Sears calls it quits at Owings Mills

Department store finds little profit in two-year stay

A `serious blow' to mall

Rouse Co. promises aggressive search for a replacement

January 14, 2001|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

Sears, Roebuck and Co. might be "Where America Shops," as the chain's former slogan goes, but the retailer has discovered after just two years that Owings Mills shops elsewhere.

That led to Sears' decision this month to close its store in Owings Mills Town Center, a move that will leave a gaping vacancy along with an uncertain future at one of the Baltimore area's top regional malls.

Though mall owner Rouse Co. says it plans to aggressively pursue potential tenants for space that's crucial to drawing mall traffic, the job is expected to be especially tough.

"It's going to be a serious blow to Owings Mills mall, and very hard to replace Sears as a tenant," said Mark Millman, president of Lutherville-based Millman Search Group Inc., a national retail consulting and executive search firm. "It will hurt the traffic in the mall, which will hurt other stores there. There are not many tenants left that you can put in there that can be successful."

Sears moved into the new, 130,000-square-foot department store, built as part of a mall expansion that also added a new wing of stores, a Lord & Taylor department store, a megaplex theater and free-standing restaurants, in 1998.

Sears' pullout after such a short time could make other retailers leery of moving in, Millman said.

And the list of potential department store replacements is limited, if only because the mall already has three major chains: Hecht's, Macy's and J. C. Penney. Saks Fifth Avenue, an original anchor of the mall, which opened in 1986 as a high-end fashion center, proved too upscale for the area and shut its doors in 1996. Saks was replaced in 1997 by Penney.

Even the new movie megaplex turned out to be too "upscale." In September, General Cinema Theatres decided to convert its three-screen Premium Cinema to conventional screen space and do away with the Premium's big leather chairs, free popcorn, gourmet bistro and accompanying higher ticket prices.

"Owings Mills was at its best the day it opened, and it has gone through ups and downs since then, and clearly is going through a retrenching right now," said David Fick, a managing director of Legg Mason Wood Walker in Baltimore. "This is one of the worst markets to try to retrench a mall. Anchors have pulled back; specialty retailers went through a rough holiday season and are not thinking about expansions."

Rouse officials had said they planned the 1998 expansion to fit in with a strategy of reinvesting in and renovating mall properties that can dominate some segment of the market. By anchoring malls such as White Marsh, Columbia and Owings Mills with five department stores, Rouse hoped to deter other developers from building centers nearby.

The additions at Owings Mills brought the center to 1.2 million square feet. Mall management had said that booming residential growth, with a large influx of first-time homebuyers and families, was prompting the mall to turn its attention to family shopping habits.

"I don't think at this point we're planning any drastic changes," Chuck Crerand, the mall's general manager and a Rouse vice president, said last week. "We're disappointed Sears is leaving, but we look at it as an opportunity to bring in another merchant that can be successful in that space. We will aggressively look for a replacement for the Sears space."

The mall needs an anchor that reflects the mall's more moderate focus as opposed to a high-end anchor - possibly even a nondepartment store tenant such as Kohl's or Target, analysts said.

Owings Mills was the wrong market for Sears because the region's Sears shoppers tended to go to either Hunt Valley Mall or Cranberry Mall in Westminster, Fick said.

"Owings Mills is more of an elderly and upscale market where they are not buying kids' clothing and don't buy a lot of tools, and there are alternative places in that market to buy appliances" - all of which are three big categories for Sears, Fick said.

"We always thought it was a strategic mistake [for Sears] to go into that market. Clearly this was an experiment at Rouse's expense. They built the store and gave Sears the right to leave if it didn't do well. In my opinion, it was a predictable mistake."

Yet the "upscale" shoppers sometimes bypass Owings Mills mall as well, heading instead to boutique shops or to the Nordstrom at Towson Town Center, further adding to the mall's struggle to find its niche, Fick said.

Despite its struggles, Owings Mills mall is among the half-dozen centers in the region Fick categorizes as long-term, high-quality survivors, along with White Marsh Mall, Towson Town Center, The Mall in Columbia, Annapolis Mall and the new Arundel Mills.

Owings Mills mall "will be around, and there is a need for it," Fick said. "It's just that it is never going to be the best performer in the market."

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