Paul Wilke

Photo by Jeff Silker

Paul Wilke, 38, wouldn’t want to be called the “King of Mankato Retail.” He would feel the title carried a connotation of him as the inflexible tyrant, the arrogant king of the Mankato hilltop, le roi le veut and therefore it must be so. Rather he would say – no, insist – that he’s only the humble gatekeeper who shepherds others along the retail journey so they can become retail kings themselves.

But there’s no denying that River Hills Mall’s presence has created an astounding retail boom in the Mankato area over the past decade. Almost nine million people visited Retail Mecca last year, including 750,000 Iowans – and the drive-by traffic, the “critical mass” as Wilke puts it, has spawned everything from Wal-Mart, Sam’s Club, an expanded Menard’s, Best Buy, hotels, restaurants and even Midwest Wireless Civic Center. And the growth has only just begun.

Wilke arrived at his present General Manager position almost by fluke, being at the right place at the right time after several hard knocks along life’s way. Along that rocky path he was groomed by two men in particular, Dave Holcomb from Condux International and Steve Menne, his current boss. Now he tries to return the favor by offering a helping hand to retailers reaching out for their dreams.

General Growth Properties, Inc., his Chicago-based employer, manages or owns nearly 140 shopping malls in 39 states. It’s a huge real estate investment trust (REIT), traded on the New York Stock Exchange (SYMBOL: GGP), that specializes in being the retail king in smaller markets such as Mankato. Given their importance, they could justifiably make the assertion that they are the Kings of Mankato Retail, but that wouldn’t be theirs or Wilke’s style.

CONNECT: Did you work your way up through the ranks at General Growth?
WILKE: I didn’t start out as general manager, but was an operations director my first two years, beginning in 1993. General Growth looks more at what a person brings to the company as a person rather than what they bring in terms of a degree. That’s true in my case.
This company promotes from within and it believes in training. Recently I spent several weeks in Chicago at the corporate headquarters, and I have three more courses with them scheduled yet this year. They have a Leadership Training Course, which includes such training as the “Emerging Manager,” and “Advanced Leadership Training.” They invest in their people.
CONNECT: So it’s not what you come in with, but rather whether you are teachable?
WILKE: It’s also your results. Actions speak louder than words with General Growth. Even though you don’t have to come in with a degree, it certainly helps you get in the door. When I was hired as an operations manager, a four-year degree wasn’t required. My experience before arriving made up for it.
CONNECT: What about your experience?
WILKE: While attending college I worked at Carlson Craft for seven years. After receiving my education at Rasmussen Business College, I applied to a blind ad in a newspaper. From it, I received a telephone call from Dave Holcomb, the operations manager at Condux International in Mankato. Dave would become one of the biggest mentors I’ve ever had in my career. Condux was a new business then that was going through a growth spurt. Dave brought me in as a shipping and receiving manager in the warehouse and taught me the business. Soon I was promoted to traffic manager for the entire corporation, which included all their manufacturing plants, one of which was in Winnebago and the others in Connecticut and Florida. The company grew from 30 to 150 employees in the five years through 1990 that I was there. I will never forget all the help Dave gave in providing leadership, support, and in believing in me. I enjoyed work at Condux until the company downsized and sold off two of its divisions, including the three plants, to Johns-Manville. They downsized to 30 employees again. It was time for me to move on.
My traffic background helped me land a position with Conway Central Express (CCX) in Owatonna as an operations manager. The commuting was very difficult, and I wasn’t able to spend much time with my wife and family. Another person whom I knew from Condux was working at PerfecSeal. She knew I was frustrated with the driving – two year’s worth – and she called me when an opening arose at PerfecSeal. I took a position as a production supervisor, and was there until I accepted the position of operations director at River Hills Mall about a year later.
As an operations director I was responsible for the overall function of the facility itself, including such things as housekeeping, maintenance, public safety, and landscaping. At that time, it was all in-house. Today, we contract most of our services out to independent vendors, such as MRCI. I brought the MRCI program to River Hills Mall in 1994 because I’d had exposure to them and their services while at Condux International.
My boss at the Mall, beginning in 1993, was Steve Menne, another great mentor of mine, who taught me a lot while I was learning the operations director position. When Steve was promoted to a regional vice-president position with General Growth, I moved into his former position as the general manager.
CONNECT: What are your responsibilities now?
WILKE: They involve all aspects of the Mall, including marketing, leasing, specialty leasing, and even construction. Certainly we have a marketing director, assistant managers, and a facility manager, but they still must report through me and I, in turn, must report to Steve. My main focus is to lease the mall. This is one reason why we’ve gone to outside contractors to provide certain services, because those services don’t fit into the leasing focus. As a public company, we’re given the task of generating income for the stockholders every quarter.
I love my position because it fits well with my personality. I like to talk with people, build relationships, and watch people become successful. When I first took this position, I was concerned that I might not fit the type of person they needed. All my experience previous had been in the operations or production area, not in any people areas.
CONNECT: When potential mall tenants walk into your office, can you tell within the first five or ten minutes whether they’re going to make a go of it or not?
WILKE: Sometimes I might have a tendency to prejudge people when they walk in the door with their ideas, especially when they have an “outside-the-box” idea. A good example is the Wave Massage, which is in the JC Penney wing. We had never seen this product before. It’s much like a human car wash, where a person lies down in a moving, plastic chute while heated water pressure massages their body. When the current owners first presented it to me – and these people were truck drivers who had seen it work in truck stops – my first thought was to doubt them. I was cautious, and tried giving them a reality check. They ended up leasing the space and doing very well. They’ve been here about a year.
I’ve told myself many times over that I can’t prejudge anyone.
CONNECT: What are the personal characteristics of business owners that make it in your Mall?
WILKE: The ones that don’t make it are the ones looking to “get rich quick.” Retail isn’t any different than any other business. An owner has to nurture a business over a long period of time; sales and a good reputation take a long time to build. If people think they’re going to make money that first year, they are probably going to be wrong. In fact, I tell people they can plan on not making any money the first year. It takes work.
CONNECT: Your first job was working for Bob Weerts? (Weerts was the cover story of the January 2000 Connect Business Magazine.) What did you learn from Bob?
WILKE: Bob owned a business in my hometown of Winnebago and hired high school kids in the summer for his sod and seed businesses. That first summer, at age 16, I started on his sod crew and moved to the seed crew the next summer. I helped seed the Fairmont Airport and threw hundreds of bales of hay for Bob. What I learned from him is that you don’t have to be hard-nosed to be a successful businessman. He was a nice man. He treated people fairly and provided opportunities for those that wanted it. When he puts his mind to doing something he doesn’t stop halfway, but he goes all the way.
CONNECT: I’ve heard you use the term “critical mass” before. What does it mean to you?
WILKE: We want to generate as much traffic as possible in the Mankato area. There is the perception, maybe, that we view other shopping areas as competition. We don’t look at it that way at all. As a mall, we know we can’t fill everyone’s need. When other businesses are brought into the Mankato area, outside of the Mall, it helps us because it makes Mankato more of a first-choice destination. This way people aren’t shopping in Minneapolis or Sioux Falls for those services. For instance, Best Buy coming to Mankato has helped us. When people make the trip to Best Buy, they are more likely to shop in the Mall as well. We feed off each other. The more offerings in Mankato, the more mass we’ll bring here. When we can’t fill a need, that need will be filled somewhere else.
CONNECT: Is Mankato overbuilt retail-wise?
WILKE: Not even close. Our trade area covers 8,500 square miles, twenty-two counties, and about 350,000 people. We haven’t even begun to fill the needs that all these people are looking for. Retail is going to grow even further in Mankato.
CONNECT: How important is an exit off Highway 14 to the Mall?
WILKE: River Hills Mall has been handicapped all these years with just two entrances that now serve nine million customers a year. It’s only a two-lane road and it doesn’t adequately carry the traffic. The state transportation studies done here clearly say that another entrance to the Mall is needed – and not just because of the Mall, but because of all the other businesses on Adams Street. If we can put in an off-ramp from Highway 14 that can provide quick access to the Mall and Adams Street, it will go a long way to alleviate congestion.
CONNECT: If you’re all for critical mass, then you’re also all for an extension of Adams Street down to Madison East Mall.
WILKE: Absolutely. They are not a competitor. They are going to have that niche and provide services that may be similar but not identical to ours. Madison East is being under-utilized right now because of the difficulty in getting there. You can’t get from the Mall to Madison East that easily or from Highway 14 to Madison East. Infrastructure changes will help it – and when they are helped, we are helped with more critical mass.
CONNECT: Is the Internet taking away your Mall customers?
WILKE: That’s difficult to gauge. Last Christmas season we had record sales from our retailers, the best Christmas season since 1992 as measured in sales growth. Is the Internet affecting us? Just from that, I’d have to say no. But of course we can’t gauge how much more we could have grown without the Internet.
The Internet is here to stay. Business owners need to figure out how to use it for their own good. General Growth is no different. We’ve structured a new division in our company called “E-business Development,” and it’s one of the fastest growing parts of General Growth Properties. We’re figuring out how to utilize the Internet to our best advantage.
CONNECT: Will you have a River Hills website where a customer could order electronically from Mall stores?
WILKE: That’s the idea. We have that already in a way; it’s called mallibu.com. All the General Growth properties are on it. We had a special test of that site late last year when a customer could click on “River Hills Mall” and buy Mall gift certificates online. That was a start and we’re evaluating that test right now. The next phase will be for us to go to businesses in the Mall and get them hooked up. For instance, a person in New Ulm interested in buying something from Scheels could go to the River Hills Mall website, click on “Scheels” and then Scheels could ship it out to them.
Rather than take away customers, in the long-term the Internet should increase customers for Mall businesses. A website could grow us well beyond 100 stores, because online we could have other “stores” leasing online space from us. Rather than calling us brick and mortar, we may end up being a little “click and mortar.”
Obviously, the Internet helps people who don’t have time to shop. But in an area like Mankato, with its limited entertainment options, the Mall, for many, has become the entertainment. We have special craft, boat, home and camper shows, for instance. Shopping malls are still the Number One entertainment option in the country. Internet sales may take away a few customers, but I doubt whether it will do much more than that here.
We have talked with a General Growth retailer on the East Coast who is providing an Internet website within their store to expand their own store offerings from 300 SKUs to 3,000 SKUs. For instance, a person could buy a dress at that store, and then accessorize it at that same store right then by using the Internet. The products could be sent to the store for pick-up or sent directly to the customer’s home within 24 hours. With this scenario, a merchant’s space and selection can grow exponentially. A 1,000 sq. ft. store could carry the selection of a 50,000 sq. ft. store.
We recently hosted a “Retail Summit” in Chicago for our retail partners that discussed “click and mortar” opportunities. The biggest stumbling block right now for the shopper is in handling shipped product, bought off the Internet, that doesn’t fit or is damaged on arrival. How do you return it? With our click and mortar concept, customers will be able to take that product back to a River Hills Mall retailer for a return. No mailing or shipping involved.
CONNECT: Given that a significant portion of your customer base comes from Iowa, will high gasoline prices keep them from coming this summer?
WILKE: From my own perspective – and I may be completely wrong in this assessment – I think the economy is so strong that most people aren’t even concerned about the price of gasoline. That’s my gut feeling. Most Iowans make the trip to River Hills Mall because Minnesota doesn’t have sales tax on clothing. Iowans are more concerned about that than higher gas prices.
CONNECT: How far does your average customer travel? how often do they come each year? and how many of them are there?
WILKE: Our research from 1996 showed that the average customer drove 40 miles, which is just about the distance from St. James, for example. We’re reaching into Fort Dodge, Worthington, Tracy, Luverne and all the way to the South Dakota border.
CONNECT: Why don’t South Dakotans shop in Sioux Falls?
WILKE: They have tax on clothing.
CONNECT: It sounds like if the Minnesota state legislature ever taxed clothing it could really hurt you.
WILKE: We feel so. It certainly would change the market by taking away one of our advantages. In fact, a tax on clothing would become a strong negative for us and all the stores in Mankato outside the Mall because our state sales tax, 6.5%, is higher than Iowa’s 4%. There was an issue a few years ago with property tax reform, and one proposal, if accepted, would have taxed clothing. Thankfully it never passed.
CONNECT: How many people come here each year?
WILKE: Our estimated traffic right now is between eight and nine million.
CONNECT: Does that count employees that work here? Does that count you?
WILKE: It does. We use a video camera technology, with cameras mounted in the ceiling at 19 different entrance points. It’s about 97% accurate. As far as my being counted, well, I’m a shopper, too. I eat at the food court every day, and make other purchases here nearly every day. Our best shoppers tend to be our own employees because they are “captive.”
CONNECT: And the number of times per year each customer shops at the Mall?
WILKE: Our average customer was coming 40 times a year. The new research shows people coming an average of 58 times a year, which is more than once a week. Cub Foods, Hy-Vee and Menard’s get a lot of those shoppers as well.
CONNECT: Does General Growth let you run your own show?
WILKE: They let me run this business as if it were my own. I’ve been given a lot of decision making authority because, in their eyes, I live here and know the community and business conditions better than our headquarters in Chicago. Since General Growth works in 39 different states with 136 properties, it would almost be impossible for people living in Chicago, where the headquarters is, to make local Mankato decisions.
General Growth has succeeded because it spends time planning for the future – and that includes planning here at River Hills Mall, too. We’re not just throwing darts when we make decisions for the future. We knew many years ago about what the Mall would look like today.
CONNECT: What is the total retail dollar sales of the Mall?
WILKE: In the Mall shops only, and excluding the anchor stores and free standing stores, what I can tell you is that our average sales per square foot there is nearly $350.
CONNECT: Most malls have strict opening hours that tenants must follow. Those hours require employees. With the labor shortage, how are some businesses coping?
WILKE: That’s another very good question.
CONNECT: Would you bend the rules for somebody?
WILKE: At this point we haven’t seen that as being necessary. I do think that many of our merchants may be staffing lower than the ideal. There is a shortage. But we aren’t interested in changing the Mall hours. We’re here to provide a service to the customer and the only way we can do that successfully is to be consistent with the opening hours of all the merchants. We are open from 10:00 a.m. to 9:00 p.m. Many grocery stores and discounters are expanding to 24 hours, and the Internet is certainly 24 hours.
CONNECT: Do you ever go back to Rasmussen College? You’re a graduate.
WILKE: I’m on their executive board. Two of our employees are from Rasmussen College and another graduate is starting here soon. The people hired from there have worked out very well. To have all the colleges – Bethany, MSU, SCTC, Gustavus and Rasmussen – in a relatively small area around Mankato is wonderful. Even Southwest State in Marshall is within our trade area.
CONNECT: Anything else to add?
WILKE: I promised myself that I would talk about my family. My wife and I were high school sweethearts in Winnebago. In today’s day and age it’s very unusual to have two people that met at 13 to still be together 25 years later with two children. I married at 21. I love my family very much.

Paul Wilke Biography

Born: 1/23/1962
High School: Winnebago High School, 1980
College: Attended Minnesota State, South Central Technical College, and graduated from Rasmussen Business College, Business Management.
Professional: Licensed Real Estate Agent (required in Minnesota for leasing Mall space.) Member, International Council of Shopping Centers (ICSC).

©2000 Connect Business Magazine