Local Malls Not Just for Shopping Anymore

In a few months, visitors to the Media City Center mall in Burbank will be able to play a game of laser tag, “fly” in an F-16 simulator and browse through a cyberspace library. For the crayon crowd, there will be an interactive indoor playground.

Oh yes, there are also places to shop.

Perhaps it’s only fitting that a mall in the self-proclaimed entertainment capital of the world should have some serious fun and games. But the Media City Center isn’t the only one to choose that course.

Throughout the nation, shopping centers are increasingly turning to entertainment as a way to lure the fashion-weary, time-pressed public through their doors. If foot traffic can be increased and consumers enticed to spend more time in malls, the theory goes, then sales are bound to rise.

Taking that supposition to heart, San Fernando Valley malls have escalated their move into entertainment in recent months. On Thursday, the Northridge Fashion Center revealed plans to rebuild part of that mall into an entertainment complex, with a movie “megaplex,” trendy restaurants and possibly an interactive motion-simulator attraction.

That announcement follows the opening in March of a splashy, state-of-the-art megaplex at the Promenade in Woodland Hills, next to a new Wolfgang Puck Cafe. Universal CityWalk, a hybrid development that incorporates entertainment and shopping in a contrived urban setting, is planning to nearly double in size. The Sherman Oaks Galleria also has plans for 13 new movie theaters and eight restaurants.

Joy DeBacker, general manager of the Sherman Oaks Galleria, said the choice for many older malls is clear: Adapt to a new world order of fewer, less dominant traditional retailers or die.

“The malls we knew when growing up as kids have to change,” she said.

The metamorphosis of malls actually began several years ago, with such developments as the huge Mall of America near Minneapolis, which melds a theme park with a shopping center. The Forum Shops at Caesars Palace in Las Vegas, which boasts light shows and animatronic statues, is another success story that has prodded developers to use entertainment as a hook for their retail tenants.

The trend is gaining momentum, partly because of advances in technology that have made entertainment venues more affordable in a variety of settings. But mostly it’s being driven by lackluster apparel sales and increasing competition from discounters, warehouse stores and specialty retailers located outside malls.

In addition, department store consolidations and bankruptcies have left many malls without their traditional drawing cards--and with big holes to fill.

The entertainment peg isn’t being employed just by mall developers. It also encompasses customer-pleasing gimmicks from cutting-edge retailers such as Virgin Megastores and Nike Town--everything from video displays to aquariums. Customers at the Barnes & Noble outlet at the Media City Center can buy a cup of java at the store’s coffee bar while browsing for books.

“The idea is that the mall is not now just for traditional shopping,” said Media City Center General Manager Dan Millman. “You can do retail, be entertained, do dinner or lunch, all in the same place. It’s more of a downtown, with all that has to offer.”

But, so far, evidence that entertainment actually helps retailers’ sales is scant.

“It’s an experiment that’s certainly worth trying,” said Richard Giss, a partner in the trade retail group at the accounting firm Deloitte & Touche. But the ultimate test will be, do the increased costs translate into increased sales? That outcome is “not fully proven,” he said.

Mike Strle, vice president of the O’Connor Group, which owns and manages the Promenade, said that since the AMC megaplex opened there last month, the number of cars parking at the mall is up by 35%. And he believes retailers will see a 15% to 20% increase in sales over last year.

The theaters--along with a Wolfgang Puck Cafe and some hip, new retailers--have given the Promenade a new lease on life, Strle said. The aging mall had been hit in recent years by a crippling combination of department store closures and earthquake damage and had fallen behind its closest rival, Topanga Plaza.

“We feel that we’ve turned the corner,” said Strle. The new additions to the mall are “changing everyone’s perception about what the Promenade is.”

Some observers warn, though, that while entertainment venues can be significant profit generators in themselves, they shouldn’t be relied on to rescue troubled malls or sickly retailers.

“Right now I think a lot of mall owners look at entertainment as the panacea or savior of older, decaying malls,” said Steve Plenge, senior vice president of the Yarmouth Group, which manages the Sherman Oaks Fashion Square.

“But it’s very expensive to do this. It’s not something people can capriciously do.”

Ira Kalish, senior economist at Management Horizons, the retail consulting division of Price Waterhouse, cautioned that entertainment is no simple cure for what ails retailing, and that it can only be effective if implemented properly.

A host of complex issues must be addressed, Kalish said, including how customer traffic is funneled from theaters and restaurants to shops and whether the types of customers that patronize entertainment venues are also the kind that will buy the merchandise offered at the mall. Movie theaters typically attract large crowds of teens, when retailers really lust after families with young children and a healthy disposable income.

“If you show an Arnold Schwarzenegger movie next to a Crate & Barrel store, what good does it do?” he said.

That’s why Mike Harris, regional director for the entertainment and media industries at Andersen Consulting, believes that the more successful ventures will be those that seamlessly blend their entertaining features with merchandising. Rather than just trying to create more foot traffic with theaters and other venues, he said, “we’ve got to see the entertainment companies working with retailers to integrate the entertainment into the shopping experience.”

Some observers also note that, as with any trend, there is a danger of overkill.

“If they all do it, it will be too much and there will be a shakeout,” said economist Kalish.

“Some of them will just have to be shopping centers.”

Indeed, some local malls such as Topanga Plaza and the Glendale Galleria are charting a more conservative route. The Sherman Oaks Fashion Square is staying true to its upper-crust retailing roots, aided by a tony new Bloomingdale’s that will open in the fall.

In some cases, mall owners don’t have much of a choice since their diversification is limited by certain covenants, zoning restrictions and real estate issues. Such is the case at the Sherman Oaks Fashion Square.

But the decision to continue emphasizing traditional retailing can also be strategic. As successful as the Glendale Galleria is, said Patrick Donahue of Donahue Schriber, the Galleria’s managing general partner, turning over square footage to another use wouldn’t make sense.

Not that Donahue Schriber isn’t planning to invest in the entertainment-and-retailing concept. It’s hoping to build an open-air retail and restaurant development adjacent to the Galleria.

Some mall operators argue that the market isn’t in danger of becoming saturated with too-similar entertainment-themed retail centers because the most sought-after theater developers, restaurants and retailers are highly sophisticated and selective in picking new locations.

“We are pitched so many deals every day” to open new stores, said Christos Garkinos, vice president of marketing for the Virgin Retail Group, one of the most coveted retailers.

The company won’t go just anywhere. Virgin meticulously analyzes such factors as demographics, available building space and whether a potential site is in an environment that’s consistent with Virgin Megastore’s carefully honed image, Garkinos said. “We’re not going to be a 1,000-store chain.”

For now, though, malls will keep chasing companies that have learned how to entertain customers, as the move to turn malls into fun zones shows no sign of slowing, said Mark Schoifet, spokesman for the International Council of Shopping Centers. Over the next few years, he predicted, customers will see more and more unconventional mall tenants. Libraries and school branches could be the next wave, he said.

“The days of if you build it, they will come--those days are long gone,” Schoifet said. “It’s a constant challenge to keep your property up to date and keep a popular tenant mix in a very volatile retail environment.”

But Media City Center’s Millman contends that, so far, local malls have engaged in more lip service than real action.

“Will there be winners and losers? I’m sure there will,” he said. “But at this point, there are more people on the sidelines.”