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Ethnic malls are buzzing

They skipped the slump. Do these niche stores offer lessons for mainstream retailers?

By Husna HaqContributor / August 31, 2009

Kam Man Mall in Quincy, Mass., bustles with shoppers. The 80,000-square-foot mall has seen an increase in sales despite the economic recession.

Mary Knox Merrill / Staff

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QUINCY, MASS. – On a typical afternoon at Kam Man Mall, soft melodies trill over the sound system as shoppers walk through stores offering herbal medicines, rice cookers, and the latest summer dresses from Hong Kong. In the mall’s supermarket, Cantonese-speaking employees serve shoppers whole roast pig and chicken feet stew, and apothecary jars at the front counter display $150-a-pound shark fin and, prized by Vietnamese women as a beauty enhancer, $2,000 packages of birds’ nests collected from seaside cliffs in China.

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What’s remarkable about Kam Man Mall isn’t that it’s in Quincy, Mass. Ethnic malls have been sprouting up in cities across the US for more than a decade. What’s remarkable is that shoppers are still buying the $2,000 packages of birds’ nests.

“We are not affected at all” by the recession, says Wan Wu, manager of the 80,000-square-foot Kam Man Mall. “Our business has been growing since we opened 6-1/2 years ago.” With sales up 10 percent in each of the past two years, he’s looking to open a second Asian supermarket in the Boston area.

As traditional malls across the United States struggle with the most severe recession since the 1930s – regional mall vacancies hit 8.4 percent last quarter, a nine-year high – many ethnic malls across the country are enjoying steady business. In the land that popularized the mall, these newcomers are outdoing their mainstream counterparts.

“Ethnic malls have developed a niche-targeted clientele,” says Wei Li, a professor of Asian-Pacific American studies at Arizona State University, Tempe. “Even in a recession, so long as the population base is there, the clientele are still there.”

It also doesn’t hurt that the clientele, in many cases, is growing.

In 2005, José de Jesus Legaspi and local Texas real estate investors took over the Fort Worth Town Center, an aging 1960s mall that was only 10 percent occupied at the time.

“We began leasing it under an ethnic theme, and repositioned it by bringing in various Hispanic-oriented retailers,” says Mr. Legaspi, who also runs a marketing and retail-services firm. “We also redressed the exterior in Spanish Colonial architecture.”

Today the aging Town Center is a bustling 1.1-million-square-foot Latino mall with more than 150 retailers, weekly entertainment, and a 6,000-square-foot family lounge that draws people from 100 miles away. “By focusing on a narrow, underserved demographic, ethnic malls create a funnel to bring people in from faraway,” says Legaspi.

The recession hasn’t hurt his business, and, in some cases, has actually helped.

“Since the recession, our occupancy, merchant base, and number of consumers have increased,” says Legaspi. What’s more, some people who lost jobs in the recession rented small booths in the mall’s mercado and opened their own shops. “It’s given them the opportunity to build their own business, a chance to execute the American dream,” he adds.

In Seattle, the Great Wall Mall has actually seen an uptick in volume in some stores. “The big financial meltdown has affected us somewhat,” says developer Omar Lee. “But sales volume is up at the 99-Cent Market, the noodle shops, and other low-cost retailers. We’re still very packed on weekends and holidays.”

Part of ethnic malls’ secret is that their niche markets are more reliable and well protected in a recession than mainstream ones.