America's Most Endangered Malls

• By Rick Newman
• On Friday June 26, 2009, 1:58 pm EDT

Birmingham's Century Plaza mall was a consumer mecca when it opened in 1971, drawing shoppers from outlying suburbs and even from other states. Over the years, however, people moved outward from central Birmingham, and new shopping centers sprouted around them. Sales at Century Plaza declined. Three of the mall's four big "anchor" tenants eventually left, and smaller retailers followed. By 2008, Century Plaza was a shadowy hulk with more shuttered stores than open ones. Then the last anchor tenant, Sears, announced it was leaving. The mall finally closed for good in early June.

[Slideshow: America's Most Endangered Malls]

Malls have a natural lifespan, as population centers shift, architecture evolves, and shopping habits change. But a sharp recession is clearly accelerating the demise of vulnerable retailers--and some of the shopping centers they inhabit. Plunging sales are one obvious reason. Many retailers are also saddled with heavy debt taken on in recent years to fund aggressive growth. And the credit crunch has made cash scarce for firms that need it most.

Those tough conditions have already driven retailers like Circuit City, Linens 'N Things, and Steve & Barry's out of business. Other chains are closing stores and slashing costs as they fight to survive. General Growth Properties, a Chicago firm that operates more than 200 malls--and owns the remnants of Century Plaza--declared bankruptcy in April and is working on a restructuring plan.

[See America's most profitable malls.]

The churn is transforming America's retail landscape. "During times like this, good malls tend to get better and bad malls tend to get worse," says Steve Sterrett, chief financial officer of Simon Property Group, the nation's largest mall operator. The first sign of trouble is often the departure of department stores and other anchor tenants, especially if those spaces stay vacant. High-quality, name-brand merchants often follow, with discounters--or nobody--replacing them. Shoppers sense the ennui, and gravitate toward malls that feel more vibrant, which only deepens the distress at troubled properties. By some estimates, about 10 percent of the America's malls could close within the next few years.

To gauge which malls are in trouble, U.S. News analyzed data from Green Street Advisors, an investment research firm in Newport Beach, Calif., that specializes in publicly owned real estate companies. Their data includes occupancy rates, sales per square foot, and quality grades for about 650 of America's biggest shopping centers. The average property in the data set has sales of about $420 per square foot and an occupancy rate of 92 percent, good for an A- grade.

[See how to tell if a mall is in trouble.]

The malls at the bottom of the list earn grades of C- or D>>>

Max Factor Kisses America Goodbye

• JUNE 5, 2009

By ELLEN BYRON

Procter & Gamble Co. is wiping U.S. drug-store shelves clean of its Max Factor cosmetics, a line that isn't popular enough to hold its own in America anymore.

The storied beauty brand -- namesake of Max Factor, the pioneer of Hollywood makeup artistry -- will continue to be sold internationally, where it garners most of its $1.2 billion in annual sales. Max Factor ranks among the top brands in strategically important markets such as Russia and the United Kingdom, P&G says.

By pulling Max Factor from U.S. shelves, P&G hopes to focus extra resources on its more promising CoverGirl brand, which the company says has increased its U.S. market share for the past seven years.

P&G bought Max Factor from Revlon in 1991 as part of a billion-dollar cosmetics assets deal meant to build P&G's share of the mass-market beauty aisles. But under P&G Max Factor never gained the same kind of traction with U.S. shoppers that the all-American, squeaky-clean marketing of CoverGirl secured for that brand.

Meanwhile, retailers, hungry for efficiency>>>

Hot Pink? Call It 'Mangenta'

• MAY 28, 2009

By CHRISTINA BINKLEY

As the founder and chief executive of Joie de Vivre hotels, Chip Conley is known for quirky, cutting-edge décors. But some of his investors balked when he planned a hotel interior and a financial-district restaurant that featured hot pink.

So he and his designers picked a new name for the color in their scheme: "mangenta."

For Fall Fashion, Think Fuchsia

View Slideshow

Associated Press

A model dressed in Christian Lacroix Couture Spring/Summer 2009 collection.

Journal Community

Is pink the new black?

No longer relegated to the garish masses, the saturated pink shades known as fuchsia and magenta are suddenly haute. They are cropping up in all sorts of unexpected places, including building exteriors, sofas, shoes and iPhones. British designer Clive Christian, who accepts only clients who know better than to ask the cost of their "couture" kitchens, has created a concept design for the "Alpha Kitchen" that's aglow with hot pink LED lighting.

Fuchsia is a leading color for fall in both womenswear and menswear. Hot pink ties drip from the racks of the upscale new Neapolitan Men store in Winnetka, Ill. Saks Fifth Avenue has placed fall orders for hot pink clothes from brands including the inexpensive BCBG Max Azria and the higher-end Michael Kors, who went so far as to show a full-length fur coat in the color for fall.

"I have to tell you," says Colleen Sherin, Saks's women's fashion director, "our best sell-throughs are not coming from black. They're coming from bold, vibrant colors and patterns."

For once, this demand is coming from the fashion>>>

Businesses Get Tougher on 'Friendly' Fraud

• MAY 26, 2009

By PUI-WING TAM

Online merchants are fighting a surge in so-called friendly fraud, as more consumers try to get out of paying for their Internet purchases in the recession.

Online jeweler Ice.com Inc. and travel site Expedia Inc. are among companies seeing at least 50% spikes from October in friendly fraud, a term used to describe when a consumer disputes an online charge but doesn't return the item or has already used the product.

Common scenarios include consumers falsely claiming they never received a product or they received the wrong item. Other consumers deny they ever authorized the charge and refuse to pay for the item.

Since the markets tumbled last year, Ice.com says its rate of suspected friendly fraud has tripled, while Expedia says it's up 50%. Athletic shoemaker K-Swiss Inc. says it's seen suspected friendly fraud rise 10% since January.

These companies say the fraud is sometimes blatant, with some consumers sending back boxes filled with rocks instead of the item that was shipped, and then asking for their money back. But in most cases it's hard to distinguish between fraudsters and consumers who legitimately don't receive their online purchases.

"Many people think [friendly fraud] is an easy way to reduce the amount they owe their credit card company," says Sanjay Sarathy, senior vice president of marketing for Vindicia Inc., a Redwood City, Calif., company that makes software to combat online fraud.

The problem is similar to what>>>

Recession Turns Malls Into Ghost Towns

• MAY 22, 2009

By KRIS HUDSON and VANESSA O'CONNELL

CHARLOTTE, N.C. -- Malls, those ubiquitous shopping meccas that sprang up in the 1950s, are dwindling in number, with many struggling properties reduced to largely vacant shells.

On the low-income east side of Charlotte, N.C., the 1.1-million-square-foot Eastland Mall recently lost a slew of key tenants, including a Dillard's and, next month, a Sears. Sales per square foot at the venue fell to $210 in 2008 from $288 in 2001.

Death of an American Mall

View Slideshow

Andy McMillan for The Wall Street Journal

As the recession alters American spending habits, traditional shopping malls like Eastland Mall are deteriorating at an accelerating pace.

See more photos and interactive graphics

The Metcalf South Shopping Center in Overland Park, Kan., is languishing after plans to redevelop it into an open-air shopping district fizzled. The stretch of shops that connects the two largest tenants -- a Sears and a Macy's -- stands mostly vacant, patrolled by security guards.

With their maze of walkways and fast-food courts, malls have long been an iconic, if sometimes unsightly, presence in the American retail landscape. A few were made famous by their sheer size, others for the range of shopping and social diversions they provided.

But the long recession is helping to empty out the promenades. Some analysts estimate that the number of so-called "dead malls" -- centers debilitated by anemic sales and high vacancy rates -- will swell to more than 100 by the end of this year.

In the 12 months ended March 31, U.S. malls collectively posted a 6.5% decline in tenants' same-store sales, according to Green Street Advisors Inc., a real-estate research firm. The recent slump was led by an average 7.3% sales drop at Simon Property Group Inc., the operator with the largest number of mall locations.

The industry's woes are worsening.>>>

Credit-Card Bill Limits Rates And Fees

By PAUL KATZEFF, INVESTOR'S BUSINESS DAILYPosted 05/22/2009 08:10 PM ET

Credit-card users can soon expect several changes in rules and rates affecting their accounts — not all of them to their benefit.

President Obama signed on Friday a bill that slaps restrictions on how credit card companies treat customers.

The new limits will cap certain interest-rate hikes, make rate hikes in general harder to impose, curtail marketing cards to younger consumers and ban a number of fees.

Supporters tout the changes for saving consumers money. But industry observers warn that at least some changes will hurt consumers.

Those changes will bar card issuers from policies that are unpopular, but which the industry uses to protect itself from risk with marginal customers. As a result, card companies will likely spread defensive costs among all customers.

"The rules look consumer-friendly on their face," said Ben Woolsey, director of marketing and consumer research, creditcards.com. "But the net effect over the long term will be to make credit more expensive and less accessible."

New rules could take effect nine months after legislation becomes law, says LowCards.com, a Web site that helps consumers comparison- shop for a credit card.

Key changes in the two proposals:>>>

How to Succeed in Business Yet Stay Small

• MAY 23, 2009

By PAUL B. CARROLL

In an age that has seen the flourishing of Wal-Mart and Starbucks, of big-box stores and national chains, George Whalin had an interesting thought: What about successful oddball entrepreneurs, maverick salesmen and eccentric retailers—how did they manage to turn their passions into profitable independent ventures?

In “Retail Superstars,” we read about a novelty store in Seattle called Archie McPhee. It has developed a big following by selling bacon-flavored toothpicks, bandages that look like fried eggs and “The World’s Largest Underpants” (two people can climb into them). The store also sells action figures, including one of Marie Antoinette that comes complete, so to speak, with severed head.

Estes Ark, a stuffed-animal shop in Estes Park, Colo., became a local landmark—and customer magnet—by housing itself in a building shaped like Noah’s Ark. In Houston, the Bering family morphed their lumberyard into a hardware store and then, seeing the neighborhood go upscale, began selling cups of gourmet coffee and fancy housewares. Nearly half of the inventory at Bering’s is still hardware—there is even a hardware-related bridal registry—but it also carries Baccarat crystal and Spode china.

Indefatigable customer service and huge inventory>>>