California Apparel News

For much of its 40-year history, South Coast Plaza has staked its reputation on attracting luxury retailers and an affluent clientele.

For its newest wing, the Costa Mesa, Calif., retail center has added even more iconic luxury brands to its roster.

South Coast Plaza’s new wing, called The Penthouse, quietly debuted early this year. With hardly more than a whisper, the 22,000-square-foot wing has almost been entirely leased.

Oscar de la Renta debuted a 2,706- square-foot coral stone–covered boutique on Feb. 18. The next tenant of The Penthouse will be Canali. The stately Italian menswear label will open a 3,094-square-foot boutique in The Penthouse in April.

The Penthouse’s empty spaces—a 500-square-foot store and a 2,500-square-foot space—are expected to be leased by luxury brands by the end of the year, according to South Coast Plaza representatives. The Penthouse will polish its look later this year, adding a new glass elevator to replace the section’s existing escalators. Construction is scheduled to start in April.

The new wing also provides real estate for the third floor of the St. John flagshipstore and Marcheacute; Moderne, a restaurant that opened in April 2007. The restaurant serves French bistro cuisine with an adventurous, contemporary edge—for example, foie gras on warm, roasted pineapple.

South Coast Plaza’s new Penthouse seems more like the mall’s luxury attic. It is adjacent to the third floor of the center’s Nordstrom. It is built above the Louis Vuitton boutique and the Salvatore Ferragamo store in the shopping center’s luxury wing, which houses some of the fashion world’s most-celebrated names.

Going after upper-echelon luxury tenants is a good move. According to a global survey released by the Nielsen Co. on Feb. 27, true luxury brands such as Gucci, Chanel and Louis Vuitton are among the top choices for luxury customers around the world. Judith E. Murphy, vice president of Departures magazine, a publication for American Express Platinum Card holders, said that wellestablished luxury brands employ a powerful mix of craftsmanship and customer service.

“They know how to service the customers,” she said. “[And] their products are made by artisans.”

Yet luxury was once a risky gamble by South Coast Plaza founder Henry Segerstrom. In 1975, he opted to give his shopping center a vastly different style from the regional malls of the time. He envisioned it as a place that would rival Beverly Hills’ Rodeo Drive as a Southern California address for international luxury.

More than 30 years ago, when the majority of mall owners were filling their real estate up with mass retailers and middle-tier department stores such as the now-defunct Bullock’s and The Broadway, Segerstrom opted for boutiques from designer names such as Halston and Courregrave;ges, which debuted in 1976 and 1977, respectively.

Those designer boutiques are long gone, but they helped attract other luxury names, and Segerstrom’s gamble paid off.

Over the past four years, South Coast Plaza has debuted new flagships for celebrated brands such as Versace and Bulgari. It opened new stores for Brooks Brothers, Valentino and Carolina Herrera. It made space for the center’s third Louis Vuitton boutique, located in the recently opened high-end Bloomingdale’s store. And for the past 15 years, South Coast Plaza has been one of the few American addresses for the Hermegrave;s and Yves St. Laurent boutiques.

As the 280-shop mall wraps up its 40thanniversary year, South Coast Plaza is projected to have sales of $1.5 billion in 2007. The retail center continues to be owned and managed by family company C.J. Segerstrom & Sons. South Coast Plaza’s sales per square foot is $800, according to the Directory of Major Malls Inc., based in Nyack, N.Y. The number does not include the giant sales of the center’s anchor stores, Saks, Nordstrom, Macy’s and the recently opened Bloomingdale’s. South Coast Plaza representatives would not confirm that sum, but other sources said the center’s salesper-square-foot figures range from $900 to $1,200.

At those figures, South Coast Plaza’s sales are more than double the $343.90 average sales per square foot of regional shopping malls projected by the New York– based International Council of Shopping Centers.

South Coast Plaza is not the United States’ only luxury shopping center, but with gross leasable area at 2.7 million square feet, it is larger than most. Florida’s Bal Harbour Shops is said to be 520,000square feet. North Park Center near Dallas is 1.9 million square feet. South Coast Plaza is almost 100 percent leased, according to Debra Gunn Downing, executive director of marketing.

Along with the vast choice of luxury brands, the mall houses boutiques for designers such as Tory Burch and John Varvatos and popular fast-fashion emporiums such as H&M. The large luxe mall also benefits from its location in the heart of a major international tourist destination. Located off the always-busy San Diego (405) freeway, the center is close to Disneyland and some of Southern California’s mostpopular beaches.

Only 35 percent of South Coast Plaza business comes from wealthy Orange County residents. Most of the visitors hail from a 100-mile radius beyond the county, which ranges from San Diego to Santa Barbara. About 12 percent of its visitors come from overseas.

August is said to be “Saudi month” at South Coast Plaza, when the luxury center gets its greatest surge of visitors from Saudi Arabia and the wealthy countries of the Persian Gulf. Many wealthy Mexicans shop the center around Easter time, and tourists from East Asian countries are said to visit all year round, according to South Coast Plaza representatives.

Well-rounded

But South Coast Plaza is not just for the wealthiest consumers. At the north end of the mall, a full-service Sears store has been doing business for 40 years. It sits on property owned by Sears Holdings. The three level store sells Kenmore and Whirlpool refrigerators and washing machines as well as DeWalt circular saws and $33 overalls by tools manufacturing company Craftsman.

The center’s McDonald’s and Del Taco restaurants are located near Sears and help the luxury mall embrace customers of many different tastes, according to Mary Gilly, a professor of marketing at the University of California, Irvine, in nearby Irvine, Calif. “South Coast Plaza does a good job of having something, if not for everyone, at least for most people,” Gilly wrote in an email. “But [the different groups] are kept separate, so the people who attend a St. John fashion show don’t come in contact with the stroller set.”

South Coast Plaza also completed a $155 million remodel in late 2007, including adding a glass elevator in the center’s Jewel Court. The Penthouse addition was part of the same remodel. Retail design consultant Brian Dyches said architecture is one of the only places where South Coast Plaza is not performing to the top of its game.

While South Coast Plaza’s Bridge of Gardens Plaza offers elegant, modern architecture, Dyches—the Orange County–based vice president of Watt International, a Canadian retail-branding and design company— said that much of the place looks like a typical regional shopping center.

Dyches reasoned that if the retail center offers flagship boutiques for some of the world’s most celebrated luxury brands, it should complement them with a rarefied atmosphere, as with the Mall of the Emirates in Dubai or the International Finance Centre in Hong Kong.

“It has the tenant mix,” he said. “But it doesn’t have the same level of aesthetic that would label it as a premier global destination.”

But Downing countered that South Coast Plaza’s luxe stores—and not its architecture—will always get top billing. “The customer does not want a lot of peripheral amenities in a sense,” Downing said. “The customer wants the merchandise.”