With anchor Scheels leaving, Rimrock Mall facing big challenges

2014-07-27T06:00:00Z 2014-11-21T16:24:09Z With anchor Scheels leaving, Rimrock Mall facing big challengesBy ERIK OLSON eolson@billingsgazette.com The Billings Gazette

Walking through Rimrock Mall and meeting community members, new mall manager Devin Hartley is usually confronted with one common question.

“ ‘What’s coming in where Scheels is?’ ” said Hartley, who started last month.

The sporting goods store is leaving the mall Aug. 24 for Shiloh Crossing on the West End, leaving Hartley to fill a gaping, 41,000-square-foot hole in a key anchor space.

Trends are working against Rimrock: online shopping is growing, and brick-and-mortar retailers are shifting to open-air shopping centers with cheaper leases. Small retailers at Rimrock worry that declining foot traffic will hurt their businesses.

Nevertheless, Hartley, a 12-year veteran of mall management, said he and his team see a bright future for Montana’s largest mall, on the cusp of its 40th birthday. They don’t have a replacement for Scheels, but they’re optimistic Rimrock Mall — home to more than 70 retailers — will play a major role in Billings’ growing economy.

“Rimrock has long had a very positive reputation within the state, within the industry, and we want to keep it that way,” Hartley, 48, said.

‘Diligent’ recruiters

Hartley is a Florida native who graduated the University of Central Florida with a degree in financial asset liabilities. He began his career in property management, though he never figured he’d end up working in malls.

“I always knew I wanted to do real estate in some capacity,” Hartley said.

When the opportunity arose, Hartley headed to Colorado to continue his career in real estate. In 2002, he went to Great Falls to become mall manager at Holiday Village Mall, lured by the rugged, outdoor charm of Montana.

“I like what the Rocky Mountain West has to offer. Big ranges, fly fishing, big game hunting. The mystique, the cowboy way of life, appeals to me,” Hartley said.

Billings is a bigger market and a good next step for Hartley.

Hartley replaces Kendall Merrick, who left in May after nearly two decades as mall manager. Merrick has taken a new position at another mall out of state.

Hartley is the first new manager hired by affiliates of Starwood Capital Group, the investment firm that bought Rimrock Mall last year from Macerich Co.

Hartley won’t hint about what could move into the Scheels space. Retailers in the mall are hoping for another large chain store, but other possibilities include a second food court or a group of smaller stores.

“Our folks are as diligent (recruiting businesses) as can be,” Hartley said. Two new businesses, women’s apparel store Francesca’s and Taco Treat, will open in August, he said.

Other malls, desperate to fill space, have leased anchor space to grocery stores, churches or social-service organizations in recent years.

At Rimrock, other anchors are JC Penney, two Dillard’s stores (one men’s and one women’s) and Herberger’s, an original anchor. JC Penney and Dillard’s have struggled since the recession, both announcing closures of poor-performing stores nationwide within the past two years.

The mall is also home to Wynnsong Cinemas, a free-standing multiplex movie theater.

Adapting with trends

Rimrock Mall was built in 1975, just ahead of the 1980s boom of shopping mall construction fueled by friendly tax breaks for developers. Rimrock was a major driver of West End development at the time, creating a regional destination for shoppers in Montana and Wyoming.

The loss of an anchor tenant is rare but has happened before. Montgomery Ward closed its department store in 2001 after the corporation declared bankruptcy, but Dillard’s moved quickly into the space.

Replacing Scheels will be a much harder chore in this era of decline for shopping malls, industry experts say.

Nationwide, online retail sales have more than tripled over the past decade, taking away an increasingly larger piece of the retail pie from brick-and-mortar stores, according to the U.S. Census Bureau.

Even the recession failed to slow electronic commerce, and industry experts say that shoppers’ habits may have changed for good. Almost no new malls nationwide have been developed since 2006, and dozens have closed or are struggling to stay open.

At the National Retail Federation’s annual conference in January, developer Rick Caruso made national headlines when he said that the traditional U.S. regional mall would be dead in 10 to 15 years, unless they’re completely reinvented.

To survive, Caruso said, malls must find ways to enhance the shopping experience and better connect with their communities.

It’s a strategy that developer Bob McDonald put into play when he bought the struggling West Park Plaza mall on Grand Avenue in Billings in 2008.

“If you don’t have the right type of regional or major tenants … what are considered to be natural major tenants, then malls are a problem,” Seattle-based McDonald said last week.

He knocked out the mall’s main atrium and reinvented West Park as an open-air, community center, focused on becoming a destination for customers from within a few miles. Instead of clothing or retail stores, the newly named West Park Promenade centered on salons, restaurants, a fitness center and other services that can’t be found online, he said.

The cherry on top was Lucky’s Market, which opened a new store at West Park Promenade earlier this year and generates thousands of car trips weekly.

“You need a draw … for these other retailers. Everyone knows the promenade because of Lucky’s. Everyone else can leverage off them,” McDonald said.

It’s an idea that Scheels is also putting into place at its new, 220,000-square-foot store. With a Ferris wheel, bowling alley and simulator games, developers are aiming to give a people a reason to drive to the store instead of staying home to buy online.

Other retailers at Shiloh Crossing expect Scheels will be a big boost for their business.

Rimrock Mall officials say their indoor venue has its own unique perks, playing host to numerous community events, including the Pack the Mall in Pink breast cancer fundraiser, Safe Kids Expo and the Playhouse Parade fundraiser. Mall officials say these events are key for Rimrock to maintain a strong connection to the community.

“It’s an ever-evolving industry. For us to be on the edge of that, we need to be active in the business community,” Hartley said.

Indoor malls aren’t struggling everywhere. The largest indoor mall in the country, the Mall of America in Bloomington, Minn., announced this spring a massive $325 million expansion to nearly double the mall over the next decade. The expansion was partly financed by state lawmakers seeking to boost the mall’s profile as a destination tourist attraction.

Hartley noted that enclosed malls in the northern states, such as Minnesota or Montana, have a key advantage: shelter from the bitter winter cold.

“There’s still a need for a conditioned environment,” he said.

Foot traffic

Inside Rimrock, locally owned retailers say they are worried about the loss of foot traffic once Scheels leaves, especially if the vacancy lasts through the holiday shopping season. But they still believe a mall location, despite its higher rent, is a valuable asset.

Tea City, which sells loose-leaf tea, pots and other accessories, opened in the mall in March, fully aware that Scheels would soon be gone.

Owner Zane Luhman of Billlings said he looked at other places, including Shiloh Crossing, West Park Promenade and downtown, before deciding Rimrock best fit his business.

“As far as getting our name out there, we felt this was the best choice,” Luhman said.

Tea City usually isn’t a typical destination store, Luhman said, so he relies on the foot traffic from other retailers.

“That is part of the struggle, getting Billings people in the mall to find us,” Luhman said, adding, “Business has been pretty much what we expect.”

Across the walkway from Scheels, owner Rhetta Pederson of Sagebrush Trading Post watches dozens of shoppers come in and out of the sporting goods store daily. Some take a glance inside her western clothing and apparel and walk inside to browse.

“The main thing that has me here now is the (foot) traffic,” said Pederson, of Billings, who’s owned Sagebrush in the mall for about 15 years.

“There is no way I would see this kind of traffic pass by me and walk in” at a location outside the mall, she said.

At the request of Rimrock officials, Pederson moved last spring into her current, larger space to accommodate the new Francesa’s store. She said she considered fleeing Rimrock.

“I’m hoping to be able to stay here a long time,” Pederson said.

Hartley is hoping for the same. Married with one child and another on the way, he’s commuting from Great Falls every week but planning to move his family to the Billings area.

Hartley admits he’s been slow to meet retailers in the mall, but he’s quick to add he’s not running the mall alone. The management team of six has lengthy experience in the community, including new marketing director Tom Krause.

Krause was formerly sales manager at the Billings Chamber of Commerce (now Visit Billings), and he said he’s excited to promote the mall around town.

“We have a real interest in the success of the community,” he said.

Hartley said the staff is ready to tackle the challenges facing the mall.

“For us to come in here, it’s a fresh perspective. We’re excited about the new team,” Hartley said.

Copyright 2014 The Billings Gazette. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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