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Experience Retail

SCW: The mix of entertainment and retail: a passing fad?

Paul Jacob: First, let's define what we mean by the mixture of entertainment and retail. I think we're talking about that part of our purchasing and leisure experience that combines our need for social gathering and the drive of pleasure seeking. The commercial elements of this experience are composed of retail, food and attractions that stimulate the senses.

I don't believe this is a passing fad. It's a return to the more complex interactions of the traditional marketplace. What is happening is a rethinking of the actual tenant offerings, the merchandising mix and the environments that showcase them. The economic winds may speed up or slow down development, but the trend will continue.

Keith Thompson: No, I do not believe that entertainment and retailing is a passing fad. Mixing entertainment or entertaining venues such as dining and movie theaters into shopping venues has been around a long time and will continue to be a viable and important factor in retail developments for the foreseeable future.

John Low: I don't think you can design a large-scale retail project today without having a strong entertainment component as an anchor. The mixture isn't a fad or trend; it is very much market-driven and a very real response to today's lifestyle and the consumer's expectation, not only in the U.S. but around the world as well.

Kirk Kennedy: The mix of entertainment and retail will continue and, more importantly, the line between the two will become even more gray. We have seen entertainment venues add retail to their locations. For example, we are currently rolling out a project to provide movie-specific kiosks full of merchandise shipped to theaters just prior to the opening.

Dan Blackman: It seems that successful entertainment retail projects include enhanced customer service amenities such as valet parking, child care, restaurant variety, multiple screen theaters and so forth. Each of these are positioned to better serve the consumer with a more pleasurable experience.

SCW: Can you take a conventional mall and merely add entertainment components to achieve entertainment retail?

Thompson: Our experience is that, given the right circumstances - i.e., at the right location demographically and geographically - an entertainment component such as a theater will indeed boost traffic and attendance within a shopping complex. Special consideration must be given, however, to matters of ingress, egress, auto and pedestrian traffic, signage, and visibility.

Patrick McBride: Entertainment retailing is about creating an atmosphere strong enough to draw people to a center or a store, and then ensuring that their retailing experience is fun, entertaining and rewarding.

Listen, when all you want is a pair of socks, you don't want entertainment retailing - you want socks, period. Make it convenient, make it fast, make it easy, and the patron is happy. So first of all, not everything should be entertainment retailing.

On the other hand, when a destination entertainment retail center provides dramatically unique environments, live entertainment, interactive attractions, a strong contingency of specialty retailers and atmospheric restaurants, and schedules wonderful events, it has created the essence of entertainment retailing.

I think the biggest challenge for a developer or a retailer is that once you create an entertainment retail environment, you need the right staff to keep the entertainment, events and atmosphere fresh and vibrant.

Low: A good entertainment retail project is definitely not about the decorating or embellishing of a retail space. In the '80s, we used to plaster the mall with surface graphic treatments and call it a themed environment. Today's shoppers are much more sophisticated. They are looking for a total experience, the depth of show and something that is authentic. The graphics and theme we create today in a mall is much more three-dimensional and interactive. It has to engage the shoppers and increase the length of stay.

Jacob: It is not enough to paint a wall to look like a theme park, a prehistoric island or some other place. The delivery of an environment that engages the guest must be total. It demands the most sophisticated levels we can possibly deliver. We are all playing in a world of rising expectations. Our audience expects complete immersion. Even Disney has stated that, to be broadly commercial, you have to be broadly talented. It means better quality and more intelligence. I think that's what our audience expects from us.

Richard Sconyers: The consumers' attention span has diminished, and they see through and grow tired of simply applied theming. The decoration of the facada does nothing for return or repeat business.

Blackman: Entertainment retail is creating an environment where the customer is immersed in sensory stimulation, where sight, sound and fragrances are evident.

Kennedy: The best themed environments, and most successful, have typically been done at tourist destinations where developers are willing to spend more and guests are willing to pay more. Less voluminous, high-quality theming will create or enhance a better brand and image than a lot of poorly done themed finishes.

Adding theming or a themed attraction to a conventional mall in an area that serves the same people over and over will probably not have a long-lasting, positive effect. Providing a clean, pleasing space and enhancing it with touring exhibits or changing entertainment will go farther.

SCW: Please comment on the following from "Emerging Trends in Real Estate 2000," a recent report by Lend Lease Real Estate Investments and Pricewaterhouse Coopers: "Most theme restaurants have been busts, the trendiness wears off quickly, and the food doesn't rate repeat visits."

McBride: It's true many theme restaurants have been busts and others are wearing out their welcome. It's because they made a lot of logistical mistakes and took their eye off their customer's desires. Planet Hollywood is no longer a rare commodity. Because of their aggressive expansion program, it's easily accessible to most people in the U.S., and people now know they probably will not see a celebrity in the local facility. The concept, therefore, must rely on its food offering and atmosphere.

Margaritaville at City Walk/Universal Studios, which we designed, doesn't feature any Jimmy Buffett memorabilia. It's about Jimmy's lifestyle, escaping into an environment that's filled with swaying palm trees, the casualness of the Caribbean Islands, lots of funky bars and live music. Food was a priority, and Jimmy was very hands-on, approving every design, tasting all the food. The result is a compelling, low-pressure experience, with good food that attracts the locals, the staff at Universal, and the all-important tourists.

Y Arriba, Y Arriba is a concept in which we are not only the designers and planners, but partners. We are currently under construction at Downtown Disney in Anaheim, Calif. Y Arriba Y Arriba is definitely not a theme restaurant. We've tried to create an experiential environment driven by ever-changing live entertainment which happens all around the guests, from spectacular in-house revenues to headline performers the likes of Jose Feliciano.

Even the food is an event. Carts of tapas greet the guest as they arrive at the table. The menu features food and drink from every Latin country. Even the merchandise is presented in discovery retailing style. Wines, coffees, crafts and artifacts of the Latin world are discovered as the guest wanders through the atmospheric retail space.

Blackman: Consumers enjoy the thematic experience many times over if the food and service is top-shelf. In essence, the food quality and customer service is then followed by a cool environment, which consumers are truly interested in as well.

Sconyers: Themed retail or themed restaurants, whatever it may be - theming gives added value to the product or service. It is not a substitute for the product. The restaurant still has to have good quality food, and the retailer still has to have quality merchandise to offer.

SCW: The report also says: "Many entertainment amenities are costly to install and maintain. Attention spans for these gimmicks are shorter than ever." Your comments?

Jeff Tunnell: I agree that gimmicks and attractions based on the latest trend tend to have short lifespans. A carousel, on the other hand, is a proven attraction. A carousel is attractive to people of all ages, and can be themed to fit almost any venue. The presence of a carousel will always add a festive flair that can complement the other features of the entertainment area.

Kennedy: It's important for retailers and developers to maintain the core of their existence: a great environment for shopping and quality merchandisers. Re-creating Disneyland may not work, but using some Disneyland principles such as clean, well-maintained facilities and pleasing backgrounds for guests will certainly pay off.

SCW: The conventional wisdom is that entertainment centers must be located in densely populated or heavy tourist areas. But there's Baywalk in St. Petersburg, Fla., a $30 million open-air center anchored by a 4,200-seat Muvico. Hamid, how are you going to fill all those seats?

Hamid Hashemi: St. Petersburg is a town with roughly half a million people, and the largest theater in the market currently is an eight-screen theater. It is also surrounded by water. Therefore, the suburban market within the St. Petersburg community where another theater can build is not reality. We feel that as the only theater in the St. Petersburg market with 20 screens and 4,200 seats, weshould be able to fill those seats as we do at our other theaters.

Thompson: Regal's experience tends to support traditional thinking that entertainment centers with theaters as anchors must, in order to be successful, fill a market gap. In other words, there needs to be a true need for the type of retail/entertainment being developed. In urban locations, a strong residential base within reasonable proximity to the site is a necessity. Otherwise, once the novelty wears off, patrons or shoppers will return to convenience as the decision driver. Why leave the area where you live to visit a movie theater in a downtown setting if there is a brand-new megaplex in the suburbs that you have to pass by in order to go downtown?

SCW: Keith and Hamid, are we over-screened?

Thompson: In some markets there is no question that the theater industry is over-screened. However, theater chains are slowing development and focusing on disposing of aging, obsolete, non-stadium theaters that are dragging down the industry's performance. As theater chains slow development activities and reposition their circuits with modern assets, it is our belief that ROI will rise and the financial health of the industry will improve.

Hashemi: Actually, we view the country as way underscreened. Today in this country, there are 35,000 screens, of which only 5,600 are stadium-seating megaplexes. As you know, the multiplexes currently in operation are obsolete. Therefore, when you look at a country with 280 million people and 5,600 screens, it is an underscreened market. For us, perhaps because we are the only operator with no multiplexes, it is a great opportunity for expansion. We will continue to build at a pace of 200 to 300 screens per year over the next five years.

SCW: Will money continue to be available for loans on entertainment projects - centers or movie theaters?

Thompson: A sizable amount of capital has been spent by developers and theaters on entertainment projects. The theater industry on the whole, however, has seen a minimal amount of incremental cash flow generated from all this spending. This poor performance, along with a couple of well-known circuits experiencing financial difficulties, has definitely tightened the credit markets for theater expansion capital. Access to capital investment markets run in cycles. We are in the beginning stages of a credit-tightening for our industry, which we believe is actually some much-needed medicine.

SCW: How does experience in the theme park industry uniquely qualify an architect or designer or fabricator to create entertainment retail concepts?

Sconyers: The storyline! In movie-making, an idea begins with the generation of the storyboard. This defines the sequence of events that create the story. In theme parks, this technique is utilized for each show or ride and as an overall concept. Translating this to entertainment retail, the storyline defines the guest experience and gives meaning to the design and creation of an enjoyable environment.

Blackman: Experience in theme parks uniquely qualifies specialty fabricators to develop entertainment retail by utilizing fabrication methods and materials that are tested and proven for public access and durability. Both the retail environment and the theme park are heavy public traffic areas and must stand up to rigors placed on them.

SCW: Are the lines becoming blurred between a fabricating company and a design company?

Kennedy: The blurring of lines between designers and fabricators is not a recent trend. It has only become more noticeable as our theme-park-educated industry has come onto the retail scene. Because of the technical aspects and multitude of choices in materials and fabrication techniques along with wide-ranging costs, it's very important for the fabricator to work closely with designers so the final product is delivered within budget and still meets the expectations of the designer and owner.

Blackman: I believe the lines between the design firm and the specialty fabricator remain separate. It appears that most design firms are concentrating on design concepts, while the specialty fabricator is concentrating on developing and delivering the design intent. Most owners rely on the expertise of each party so that the design intent and budget are not compromised.

SCW: Do you predict that themed entertainment professionals will continue to trickle away from the theme park industry and toward the shopping center industry?

Kennedy: Themed entertainment professionals will be required in all areas where there's a need to enhance a product - not only retail, but resorts and hotels as well.

Jacob: The delivery of projects in the themed entertainment world involves a wide array of disciplines and is everything that traditional architecture is not. These creations dictate that the usual commercial design process be inverted. It is the idea of the place that is the important first step. In essence, these are art-directed projects, where all the elements and nuances that reinforce the experience are carefully thought through. As the shopping center industry embraces this notion of experience, it follows that professionals who have been successful in the themed entertainment world will migrate to commercial real estate development.

SCW: Can retail be theater? Or, perhaps more to the point, are we at a stage in the experience economy that retail must be theater?

McBride: First of all, retail does not need to be theater, and in many cases, as we discussed earlier, it should not be. But often, by making the experience theatrical, it can encourage people to visit for the experience. NikeTown in Chicago, The NBA Store in New York City, Discovery Channel Store in Washington are all examples. Metreon in San Francisco is a theatrical retail center, but the theater only gets the visitor in. If you don't see people leaving with shopping bags, only half the job has been done. You may have helped market the brand, but you might very well be operating at a deficit.

SCW: Rick, does CityWalk in Orlando achieve the perfect ratio of entertainment and retail?

Sconyers: Universal Studios CityWalk is a unique situation in that it has a captured audience. Each night, all the patrons from both parks - Universal Studios of Florida and Islands of Adventure - exit through CityWalk. The entertainment value of CityWalk assists in drawing the attention of the exiting patrons and allowing them to discover the retail. Just as CityWalk utilizes entertainment to keep patrons on property, retail malls can utilize entertainment to draw them to their property.

Low: We learned a lesson from CityWalk in Los Angeles. There's less retail in CityWalk in Orlando, and more theme bars and food venues.

Kennedy: Rick mentioned that CityWalk gets a captive audience and does not define the norm for a retail entertainment complex. These destination locations are best used by retailers to build brand image and make a pleasing but bold statement that customers will remember when they are back home.

SCW: If you were a mall developer or owner, what would you do differently?

Thompson: Most developers today are sensitive to the unique needs posed by entertainment uses. Some developers, however, focus too much on return on capital at the expense of tenants. By focusing too much on capturing the foot traffic generated by a theater or entertainment user, critical aspects of access, convenience and visibility can be sacrificed. This style of development is very short-sighted, as it damages the "designated" anchor and can place the project in jeopardy.

Low: Mall developers should be more open-minded when developing centers today. High efficiencies and low CAM is not always the rule. The old formula does not work anymore; shoppers are paying big dollars for experience. As an architect, it is nice to witness the dramatic transformation and the convergence of retail and entertainment.

Kennedy: I would recommend maintaining relationships with quality professionals they've had good experiences with rather than revert to a low-bid mentality. Teams that understand quality, budgets, schedules and the owner's point ofview are much more cost-efficient in the long run.

Jacob: The move to the suburbs, the rise of the department store and the benefits of a controlled environment led to the phenomenal success of the shopping center as the place for our retailing purchases. Unfortunately, this success also resulted in a formulaic approach to retail. After years of explosive growth, the sameness of these environments and experiences has been exposed.

We are now seeing a return to the Main Street concept as the main stage for this experience. We are leaving the all-too-familiar regional mall habit of providing a merchandising plan that is highly uniform, not locally focused and with little regional context. It is being replaced with the richness of an authentic place with its sense of serendipity, and ability to capture the diversity and humanity of traditional street life.

The mall will need to respond to this search for authenticity. The need to provide a unique blend of tenants and environments. The need to deliver a rich fabric of opportunity that resonates with the consumer and creates a marketable experience.

SCW: Jeff, what opportunities are there for carousel placement in downtown revitalization projects, such as the ones in Nashville and Chattanooga?

Tunnell: A number of these revitalization projects try to give a nostalgic look, try to recapture what the area was like in some earlier era. A carousel is a natural choice in these instances. It can complement the feeling that many of these projects desire, and is particularly appropriate to areas trying to appeal to entire families.

Kennedy: Carousels and specific draws are great where there's a tourist base, perhaps like Nashville. But where the audience or guest is mostly local and the project requires repeat visits, interchangeability and pleasing environments will go much farther.

SCW: Will the Internet be a factor in changing the face of retail development as we know it? How will you, as designers and entertainment providers, respond to this potential threat to the shopping center industry?

Thompson: Retailers cannot afford to ignore the effects of e-commerce, whether it is selling goods and services (or tickets in our case) over the Internet and using that as a way to drive customers into the stores (for pick-up, etc.). It is not likely that all shopping will be done over the Internet, as people are reluctant to purchase some items without actually seeing the product.

Sconyers: Every industry responds to new external influences to their market. Retail will also have to respond to e-commerce. The senses - sight, touch, smell, and taste - will remain important to the consumer. The guest experience and creating an environment will become more important than ever.

Jacob: There's a view emerging that speaks of the need to synergize between the online world and the real world. That, to win in this new age, the shopping experience and buying transaction must be supported in both formats. That view speaks to the continued need for physical space and virtual space. We need to understand the relationship between these two different spaces and how they interact to reinforce the shopping experience.

Kennedy: We must bring the Internet into our retail world rather than avoid it. Programs such as Clix N Bricks and Frog show that the Internet and retail stores can co-exist.

Low: To date, Internet sales account for less than 1% of total retail sales in the U.S., but experts estimate that worldwide e-commerce sales could reach as high as $2.3 trillion. The mall is still an important social institution. However, our existing mall format has to change. The challenge, I think, as a designer, is to create a retail center that is flexible and offer experiences that a computer monitor can't provide.

McBride: People's desire to get out, touch the product and mingle with others will not change. They will, however, be more selective in where they go - which leads to the issue of customer service.

In so many parts of America, service has just eroded. The sales staff doesn't know the products, doesn't want to work that hard, and doesn't really care about the customers. The booming economy is partly to blame. The employer who now needs a larger force just cannot be as selective as he once was - and it shows.

But the customer won't tolerate it much longer; you can see the fury building in the eyes of very red-blooded consumers. As a matter of fact, I can't think of a better way to entertain our customers than to provide a great service experience.

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