Finding The True Shopper
One California center has a lesson to share about reaching out to today's demographically diverse consumer.
Randall Shearin

How do you merchandise to today's demographically diverse consumers?   Too often, mall developers make assumptions about consumers based on ethnicity, and often, they're finding the assumptions wrong. One California mall is a case study as to how to find out what today's diverse customers want. Montebello Town Center in suburban Los Angeles has made many changes over the years as its market has changed. The center's trade area has a diverse ethnic background, but don't make assumptions about who the center's tenants are or what its sales are.

Macerich's Montebello Town Center is a unique center with a unique trade area.

The first thing you notice when you arrive at Montebello Town Center is that it looks like most Class A regional malls. There is no special theming or signage in any language other than English. Retailers at the center are bustling and the food court is populated with national and local chain tenants. The 20-year-old center was originally developed by Donahue Schriber and was acquired by Aetna Life Insurance Company in 1988. Donahue Schriber continued to oversee the development and management functions at the center for Aetna until 2001, when The Macerich Company was hired to take over these duties. At 755,000 square feet, Montebello Town Center is anchored by Robinsons-May, Macy's, Mervyn's and JC Penney.

When Montebello Town Center was developed, the trade area was made up mostly of first generation Hispanic immigrants. Over time, that has changed. In the 1980s, the retailers didn't fully understand the preferences and shopping habits of this valuable consumer group, which resulted in the department store anchors being overly cautious and building units smaller in size than the typical department store today. Other chain and national retailers also made incorrect assumptions about this consumer during the early years, passing over the mall in favor of markets where the demographics were more closely in line with their prototypes. Gaps in the merchandise mix were filled in with local retailers, which although they appealed to the local market, didn't fully satisfy the wants and needs of this aspirational consumer.

“The retailers had lots of choices for store expansion, and so they were slow to focus in on the benefits of this consumer to their business,” says Arndt.

About 10 years ago, retailers realized that in order to expand in Southern California they were going to have to understand the ethnic consumers who lived in the area. Montebello's demographics, too, had begun to change. Since the market had aged 10 years, second and third generation Hispanics had become the prime shoppers at the center. While these consumers fully embraced their Latino heritage, they were quickly becoming fully acculturated Americans. The line was beginning to blur between Hispanic and American.

Montebello Town Center was able to attract tenants like Gap to the center after realizing what its market really wanted.

Today, 72 percent of the center's market is of Hispanic descent and 19 percent is of Asian descent. The remainder is a melting pot of European ethnicities including Armenian and Indian. The interesting aspect about Montebello's Hispanic and Asian market, however, is that it hasn't recently immigrated. Most are second or third generation Americans. Most speak English more often than they do Spanish or their “native” dialect.

To understand how to market to its Hispanic and Asian consumers, Montebello first had to understand the level of acculturation achieved. In Montebello's case, most of its primary shoppers — the 25- to 40-year-olds — were second or third generation Americans, with strong incomes. While they may be of Hispanic origin, they live American and consider English their first language.

“It's no longer as simple as making assumptions about a person's last name and then sending them a flyer in Spanish or an Asian dialect,” says Arndt. “We've had a lot of feedback over the years from our Latino shoppers when we had signs posted in Spanish that they preferred to be communicated to in English.”

Research has shown that only a small percentage of Montebello's customers prefer to speak Spanish. Mostly, these are visiting relatives or older family members who come weekends with their children or grandchildren when they shop. While they may not make the primary shopping decisions, as highly respected members of their family, it is important to create and environment where they can enjoy the full benefits of the shopping experience. Therefore, it is important that the stores, as well as the mall's security and guest services can offer the added benefit of a multi-lingual staff. These shoppers tend to choose to communicate in Spanish when they have a Spanish-only speaking relative with them. What is important, however, is to let the shopper decide what language will be spoken.

“Our Latino and Asian guests have a tremendous respect for taking care of their elders and extended family,” says Arndt. “That is one very different aspect of our shopper.”

Montebello Town Center is owned by Aetna Life Insurance and managed by Macerich.

“It is an ethnically diverse market and we want to make everyone feel welcome, so we are careful not to un-invite our guests by catering specifically to one ethnicity over another,” says Arndt. For instance, no announcements are made in Spanish at the center and there are no signs or other outward indication of the shopper's predominately Hispanic background.

In the mid-1990s, Montebello Town Center conducted many focus groups, telephone surveys and shopper surveys to seek information from the shopper. It conducted these with everyone from teenagers to older adults and with all Hispanic and all Asian, and some mixed ethnic groups. The mall also reached out to local high schools and businesses. It met with regional managers of all their anchor and specialty stores at the center, who provided feedback not only about their stores at Montebello, but about other centers as well. The results of these focus groups enabled mall executives to develop a strategic plan that would take the mall to the next level.

Top sellers at the center 10 years ago included children's clothing, athletic shoes, lingerie and men's clothing. Food was another top category. With a lot of traditional Hispanic food served at home, the mall offered the customer the opportunity to get something other than their traditional fare. Putting into action the strategic plan, this has all changed. Over time, the demand of the changing market, driven by competition from centers like Brea Mall, Westfield Shoppingtown Santa Anita, and Glendale Galleria, forced the center's leasing and marketing team to set about a change of course. Whereas the center previously had many local in-line tenants, it actively sought — and leased space to — nationals like The Children's Place, Starbuck's, Disney Store, Gap, d.e.m.o., Hot Topic, Forever 21, Finish Line, Zales, Carlton Hair, Limited Too and Charlotte Russe. Along those same lines, the department stores began focusing in on the wants and needs of the consumers found in the local market, rather than simply carrying the same merchandising chain-wide. This allowed for a lot of flexibility in terms of product mix, brands, sizing, etc., that specifically catered to the Hispanic American shopper.

In 1998, Montebello Town Center completed a major renovation, which culminated in the addition of a Macy's in 2001. When Macerich took over the management, marketing and leasing functions at the center in 2002, it brought a whole new level of expertise to the property, securing such national tenants as American Eagle Outfitters, Torrid and PacSun.

The marketing team worked in tangent with leasing and management to convey to the marketplace these important changes, developing the “See Us In A Whole New Light” advertising campaign. This campaign was used as a vehicle to communicate on-going improvements at the center, including the renovation, exterior upgrades, new stores and the grand opening of Macy's. In 2003, the marketing team followed up the success of this campaign with a more targeted, young and edgy message, “The Answer” campaign, which allows them to focus in more specifically on the various consumer segments of the marketplace. Marketing decisions at the center continue to be influenced by extensive market research.

“We've made a shift so that we have the tenants and the merchandise that our customer wants,” says Arndt, who has been at the center for 10 years and worked for both management companies.

Today, sales at the center — at $449 per square foot at the end of 2004 — are doing very well. All of the department stores have excellent sales: Mervyn's is in the top 5 in the chain; JC Penney is a top sales per square foot performer in its region; Macy's, which has been at the center less than 4 years, is a strong performer; and Robinsons-May is also a top performer in the chain. One of the most interesting aspects about Montebello Town Center, though, is that you may assume to see one thing based on the demographics, and when you get to the center you see something different.

“That is what is so fascinating to me when I come to work every day,” says Arndt. “To fully understand this rapidly evolving consumer, you must be in constant contact with them, and the retailers, and you must not be afraid to embrace change. Macerich is a company that embraces change better than any company I've ever seen, and this talent is what will keep allowing us to reinvent Montebello Town Center.”