Alaska bucking national trend of slowing mall sales

Sean Doogan
The Anchorage 5th Avenue Mall is a large retail complex in downtown Anchorage. Photograhed on Friday, August 22, 2014.
Marc Lester / Alaska Dispatch News
A store for clothing retailer H&M is under construction in the Dimond Center on Friday, August 22, 2014.
Marc Lester / Alaska Dispatch News
Interior of the Sears Mall in Midtown Anchorage on Friday, August 22, 2014.
Marc Lester / Alaska Dispatch News

Since the late 1950s, malls have been a staple of American shopping and culture. But their success and influence on consumers are waning across the nation. No new enclosed malls have been built in this country since 2006, according to real estate research firm Green Street Advisors. Sales have been slumping in many parts of the country, driven down by increased competition from the Internet and struggling anchor stores like Sears and J.C. Penney. There is even a website dedicated to the downfall of the American mall.

But in Anchorage, many brick-and-mortar indoor malls are outperforming their Lower 48 counterparts. And new mall formats -- especially the more modern and increasingly common outdoor mall concept -- are springing up across Southcentral Alaska as well, spurred on by the emergence of national brands in the Anchorage market and a relatively stable economy.

Tikahtnu Commons, a $100 million Cook Inlet Region, Inc. property encompassing 95 acres and more than 900,000 feet of retail space, opened in 2010. It was host to one of the first Target stores in Alaska and now is more than 90 percent built out, according to CIRI President Sophie Minich. 

Minich said in Alaska there remains a "pent-up demand" for national brands like Target. But the retail giant may not have known just how successful it would be in the Last Frontier.

"When Target opened, it was a perfect storm," Minich said. "PFDs came out and it was close to the Alaska Federation of Natives Convention. We kept telling people at Target that they needed to know this is happening and be prepared, and it turned out that the demand in Anchorage alone cleaned out the store."

Minich said Target had to scramble to restock its shelves after its grand opening.

Ever since, national brands that had avoided Alaska have begun to build stores here. Outdoor retailers Cabela's and Bass Pro Shops opened stores earlier this year. Nordstrom Rack, H&M and other retailers are in the process of building Anchorage locations. Restaurants like Olive Garden and Hard Rock Cafe have also taken up residence in Alaska.

"I think it got people's attention when we weren’t really impacted in our economy like they were in 2008 in the states," said Linda Boggs, marketing manager for The Mall at Sears in Midtown.

And that is good news for local malls. Boggs said the soon-to-be-opened Nordstrom Rack store at The Mall at Sears should help the mall -- built in the mid-1960s -- attract a new customer base.

"There might be some housewives on Huffman or on the Hillside that haven’t been to the mall in years that the Rack will bring," Boggs said.

Boggs said The Mall at Sears is more than 90 percent full and she expects the addition of a Burgerfi restaurant to help add to the more than 3 million visitors the mall receives each year.

The influx of national brands hasn’t stopped with large box stores. Smaller, boutique shops have opened up in local malls as well. Michael Kors, Sephora and Coach have all recently opened in the Anchorage 5th Avenue mall, and they may be helping to change the definition of what makes a mall anchor store -- traditionally, large department stores like Sears, Macy's and J.C. Penney.

"The Apple Store is not an anchor in the traditional sense," said Kari Skinner, Anchorage 5th Avenue's director of marketing and business development. "But customers are waiting for that Apple Store to open, much in the same way that they are waiting for anchor stores to open on Black Friday. They are there every day for Apple."

Like most Anchorage-area malls, the 5th Avenue mall is almost full. It was purchased by the mall management company Simon Property Group in 1994. Simon is one of the nation's largest mall owners, with more than 325 properties across the U.S., and Anchorage 5th Avenue is one of the company's best performers, according to Stephen Welch, the mall's manager.

While the 5th Avenue mall and South Anchorage's Dimond Center continue to see steady growth, older Anchorage malls are also keeping their hallways filled with stores. And the success of the large, upscale indoor malls and outdoor town centers may be spilling over to help smaller and older mall properties in Anchorage.

The Northway Mall, built in the early 1970s, is located in East Anchorage, along the Glenn Highway. It is currently 90 percent occupied, according to its manager, Mao Tosi.

The Mall is home to two anchor tenants -- Burlington Coat Factory and Planet Fitness -- but is also seeing interest because of the nearby Tikahtnu Commons and Glenn Square malls.

"I love this strip of highway because you have four malls here," Tosi said.

Tosi said that while he tries to focus on getting local business tenants, the proximity of larger, newer stores is drawing customers to the Northway Mall.

"How could a Bass Pro Shop across the street hurt us?" Tosi said. "Yeah it's not here but it's close enough that people can make that crossover across the street to get to us."

The influx of national brands into Anchorage is a factor of the city's economy. And for local malls, the future looks profitable. According to the Anchorage Economic Development Corp., the city is seeing steady growth in its retail sector, adding more than 400 jobs in the last quarter.

But the Anchorage bright spot might not attract every national retail chain. Some may be suffering from the same Alaska misconceptions plaguing many Americans. Boggs has approached one national retail group several times about bringing some of its well-known brands to Anchorage. On one of those occasions, she said, she was told a story about how the head of the corporation once made a brief refueling stop in Fairbanks while traveling.

"He took one look outside the plane and said, 'I would never, never bring a store to Alaska. This place is godforsaken,' " Boggs said. "And now when you call them to see if they want to come up, they go, 'We just can't do that.' The story has spread among everybody (in the corporation). Maybe they will break down one of these days but they are one of the last holdouts."

Contact Sean Doogan at sean@alaskadispatch.com.