Real Mall Owners to Go Virtual

SAN FRANCISCO (03/31/2000) - Fearful that e-commerce might cramp business in U.S. malls, one of the nation's largest mall operators has announced its shopping malls will go online.

Chicago-based General Growth Properties plans to launch in June.

The site would group together the 136 malls it manages. GGP says that customers would be able to hit their favorite local mall on the Web, ordering goods from stores for delivery or in-person retrieval.

Assuming it comes to fruition, Mallibu would be a big embrace of the Web for malls, which have struggled to determine whether Internet shopping is a threat and how to respond. In one extreme case of denial last December, St. Louis Galleria owners sent a letter to mall tenants forbidding them from advertising their Web sites in stores. (The owners retracted the policy two weeks later.) For its part, GGP hopes Mallibu will lure consumers to the malls rather than away. "I think our primary audience are the people who live in our trade areas and shop at the malls," says GGP senior VP Charlie Graves, senior the director of the firm's e-business effort. In other words, the company isn't expecting a Milwaukee resident to log onto a Los Angeles mall; instead, Graves argues, that person would enjoy wandering through his favorite Milwaukee mall's Web version, hitting the same stores he or she would shop in person. But moving over a hundred malls online, each with dozens of stores, would not be easy. Graves admits that Mallibu's beta site, up for the past six months, has "been a lesson in what not to do."

The site is clunky and slow, and its designers have struggled to accommodate all the stores that would need to be included. Nevertheless, GGP's strategy mirrors those of its competitors. Simon Property Group, the country's biggest mall operator, has already created content-only Web sites for each of its 172 regional malls. Those sites' visitors can click through to stores that run their own sites, like the Gap. Simon is now working to provide smaller retail outlets with commerce sites and to increase Internet presence in brick-and-mortar malls.

"This industry as a whole is really looking for plays to integrate the virtual and physical space," says Simon VP and CTO Robert Covington.