California Apparel News

Nearly 30 years after it opened, Carousel Mall in San Bernardino, Calif., is trying to find itself.

The 1-million-square-foot facility, anchored by JCPenney and US Factory Outlets, hasn’t regained its footing since the losses of its other heavy hitters, Montgomery Ward, in February 2001, and Harris/Gottschalks, in January 1999. At the same time, competition has heated up in the Inland Empire. Nearby Inland Center expanded in the last few years with a Robinsons-May and converted its May Co. store into a Gottschalks. And, in the next two years, 3.5 million square feet of retail centers are scheduled to open in San Bernardino and Riverside counties.

The solution, according to Carousel officials, is to recruit outlet stores, those outposts for designers looking to sell excess wares. So far, in the last four months, four tenants have come aboard: Shirt Outlet, Club LA, home furnishings store Mor Designs and Tekin Jewelers.

“With a shrinking pool of department stores and national retailers, there isn’t a whole lot to go around,” said Sam Catalano, the mall’s general manager. “Our most fertile field is manufacturing types and local types of apparel and retail businesses.”

Real estate experts say the move is a needed one for the mall, which is about 40 percent occupied.

“The mall has had to reposition itself as retail has evolved in the city,” said Tom Swieca, first vice president of CB Richard Ellis. “The fact they’re thinking outside of the box is a good thing. Discount and outlet retailers are active and successful these days, which means the mall can be successful as well.”

During the past year, Carousel’s management has shopped the mall at apparel trade shows, including MAGIC International in Las Vegas, in search of manufacturers who’d like to open such factory-direct stores.

The draw for businesses is the easy leasing terms. While most malls command long-term leases from their retailers, Carousel is offering six-month leases, and in some cases, the mall will loan the retailer store fixtures and racks.

It’s that flexibility that appealed to Shirt Outlet co-owners Gregg Brown and Michelle Henderson, who opened a 2,600-square-foot location last December.

“We were searching for an outlet to sell our odds and ends and most malls we went to had an attitude—they thought we’d just pile stuff on tables,” said Brown, who is also the store’s general manager. “These chaps in San Bernardino got it and knew we could offer real value to customers.”

Indeed, the Shirt Outlet, whose parent manufacturing company, Riverside, Calif.-based Trilogy Group, wholesales to Today’s Man, sells men’s sport shirts and polo shirts in washed linen, doupioni silk and Jacquard from $19.99 to $29.99, about 40 percent off the typical retail price.

“We’re not going over $29.99, since we find resistance over that price point,” said Brown, who says his business is steadily growing.

Hans Reith, owner of women’s junior and contemporary store Club LA, said business is meeting expectations. He’s helping it along by sending mailers and coupons to area high schools promoting raffles and free limo rides to school dances.

“We’re very pleased so far. We’re doing about $10,000 in sales a month,” Reith said.

His year-old clothing company, Los Angeles-based Moda LA, sells skirts, blouses, spaghetti T-shirts and trendy clothing to Southern California stores including Bertini in Beverly Hills and on Main Street in Santa Monica, as well as smaller boutiques in Los Angeles.

The advantage of the store, said Reith, is that his company can overproduce to better fill its orders, and whatever is leftover can sell in the store.

“We do samples that probably won’t make it in the line, so this store is quite handy for us,” he said.

Carousel officials say the recruitment doesn’t stop at outlet stores. The mall has tried to attract office users, including government offices. The only taker to date is Starwood Vacation Ownership, a time-share company that opened a 20,000-square-foot call center. Negotiations have begun to possibly expand Starwood’s space, Catalano said.

Other tenants targeted are educational bodies, including California State University, San Bernardino, and the San Bernardino Unified School District, which could expand their facilities and conduct classes at the mall.

Catalano said there’s also an opportunity to capitalize on the car enthusiast culture that flourishes in the fall at the Route 66 Rendezvous in the 35-block area of downtown San Bernardino. He said he’d like to see part of the mall devoted to a car museum and an auto aftermarket facility.

The only thing stopping Catalano is the tepid pace of leasing, part of which is attributed to the bureaucratic styles of tenants he’s chasing.

“It’s frustrating—I want it to move faster than it is,” he said.