To boost sales, Galleria shifts its store mix

Warren Beck is reconfiguring his "jigsaw puzzle" again.

The upscale Galleria mall in Edina, which Beck owns, recently announced a flurry of moves designed to boost growth after mostly holding steady during the Great Recession and subsequent sluggish recovery.

In addition to landing Arhaus, a home design and furniture store, Allure Intimate Apparel and Marmi, a European shoe retailer, the Galleria said several stores are expanding or moving within the shopping center.

Later this month, Bang & Olufsen will open a showroom for its audio-video products and home theaters on the lower level of the mall.

In March, Cole Haan is moving to a temporary space while it designs a flagship store in the west end of the shopping center. The following month, Papyrus will debut its updated look next to Tiffany & Co., while Hammer Made will launch a newly designed store that's twice as large as its old location.

At the same time, the Galleria has to make difficult decisions about tenants. To make room for its most recent improvements, the mall didn't renew leases with Schmitt Music, A Pea in the Pod, and Que Sera.

Parting ways with Schmitt, an original Galleria tenant, was especially "bittersweet," said general manager Jill Noack, acknowledging that some customers were not too happy with the move. She said the mall will continue to work with Schmitt on holiday events.

That's actually a big understatement. At 417,000 square feet, the Galleria is much smaller than any traditional mall, which would seem to limit Beck's options since the mall typically signs leases ranging from five to 15 years. Yet the Galleria has earned a reputation for staying fresh and dynamic, even if that means playing hardball with tenants.

"One of the things that they do best is not [let the property] go stale," said Dick Grones, founding principal of Cambridge Commercial Realty in Edina. "If you're not on your game, you won't last long."

One of the few privately owned malls in the United States, the Galleria does not release financial figures. But sales at stores open for at least a year, a key measure of performance, rose in the high single digits, Noack said. About 95 to 97 percent of the mall is occupied, she said.

Beck's history suggests he does not sit still for long. In 1974, Beck and father-in-law Don Gabbert opened the Galleria, hoping to cluster a group of similar home retailers around Gabberts Design Studio and Fine Furniture across the street from Southdale Center. HOM Furniture acquired Gabberts four years ago.

Over the years, the Galleria expanded beyond the home, landing national and local retailers in jewelry, clothing, accessories and shoes, including Tiffany's, Louis Vuitton, Melly and Len Druskin. About 30 to 40 percent of the mall's 65 stores are local.

Beck also focused on food, helping entrepreneur Keyvan Talebi open the first Crave Restaurant at the Galleria in 2006.

Given the Galleria's limited space, the mall doesn't have the luxury of experimental indulgence. Beck said he has no plans to expand the mall, even though experts such as Grones estimate that the Galleria could use another 100,000 square feet.

If anything, the Galleria's space premium has forced Beck to make disciplined decisions, he said.

"We kept the space smaller than other shopping centers would want to be," Beck said. "We spend a great deal of time" on evaluating store performance and mix.

Retail consultant Jim McComb applauds Beck's "superb management." But he also said the Galleria benefits from its proximity to Southdale Center, which has struggled of late.

And since the Galleria is a lot smaller than Southdale, Beck can offer potential tenants much less expensive leases, he said.

"The struggles of Southdale have helped the Galleria," McComb said. "You have to give a lot of credit to Warren Beck."