Monday, November 24, 2003
New holiday decor can cost a mall between $75,000 and $1 million.
WASHINGTON POST
Santa sits amid faux icebergs and penguins in a shopping center festooned with swags of garland and twinkling lights -- just as he did last year.
And as he probably will next year -- and the year after and the one after that.
That's because tightfisted shopping centers have changed their redecorating habits and are going years without buying new holiday displays. The shift is a setback for the roughly half-dozen players that dominate the business of dressing up malls and is intensifying competition among them.
"It used to be that every three years a mall would purchase a new holiday decorations program," said Phil Champion Sr., general manager of Carpenter Decorating Co., a North Carolina firm. "Now it's more like five years. ... A lot of malls can't let loose the money, and the [decorating] market is down quite a bit."
Of the nation's 1,130 enclosed malls, only about 10 percent to 15 percent revamp their holiday decor in any given year, industry experts said. Instead, some freshen displays with "fluff" -- such as bows and wreaths. If malls do buy a new package, they want it to last longer and cost less.
Financial concerns
Twenty years ago most mall owners operated as private companies. Today, many of the largest malls are owned or managed by public companies that must answer to shareholders.
"We're looking for earnings growth and squeaking every nickel out of the regional malls that we can," said David Fick, an analyst with Legg Mason Wood Walker Inc. "Why buy new decorations when stuff you bought three years ago still looks fine? Maybe not great, but fine."
A new holiday decor package can cost $75,000 to $1 million.
And the potential client list has shrunk as an acquisition binge has consolidated ownership of most of the nation's malls into the hands of about 10 companies.
"The shopping-center industry is going through a transition," said Glenn Tilley, president of the Becker Group, a 50-year-old firm in Baltimore that decorates malls, hotels, casinos, resorts and city streets. "Right now, the focus is on acquisitions. ... Once that settles, we think they will strengthen their properties by emphasizing experiences within the mall," including enhancing appearance during the holidays.
Until then, mall decorators live with added uncertainty.
Waiting till last minute
For Champion, that means waiting longer than usual for mall owners to decide how much they want to spend -- if anything.
This year, Champion's biggest contracts weren't signed until the end of August, forcing the companies to do a year's work in two months. Workshop employees averaged 90 to 100 hours a week of work each in the past month.
"You can imagine what that does to payroll," said Champion, an 18-year veteran of mall-decorating business. "Now we're paying our employees time and a half. If things were going normally, we wouldn't have had to do that."
General Growth Properties Inc., owner of 168 U.S. malls, orders early to save money, said Wally Brewster, the company's senior vice president of marketing and communications. General Growth already is preparing for next year.
"If you last-minute the order, you're going to be paying full price and more shipping to get it here in time" because many decorating companies rely on overseas suppliers, Brewster said.
Mall owners look at selling used decor to smaller malls or to vendors, said Robin Miller, president of Miller & amp; More, an Atlanta firm that helps malls manage decor purchasing.
They have learned to invest in well-built pieces that won't go out of style, Miller said. "It's like buying investment pieces for your wardrobe," Miller said.