All the right moves

Jeff and Linda Ball have made a business of telling people’s life stories. The husband-and-wife entrepreneurs sell Italian charms — tiny rectangles that fit together into bracelets to reflect a person’s tastes and passions.

Over a year ago, tired of traveling the craft-show circuit, the couple paid $500 a month to rent a kiosk in Coeur d’Alene’s Silver Lake Mall. Surrounded by giants like J.C. Penney and Sears, they focused on a niche product delivered with personalized service. Sales at Charm Depot took off.

Their success led the Balls to consider upsizing the operation, and in April they moved Charm Depot into a 600-square-foot storefront at the mall. Although they pay about $1,500 a month all-in for the shop, the added space allowed the Christian storeowners to expand their selection of charms and add a line of gifts expressing their faith.

Charm Depot is one of dozens of small local businesses finding a place among anchor and chain stores at area malls. Although independent stores don’t play the role they once did as shopping center mainstays, retail experts say they offer a unique flavor that can incubate into something bigger.

Take Hat World Corp. The Westwood, Mass.-based company started with a single kiosk, 11 years ago. Today it operates more than 600 mall-based stores nationwide including Lids, which sell team logo and other types of hats.

Thousands of other independent retailers are also getting their starts through carts, kiosks and temporary space at malls.

Because lease agreements are short-term for those locations and rents are lower than in storefront spaces, businesses can test the water before jumping into longer agreements, said Patricia Norins,publisher of Specialty Retail Report and Gift Shop magazine. The Hanover, Mass.-based publications cater to specialty retailers.

Kiosk rents average $1,500 to $3,000 a month, meaning a retailer can get started for less than $15,000, Norins said. About 95 percent of the specialty leases are held by small, independent retailers, she said, and their sales total $10 billion a year.

Choose malls carefully

Shopping centers are increasingly tailoring their store mix to the ages, incomes and lifestyles of the communities they serve, said Wally Brewster, senior vice president of marketing and communications for General Growth Properties Inc. The corporation owns and manages 225 malls throughout the United States, including NorthTown, Spokane Valley and Silver Lake malls in the Inland Northwest.

General Growth Properties mall managers look for innovative small businesses that fit well with existing stores and shopper demographics, Brewster said, adding, “Many times the best ideas are from new retailers.”

But independent retailers need to research locations carefully to make sure they fit with the shoppers that a particular mall attracts, Brewster said, because unlike big chains, they don’t have multiple locations to absorb lower-volume store sales.

“It’s a big challenge for locals to really thrive,” he said.

Although local managers of General Growth Properties’ malls declined to provide statistics about independent retailers, a NorthTown representative said locally-owned Saad’s Shoe Repair has been there nearly 50 years — the longest of any store at the mall.

Eight of River Park Square’s nearly 50 shops and restaurants are locally owned, including Rock City Grill and Whiz Kids, said General Manager Rob McOmie. The mall is owned by Cowles Co., which also owns The Spokesman-Review.

McOmie said River Park Square looks for compatible small businesses, because they help differentiate one mall from another — especially when it comes to out-of-town shoppers.

“They’re not looking for what they can get back home,” McOmie said. “They’re looking for something unique and different that they’re not getting in their own community.”

Still, independent retailers sometimes struggle amid the big dogs of retail. Merchants may have to relocate, for example, if tenants willing to pay more and sign long-term leases arrive wanting their space. Malls usually give small businesses with one-year leases a better deal than long-term lessees, because it enables them to utilize space while maintaining flexibility.

At River Park Square, locally-owned Chrysalis Home Interiors declined to move to another space after its lease expired and its main-floor location was leased to a chain store.

Boehms Chocolates & Flowers, another River Park Square tenant, moved to make room for a walkway to the West 809 building and the owner said she ended up with a better location.

Johanna Julyan, who owns the store with her husband, Ren Julyan Sr., said she was initially skeptical because the store had been near Nordstrom for years.

But, she said, the new space has more window display area and 200 more square feet of space, which enabled her to design the interior based on shops she’d seen in New York City and to add Papyrus-brand cards. River Park Square bore most of the expense, she said, and store sales increased by up to a third.

“Every move is hard, but it was well worth it,” Julyan said.

The Everett Gallery closed its Spokane Valley Mall store in the summer of 2005, after nearly six years there.

Roxanne Everett said the company initially had a good deal on a yearly lease at the mall, but after a competing chain store arrived, Everett Gallery was asked to sign a five-year lease at triple the rent in order to maintain the option of providing picture framing.

The alternative was to continue the existing agreement, but the gallery no longer would be allowed to offer framing, which made up half of its business, Everett said. So the Everetts moved their gallery into a free-standing building on Argonne Road.

Foot traffic a boon

For retailers that find the right niche, however, malls can provide a friendly audience and opportunity to grow.

Uncle’s Inc., a locally owned puzzle and game company that started with a single shop adjoining Auntie’s Bookstore in downtown Spokane, opened Uncle’s Games, Puzzles & More at Spokane Valley Mall in 2002.

The success of that store, and the closure of a competitor in Western Washington, inspired owner Hans Isaacson to locate in shopping centers in Bellevue and Redmond. Recently, he committed to a NorthTown shop after a seasonal store there showed potential.

The businessman tailors his store offerings to demographics at each mall— something experts say is a key for small businesses to thrive in shopping centers. The Spokane Valley Mall store caters to a family market, he said, while Bellevue has high-end products for the “geek” crowd — an affectionate word he uses to describe the brainy Microsoft employees who purchase the latest games and even glean program ideas from them.

Uncle’s pays more for mall space than for the downtown Spokane location, Isaacson said, and some malls also collect a percentage of sales above a certain amount — a challenge for a small company.

“We find our goal in a given situation is just to pay bills 10 months of the year. Your typical gift merchant makes it because of Christmas,” he explained.

But malls also attract a parade of foot traffic, which translates into exposure that attracts both gamers and grandparents, Isaacson said.

“The mall will bring you everybody trying to fulfill a shopping need.”