At Santa Rosa’s two malls, new shopping habits, options alter premier retail space

As a girl, Shawna Rundstrom regularly accompanied her mom on outings to Santa Rosa's two shopping malls.

But now as a mother with two young daughters, the Sebastopol resident finds herself an infrequent visitor to the Coddingtown and Santa Rosa Plaza centers. But she's planning a trip to Coddingtown after Nordstrom Rack opens there Friday.

“I seem to usually find stuff when I go there,” Rundstrom said of her visits to Nordstrom discount outlets in other cities. “It can be decently priced, too.”

Santa Rosa's two malls have long been premier retail spaces in the county, and construction of the 31,000-square-foot outlet represents the latest step in reinvigorating the 54-year-old center. In the past six years, Coddingtown has added a Whole Foods, a Target and a string of restaurants on its front face on Guerneville Road.

But the competition for shoppers has grown increasingly fierce, both from online commerce and from discount clothing retailers in other shopping areas. And recent store closures, including Gap, Banana Republic and Old Navy, mean some consumers have had fewer reasons to visit the two malls.

Mounting closures this year make it the worst since the recession for U.S. chain stores, said Garrick Brown, vice president of retail research for real estate company Cushman & Wakefield. Already, the number of planned or completed closures exceeds 3,500.

“My suspicion is these are all-time records,” he said, adding the nation's malls have surplus space, and department stores will continue to shed locations in an effort to improve their bottom lines.

Even so, Brown, who is based in Sacramento, suggested Sonoma County's malls will benefit from their location. They sit in a region not only known for high employment levels but also for two factors that many locals view as negatives - a congested freeway and a constricting regulatory process for new construction.

Highway 101 traffic contributes to making the North Bay something of a “captive marketplace,” he said, at least for those seeking brick-and-mortar retailers. And, as in the residential sector, demand for store space remains high because tough standards and slow permitting means new projects can be difficult to build here.

“There is a shortage of retail in the North Bay,” he said. “It actually is one of the rare areas in the U.S. that is under-retailed.”

Over the past six years, the number of U.S. shopping malls has declined to about 1,350 from 1,500, Brown said. About 75 of those former malls have been reconfigured for other uses, including retail centers different from the traditional enclosed mall.

Department stores have seen declining sales partly because shoppers continue to be frugal in the wake of the recession, which hit in late 2007.

The tighter spending habits in turn have led to considerable growth in such off-price apparel stores as Ross, T.J. Maxx and Burlington Coat Factory.

But the hard times for department stores also can be blamed on the rise in online shopping, which Cushman & Wakefield calls the most disruptive force in U.S. retail in a half-century.

Of note, the suburban shopping mall was itself a disruption. Its rise in the 1960s led to an era of upheaval and decline for town centers around the nation.

In Santa Rosa, proponents of urban redevelopment succeeded in bringing a shopping mall downtown. Their efforts took decades, delayed by litigation and spurred by the damage from two 1969 earthquakes. But through their perseverance, the Plaza opened in March 1982.

By that time, a competing center, Coddingtown, long had been in operation near the freeway about a mile northwest of the downtown. That center opened in November 1962 with 13 businesses, its biggest retailers then being a Thrifty drug store and a Lucky's supermarket.

Simon Property Group, the nation's largest mall owner, owns the Plaza today and is a partner in Coddingtown with Codding Enterprises, the center's developer.

Over the decades, the mall stores have changed, including the larger department stores that serve as anchor tenants. Mervyn's closed at the Plaza, and Coddingtown saw the entrance and departure of Emporium and Gottschalks.

Today, each mall has a Macy's. The Plaza also houses a Sears. Coddingtown has a JC Penney, along with Target and Whole Foods.

Tyffani Sedgwick of Windsor said 16 years ago she considered the Plaza the place to shop. But today, when she visits a local store, whether in or out of the malls, too often she comes away empty-handed. As a result, she makes more purchases online, even for clothes.

“I find it much more worth my time and money to buy online, and I never thought I would say that,” she wrote in an email.

However, like others who shared their shopping habits, she is planning to visit the new Nordstrom Rack.

Several shoppers said the malls today seem to have plenty of stores for teens and 20-somethings but fewer options for women their age. At the Plaza, it seems like there are not a lot of clothing stores for women in their 30s and 40s, said Rundstrom, 34, who works in nonprofit social service. She said she was pleased to find both Gap and Old Navy discount stores at the Petaluma Village Premium Outlets center. She also shops online and this year bought items at pop-up parties of LuLaRoe, a multilevel marketing clothing business.

Other shoppers over the years have migrated away from traditional enclosed mall to the boutique stores at Montgomery Village in east Santa Rosa, as well as to so-called “power centers” like the one on Santa Rosa Avenue that houses both Costco and Old Navy.

Mall managers said they have heard from shoppers and are working to give them more reasons to visit. Progress is underway, but it isn't rapid.

“It's like a giant battleship,” said Jimmy Scales, Coddingtown's director of marketing and business development. “It takes a long time to turn us around.”

For Scales, Nordstrom Rack is a good example of listening to shoppers and delivering what they want.

“People know the brand,” he said. “They have a beautiful new store. It's in a prime location.”

On Friday morning, workers inside the new Rack were stocking merchandise and receiving training on using the mobile checkout devices that will allow shoppers to make purchases from anywhere in the store.

The outlet, which officially opens at 9 a.m. Friday after some 8 a.m. festivities, will offer clothes and apparel for men, women and children, as well as beauty supplies and some household goods.

“You can expect to find items 30 to 70 percent off regular price,” said Nordstrom spokeswoman Jessica Canfield.

The store's inventory will change often, she said, so a shopper on Tuesday is likely to see new items by Saturday on a return trip. The store joins 121 full-line Nordstroms and 205 Rack stores in the U.S. and Canada. It will employ about 85 workers. Asked why Nordstrom chose its location at Coddingtown, Canfield suggested the company found it the right space in a great center with a good array of dining and shopping options.

“We'd had our eye on Coddingtown Mall for awhile,” she said.

The mall still has over 10 vacant spaces, mostly in its center section. But Scales noted that in 2014, Coddingtown added Target and three other retailers. Last year it gained Motherhood Maternity, and this year Orangetheory Fitness opened there. As well, Unleashed by Petco has signed a lease for a space to offer pet goods and services.

At the Plaza, the Gap store closed earlier this year. But the pending departure of bankrupt teen clothing retailer Aeropostale was halted this month after Simon joined a novel consortium, including another mall owner, General Growth Properties, to jointly purchase and keep open at least 229 of the chain's stores. Even so, the local store last week still was conducting a sale with signs reading, “EVERYTHING MUST GO!”

Kim Hall, the Plaza's director of marketing and business development, said officials there are looking forward to the opening later this year of 2 Tred Brewery along B Street in the old Fresh Choice space that has been vacant about five years. The business will include a craft brewery, restaurant and beer garden.

“That's going to add a whole different element to the property,” Hall said.

The addition follows the opening in the past six years of such Coddingtown restaurants as BJ's Restaurant and Brewhouse, Chipotle, Sea Noodle Bar and Jack's Urban Eats.

Eateries have been a major trend for malls, Brown said. At one gathering of shopping center officials he attended, the representatives estimated their space devoted to food in the last decade has grown to 20 percent from 10 percent.

Experts will be watching next year to see how the fate of two major retailers with a local presence will affect the nation's malls.

After the new year, Macy's is expected to announce which of the 100 stores it plans to shutter in 2017. Brown said he expects the retailer will close one of its four North Bay stores, one in Corte Madera, one in San Rafael and two in Santa Rosa.

Also under growing scrutiny is Sears, which has been losing money for years and is expected to have more difficulty raising capital after Moody's Investor Services this month downgraded the retailer's liquidity rating. The news likely has affected some companies with interest in acquiring Sears' Kenmore and Craftman brands, Brown said. As a result of Moody's announcement, the potential buyers must consider whether they can pick up the same assets for less money should Sears file for bankruptcy.

“Now they're holding out for the fire sale,” Brown said.

Some malls will fare much better than others as the big chains continue to shrink. And some are exploring new ways to attract consumers, including “experiential” retailing. That includes such chains as arcade restaurant Dave & Buster's and Topgolf, where golfers compete with microchip-enabled balls in an indoor food and entertainment complex. But retailers that had helped boost mall traffic, including restaurants and off-price apparel, are reaching a point of saturation at many of the nation's malls, Brown said.

“The runway to further growth is pretty limited,” he said.