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Off the Streets and Into the Mall

Concurrent with the development of projects such as Metreon, retail mall developers were taking note of the visitation patterns of LBEs. Always interested in finding new ways to draw traffic into the climate-controlled byways of America's new main streets, developers such as the Mills Corporation—whose gigantic outlet shopping destinations were beginning to spring up outside of major urban areas—began to see entertainment as a driver for repeat visitation.

Entertainment in malls was not a new idea; developers had been including movie theaters in their projects for years. But now they became intrigued by the prospect of creating a greater length of stay with the patrons who might just duck in for a movie then leave. And, while the LBE/UEC trend was certainly feeding the interest of developers, one project had caught their attention, big time—a retail project on the Las Vegas Strip.

Case in Point: The Forum Shops

The Forum Shops were originally planned as a strategy to keep guests within the confines of Caesar's casino during those moments when they weren't gambling or attending shows. Given that Caesar's was the finest example of themed casinos on the Strip at that time—1992—the retail area was designed to match the resort's story line and level of luxury.

On the luxury end, developers shot for the ambience of Rodeo Drive, Madison Avenue, and the Via Condotti. On the thematic side, the plan called for an experience that would keep Caesar's guests entertained—and provide a reason for guests of other casinos to venture out to Caesar's. Given that pulling people from the tables at Vegas was a bit of a chore at that time, the developer realized the experience would have to be something special.

The answer to the experience question took the form of a destination that has become a classic in the retailing world. The Forum Shops, which have now gone through two additional expansions, is a fantasy recreation of an ancient Roman streetscape, complete with arches, columns, and a sky that grows dim for "evening" and brighter for "daytime." But those thematic elements are nothing compared to the fountains, laser shows, animatronic Bacchus, Roman Great Hall, Atlantis fountain, 50,000-gallon aquarium, and a myriad of other show elements that keep the traffic pouring in.

45,000 to 50,000 guests visit this center every day, with a peak day of over 81,000. Annual visitation is nearly 20 million per year—compare that to Orlando's Universal Studios' visitation of 5.4 million. And these visitors spend money; the Forum Shops average over $1,300 in sales per square foot, the highest in the retail industry. Most significant, the Forum Shops are now considered one of the top tourist destinations in Las Vegas, with every one of those tourists a potential customer, either of the stores or the restaurants that line the Roman streets.

The Forum Shops were not the first to bring entertainment into the retail mix, but they certainly set a very high standard—one that most destinations could not hope to reach because the foot traffic simply wasn't available to feed the retailers. This type of technology-driven "shopper-tainment" works best in tourist destinations. However, the local mall down the street began to take advantage of the same principles by incorporating events that not only drew customers to their sites, but also created an environment that offered more than just a retail opportunity.

As the entertainment component began to take on more importance, destinations such as Ontario Mills outside of Los Angeles were planned with entertainment "districts." In the case of the Ontario project, this included a GameWorks, a Dave and Buster's, and a concept called the American Wilderness Experience—along with the requisite movie screens. The project successfully demonstrated the draw of entertainment, building visitation, and increasing the time the customer stayed in the mall.

"Entertainment retail" became a buzzword in the industry and a trend all over the country. Additional projects within the UEC framework are destinations such as Kansas City's Power & Light District, Chicago's Navy Pier and Marina City-area developments, and Circle City in Indianapolis. Washington, D.C.'s MCI sports arena is attached to a UEC that includes a three-level Discovery Store, developed by the Discovery Channel. And of course, 42nd Street, once the most notorious red-light district in New York, is awash in Disney, Madame Tussaud's Wax Museum, Broadway City (a large arcade), and an ESPN Zone (a sports-themed restaurant, also owned by Disney).

The Party's Over?

So, a happy ending for LBE and entertainment retail? Not exactly. More than anything else, these high-end UECs raised the bar in terms of facility development. Once the "Big Boys" appeared, each new project was challenged by the next guy in town. Operators were faced with the climbing costs of keeping up with the Joneses, and finally, the LBEs reached the point of no return: basically, the investment was too high to achieve the expected returns.

The reason for the fall was simple. How many of us have visited malls across the country, only to realize once inside whatever architectural jewel may house the stores and food court, the stores were exactly the same as the ones in the mall back home? The malling of America brought the Gap, Banana Republic, the Nature Company, the Body Shop, J. Crew, and assorted other standards to every neighborhood in the U.S. There is, of course, a reason for this: Customers want these products, and when successfully marketed, customers need these products. But very few people actually need to play video games or virtual reality. Therefore, the expected hordes of players failed to show up at most of the over-budgeted projects—at least for any sustained period of time.

The lack of sustained visitation was also affected by the fact that, other than the grossly expensive theming packages that dressed up the environments, what filled the floors in one entertainment venue was no different from the next—each concept was drawing on the same suppliers of video games and coin-operated amusements, so most destinations offered the same goods as the local mom-and-pop store down the street—hopefully with a higher "cool" factor. But cool only goes so far in keeping the guest satisfied.

Many of the products pushed into the marketplace were long on promise, but short on delivery—regardless of the behemoth company or major superstar behind them. Most of the concepts went through incredibly difficult shakeout periods, trying to reframe the food/attraction mix to meet the demands of the particular market. And, as a final stroke of the ax, the home PC market skyrocketed with games, driven by bigger, faster, better computers that quickly offered the same—if not better—graphics as the destination-based games.

All in all, the LBE industry missed the mark and found many concepts plunging over the cliffs of bankruptcy. Hundreds of millions of dollars of investment went by the wayside. While concepts such as Dave and Buster's have hung on successfully, DisneyQuest Chicago closed its doors (the Orlando location, fed by Walt Disney World, remains open for the time being).

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