Attention Wireless Shoppers
January 07, 2005
The Simon Group has outfitted only two of its 300 mall properties with Wi-Fi. That number is very likely to increase this year, if it can figure out what to do with all that wireless bandwidth.
Simon Property Group is not the first mall owner to install Wi-Fi access in its shopping center properties. Compared to some industry players, Simon isn't even very far along in the process. It has so far installed wireless networks in just two of its malls, one in Burlington, Mass., another in suburban D.C. Senior vice president of business development Marty Plocica calls them "alpha test" sites.
Plocica is the first to admit the company hasn't really figured out yet what it can do with the technology. These first two test installations will help. Despite its tentative start, though, Simon Malls is an important bellwether for Wi-Fi in the mall industry.
The company owns, co-owns and/or manages 300 properties in North America. That's a lot of malls, and the portfolio includes some of the biggest and best known in the country. While Simon is far from committing to a roll-out schedule—and in fact nothing is written in stone yet—it's clear the company's intention is to move forward with Wi-Fi.
"I think by late next year, you'll see us trying to roll out to as many properties as we can," Plocica says.
Simon chose the first two malls for completely different reasons. "The Burlington property was picked because it's pretty typical in the portfolio," Plocica says. "It's a high-end, suburban-type shopping center with a fairly large food court and decent pedestrian traffic."
Simon chose the Fashion Center at Pentagon City because it's totally unique. The mall is directly across the Interstate from the Pentagon, one of the most tightly secured building complexes in the country. Visitors often head to the Fashion Center's food court for pre- or post-meeting sessions, or just hold their main meetings there rather than go through the security hassles at the Pentagon itself.
"It creates an unusual kind of business environment in the food court and our idea is to try and take advantage of that," Plocica says.
The company is not just targeting mall customers, though. It has identified four potential user groups: customers, tenants, mall owners (most often Simon itself) and sub-contractors, such as facilities managers and security companies. For each it sees different possible applications and different business opportunities.
"One of the things we want to find out is what the adoption rate will be among [mall] customers," Plocica says. "It's obviously not the practice of most customers now to bring their laptops to the mall. But how many might in the future? And two years from now, we'll be talking more about handhelds. Are we in fact in the forefront of a significant change in consumer behavior?"
The company believes there might be an opportunity for a service provider partner to establish a presence in each of its malls and offer hotspot-type services to customers for a fee—or service might be offered free as a traffic builder. The user experience likely will include some kind of portal that will provide customers with information about the mall and its tenants—including advertising—and the Simon chain.
Location-based services are another obvious possibility for reaching customers—beaming very localized advertising to Wi-Fi devices or providing directions to tenants' stores based on where a user is now. These probably won't be among the first applications implemented, though."We've seen vendors suggesting [location-based] applications," Plocica says. "But we have not found anyone actually managing that kind of application yet. As it matures, though, and if we can find partners, we may look at it."
Tenants are the next most important group. Some have already signed up to use the service at about $50 a month for DSL-equivalent service. That puts Simon in competition with local cable and DSL providers. One key advantage of the company offering service—again, probably through a service provider partner using Simon-owned infrastructure—is that it would be a consistent, reliable service across all its properties.
"It's too early to tell if [providing service to tenants] will be a significant revenue generator," Plocica says. "What we need to find out, again, is what kind of adoption rate can we expect. And what will tenants use it for—to access their own corporate sites through a VPN, for financial and reporting needs?"
Tenants in Simon malls range from tiny independents to big corporate chains like The Gap. The small independents probably require nothing more elaborate than a Yahoo! or AOL-type service, Plocica says. Larger companies will be much more demanding about things like network security, bandwidth and quality of service.
Some of the most interesting applications the company envisions for Wi-Fi will benefit owners, managers and major sub-contractors. Door locking and other physical security systems could be linked and centrally controlled using the wireless network, for example.
At the Pentagon City mall, where Simon is in the process of installing a new outside irrigation system for the landscaping, Plocica speculates that Wi-Fi could be used to relay information about rainfall and temperature conditions to a server controlling sprinkler systems, which could then automatically adjust its sprinkling schedule. If it's been raining for three days, you really don't need to irrigate.
Facilities managers and sub-contractors could equip maintenance workers with handheld Wi-Fi devices that would let them upload reports on work done and download dispatch information about the next task on their list. Or management could alert an employee to a safety hazard or incident—a spilled drink that needs to be cleaned up, for example—and get them to the scene much more quickly.
The company won't say how much it has spent so far to equip the first two malls. It is working with Single Digits, a Manchester, New Hampshire company that provides "business-class wireless hotspot management software and hosting solutions." Single Digits uses access point/gateway devices from Colubris Networks, which it has installed at the Simon malls.
Simon owns the network infrastructure, but Single Digits is managing it for the company right now. That will probably continue to be the case.
"We're a real estate company, we rent space," Plocica points out. "We're going to have to outsource technology management. It's just not our bailiwick. We would like to offer Wi-Fi service to our consumers and tenants, but it's not something we can take on ourselves."
Little else, however, has been determined about the business model the company will adopt for any major roll-out. Will mall visitors pay? Or will Simon just use the service as a traffic builder? Will tenants partly or completely underwrite the cost of offering the service to customers?
In the meantime, Simon is satisfied with progress in the early going. "We have interest from tenants—some have already signed up," Plocica says. "So we have traction with the two main user groups: customers and tenants."
Developing applications for the other user groups and figuring out what exactly Wi-Fi can and will do for the company in the longer term are on the agenda, but it will be two or three months before Simon begins to assess the situation and figure out how to proceed.