers to Web-based retailers. But mall owners view the apps as vital at a time when shoppers increasingly consult mobile devices like Apple Inc.'s iPhone to plan their excursions.
These mall apps now do little more than help shoppers remember where they parked, and provide store directories and movie times. Some of them also offer reward points for visiting certain stores. But some mall owners envision them doing more.
At a Citigroup Inc. conference last month, Simon Property Chairman and Chief Executive Officer David Simon said he would like his malls to emulate Groupon Inc., whose deal-of-the-day website has surged in popularity over the past year. The site uses email to promote group discounts offered by a range of merchants. Shoppers often have to visit one of the retailer's stores to redeem the coupons they buy.
"What I'd like to figure out how to do—through acquisition or creating it on our own—is to create 'Mall-on'," he said. It would be "a loyalty program coupled with an offer program for the mall environment, where we have all of the retailer participation in the mall. ...You could see us ultimately buy a technology-based company to facilitate that," Mr. Simon said.
Mr. Simon didn't elaborate, but a Simon Property executive said later that the Indianapolis-based company intends to flesh out its plans for the project in the next six months. Last year it assembled a digital-marketing group, led by Patrick W. Flanagan, a veteran of consulting firm Accenture PLC and ShopLocal.com, to oversee mobile apps and other online efforts.
Mall-focused apps are emerging as malls face their biggest challenge ever. Online sales still account for just a fraction of overall retail sales, but they are growing rapidly—gaining 12.6% last year to $176.2 billion—and are expected to increase at a compound annual rate of 10% through 2015, according to Forrester Research.
By contrast, sales at brick-and-mortar stores, excluding gasoline and vehicles, rose 3.7% last year to $2.37 trillion, according to the National Retail Federation. The trade group forecasts 4% growth this year to $2.47 trillion.
Whether mobile apps will help to slow the exodus of mall shoppers remains to be seen.
Shopkick, available in 161 of Simon Property's malls, is among the leading mobile apps for shopping, with more than one million users. The mall owner and seven retailers, including Target Corp. and American Eagle Outfitters Inc., have signed up to offer shoppers rewards through the free app, which is accessible via the iPhone, as well as devices powered by the Android operating system. Simon paid to install transmitters in its malls that sense when a Shopkick user's phone enters a store.
On average a Shopkick user gets 60 to 150 Shopkick reward points for visiting a participating store. The user can redeem 875 points for a $25 gift certificate from one of the retailers.
In October, Simon Property unveiled its own mobile app, which displays promotions from stores in its malls, publicizes events planned at the properties and helps shoppers remember where they parked.
Australia-based Westfield Group introduced a free app for the iPhone last year and for Research in Motion Ltd.'s Blackberry device last month that provides a mall directory, parking-spot marker and movie showtimes. The app, which it developed with mobile-app maker Simplikate, also allows users to create shopping lists. Westfield said it eventually wants to add product-search and you-are-here locator functions.
David Towers, Westfield's vice president of digital business, declined to say how many shoppers use the app, except to say it is "in the six figures."
"As far as working more extensively with retailers, that will come in time," Mr. Towers said. "But before that happens, we have to build a critical mass of people using our app and [it] becoming a critical part of our shopper experience."
Indeed, skeptics point out that the relatively small number of people who use mobile apps for shopping make it hard to generate much extra business with them. "It comes back to the fact that they still have relatively small bases of consumers using these things," said Sucharita Mulpuru, principal analyst at Forrester Research.
That hasn't deterred Glimcher, though its mobile app is still on the drawing board. The Columbus, Ohio, company, which owns 23 U.S. malls, said it envisions a free app that includes a parking-spot tracker, a map for navigating its properties and notices of promotions from participating stores. But the company hasn't selected a contractor to develop and operate the app.
