Whistling in the retail graveyard

The Baltimore Sun

Towson Town Center probably didn't have the best timing yesterday when it unveiled a new luxury wing featuring a Burberry apparel store and plans for Louis Vuitton and Lacoste amid an economy that continues to falter.

Shoppers faced with declining stock portfolios, job losses, devalued homes and less access to credit presumably have little room in their budgets for $600 purses and $1,000 coats. Retailers across the country have shut their doors as shoppers spend less.

And General Growth Properties, the owner of Towson Town and several other regional malls, has said debt problems exacerbated by the economic climate could force it to sell assets or even the whole company.

"I can't think of a worse a time" to open high-end retail, said Geoffrey Mackler, a principal with retail brokerage H&R; Retail.

But mall executives, who acknowledged that the weak economy has affected consumers, said they believe the new 110,000-square-foot, 32-store addition fills a void for the Baltimore region's affluent shoppers. Some of the retailers opening in the new wing will bring their first stores to the Baltimore area. Shoppers now travel to Tysons Corner and Pentagon City in Virginia or Mazza Galleria in Chevy Chase for pricey pumps and handbags.

"If we had a crystal ball to look at where we would be today, we would have still followed our merchandising strategy," said Lisa Bisenius, associate general manager for Towson Town Center.

Sales at the mall increased about 2 percent in August, the latest figures available, according to Towson Town General Manager Charles Crerand. And mall executives believe the Baltimore region can support such high-end retail for years to come.

Retail analyst David Fick said mall owners do not have the ability to time upgrades, expansions and renovations to the economy. Sales at the new stores might not meet expectations during the first year because of the recent slump, but owners believe that in the long run the investment will prove worthwhile.

"General Growth created a lot of value in the upgrade, but it will take a little longer than hoped to be realized," said Fick, an analyst with Stifel Nicolaus who follows General Growth. "For the first time, Towson Town is the full-on luxury center that the high-end shopper in this region is looking for."

General Growth began looking to lure in more upscale brands after a luxury retailer told them it wanted to locate to the market, Bisenius said. The mall company began doing its research and found that the demographics could support high-end retail.

"I think that Baltimore has money," Mackler said. "I think that Baltimore is not accustomed to spending their money in Baltimore, but that there is a market here. People are carrying Louis Vuitton bags and they're wearing Gucci and Prada. The wealthy people of this town are getting it from somewhere."

Burberry, Pottery Barn and Crate & Barrel opened in the new wing yesterday. Louis Vuitton and apparel retailer Lacoste will open next summer. Crerand said there is space for seven to 10 more upscale retailers and announcements about tenants are expected during the next few months. Restaurants P.F. Chang's and the Cheesecake Factory also began serving yesterday.

Some analysts say they have heard that Tiffany's is considering moving to the mall. Bisenius and a spokesman for the jewelry company would say only that they don't talk about new stores until a lease is signed.

Other stores that have opened or will open soon are Sephora, BCBG Max Azria, Bose, Fossil, Lucky Brand and Martin + Osa.

Analysts said this economic downturn is different from previous ones because wealthier consumers have been hit harder.

"It used to be if you hit a bump in the road in the economy and the retailers would watch their sales go down, the luxury retailers wouldn't go down as much," said Ed Henderson, vice president and senior analyst at Moody's. "It's different this time."

About 56 percent of affluent shoppers, or those with an average income of $210,700, said they were spending less on luxury in the third quarter compared with 12 months ago, according to a survey released by Unity Marketing, a research firm with expertise in luxury retail.

Many of those shopping at Towson Town yesterday said they were excited about the new offerings despite the economy.

Maria Lugl, a Towson homemaker whose husband is an architect, bought two clutches from the Coach store, a pair of designer jeans from Martin + Osa and a slipcover from Pottery Barn. She's happy she soon won't have to travel as far for the brands she likes.

"The guys at the Louis Vuitton store in Chevy Chase are going to miss me," the 29-year-old said.

Angela Lang, who was carrying a Burberry purse yesterday, said she likes upscale stores but it's difficult to travel too far for shopping with her 5-year daughter and 2-year-old son.

"We've been waiting for great shopping for a long time," said 33-year-old Lang, who lives in Fork. "I'm anxious to see what else is coming."

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