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Talk of Potential Mall Merger Has Retailers Watching Closely

Posted by Paul Christ February 17, 2010

General Growth to Simon: Thanks, but No Thanks (New York Times)

When most marketers talk about distribution decisions they almost always focus their discussion on the strategies needed to move a product from one point to another point.  In its most fundamental form the marketer engages in activities that end up moving the product from the marketer’s hands to the customer's hands.  Of course, for consumer goods companies this means finding ways to get the product into the hands of the final consumer that they are targeting.  And for these marketers, gaining distribution often requires finding retailers who will handle the product.

But distribution decisions are not exclusive to product suppliers, others in the distribution channel, including wholesalers and retailers, face these as well.  For brick-and-mortar retailers one of the biggest distribution decisions has to do with store location.  For many big name retailers who target mid-to-high end customers this often means locating their stores in shopping malls owned by large real estate firms who lease space to the retailer.

As this story discusses the top U.S. owner of shopping malls is seeking to acquire a rival of similar size.  This consolidation of ownership could potentially impact the retail location decisions of some retailers.  However, right now this is far from a done deal.

In the world of mall operators, gaining size and scale gives companies greater bargaining power over their tenants, especially the national retailers whose stores serve as anchors. For Simon, which owns many outlet malls as well as some marquee names like Copley Place in Boston, the merger would also present a more formidable rival to other owners of shopping real estate, including Wal-Mart and operators of strip malls and lifestyle centers, Mr. Sullivan said.

Which retailers are most likely to be threatened if the merger succeeds?

Image by Mr. T in DC

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