Entertaining Frivolous Shopping Impulses

At least once a month, Napoleon Alvarado makes the 20-minute drive from his family’s house in Koreatown to Universal CityWalk. Although there are theaters closer to home, Alvarado said it’s worth the drive and parking fee to spend a few hours at the big neon entertainment center next to Universal Studios.

“We can walk around, look at things and we don’t get bored waiting for the movie,” he said.

Across the country, the new breed of entertainment centers is not only changing the way Alvarado and others spend their weekends, it is changing what they spend their money on, and the retailers they spend it with.

While traditional malls primarily sell clothing and electronics, fun-oriented developments such as Irvine Entertainment Center and CityWalk encourage far more frivolous expenditures, from movies and rides to such impulse buys as hats, silver jewelry and glow-in-the-dark boxer shorts--things most people don’t necessarily need but want.

Cindy O’Neill of La Crescenta said every time she visits CityWalk to see a movie or go to a restaurant, she winds up buying her 4-year-old, Brent, a new toy. Last time, it was a big, brightly-colored ball that bounces at odd angles. Last Sunday, she got off more cheaply--at a store called Sparky’s, Brent spotted a Darth Vader Pez dispenser, which she picked up for a couple of dollars.

“I normally wouldn’t buy things like that if we weren’t here,” she said.

Neither would many people in a traditional regional mall. But in the outdoor setting of most entertainment centers, with their bold fantasy-like decorations, elaborate fountains and barkers demonstrating products, few can resist making a purchase.

Hordes of impulse buyers and tourists have pushed sales up to about $500-per-square-foot at CityWalk, compared with about $203 for the average mall shop, according to the Urban Land Institute. And entertainment centers have brought out a shopper not frequently seen at most malls--34- to 54-year-old males, said Michael Rubin of shopping-center consultant MRA International.

More sales and bigger crowds mean developers can charge higher rents. So, now that at least a dozen successful big centers are up and running around the country, developers are rushing to build more.

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At least 10 major projects are under construction in the U.S., experts said, including the Block in Orange and Sony’s huge Metreon in San Francisco. And 40 more projects are in the planning stages, estimates retail developer David Malmuth of Trizec-Hahn Corp. Among his company’s pending projects are a large-scale redevelopment at Hollywood Boulevard and Highland Avenue in Los Angeles, which is expected to be built during the next two years. San Diego-based Oliver McMillan plans to build the massive Queensway Bay project next to a new aquarium in Long Beach.

Experts said one reason these centers are multiplying is Americans are feeling more confident and have more money to spend on fun, especially Hollywood-style entertainment.

According to U.S. Bureau of Labor Statistics, Americans spent about $1,612 each, or 5% of their expenditures, on entertainment in 1995, about 13% more than they spent in 1990.

Instead of ending a hectic workweek with video rentals and dinner at a local strip mall, analysts said Americans are turning to more elaborate types of entertainment and greater social interaction.

“People want a gathering place,” Malmuth said, “a clean well-lit place” where they can congregate and people-watch, he added.

As urban blight and suburban flight have decimated many town squares and downtown theater and shopping districts, these new centers with their tree-lined “streets” and park benches are providing people with a substitute--albeit a well-sanitized version, analysts said.

“There is a feeling now in our society that the world is not a safe place anymore. These are places where people can go to have fun and find recreation and be safe,” said Ojai-based retail consultant Jill Bensley.

Within these walls, patrons can visit themed restaurants, catch a movie or browse through a book store. But they can also do other things they can’t do in most regional malls such as visit virtual reality arcades and skateboard parks, or check out such live entertainment as comedy clubs, magic shows and musical revues.

“They’re like theme parks without the roller coaster,” said Sanford Goodkin, a San Diego-based retail development consultant. “I can see the time where the core of the shopping center will be a soccer field. It will be fantastic.”

Goodkin said the project that rewrote the rules about mixing entertainment and retailing was the country’s largest retail center, the Mall of America, which opened in Bloomington, Minn. in 1992. The huge mall with a theme park inside was considered an extreme experiment. Until that time, mall operators had generally considered cinemas and other forms of entertainment a financial drain, taking customers away from and generating lower sales-per-foot than surrounding stores, said Michael Beyard, ULI vice president.

A string of entertainment centers soon followed, primarily because the country was in the midst of a retail slump while the appetite for movies was on the rise. Developers who could no longer line up department stores as anchors for new malls recruited the only businesses who would pay for new buildings--theater operators.

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The concept appears to be working. Although people generally spend less per trip than they do at a regional mall, these centers bring more people in, and from farther away. They also bring the people back more often.

While waiting for movies, or walking around after dinner, people will often wind up browsing at so-called lifestyle retailers, such as Nike Town, Virgin Megastore and bookstore Borders Group Inc., which have opened many of their new superstores in these retail centers.

Borders officials said they prefer these locations because people stop in, look around and sip cappuccino, even when they don’t need a book.

“It’s a distinction between shopping because you have to do it and going to a venue because you want to do it,” said Rick Vanzura, Borders senior vice president. And because people feel that they are being entertained, they spend more per trip, according to Borders Chief Financial Officer Ken Scheve, who declined to be more specific.

In the two hours that Debbie Whitcomb of Granada Hills and her husband, Paul, spent at CityWalk, they went for lunch at Tony Roma’s rib restaurant, bought their 3-year-old daughter, Selina, a mouse puppet from the Nature Co., and bought tickets for CityWalk’s motion simulator ride. It was the second time Whitcomb had been to the center in less than two weeks. She went with a friend a week earlier to see a movie and eat at Wolfgang Puck Cafe.

“It’s just something different to do.” she said.

But putting a multiplex movie theater and a couple of restaurants in a mall doesn’t guarantee a financial success, consultants said. With development and operating costs for their elaborate structures sometimes running almost twice as high as that of a neighborhood center, many that appear popular are actually not that profitable for the developer, Bensley said. And if the crowds do not come, retailers often struggle under the burden of much higher rents.

Not all types of entertainment succeed, either. Arcades such as Steven Spielberg’s GameWorks have had to go back to the drawing board to come up with plans to attract broader audiences. And cinema operators including Edwards Theatres Circuit Inc. have had to sacrifice some of their smaller theaters to be in these glitzy new showplaces.

“Everyone wants to go the new ones, the more exciting places,” said Frank Haffar, Edwards vice president. “We have to be competitive.”

After the theater company opened “The Big One” 21-screen theater in the Irvine Entertainment Center, receipts at its nearby University Theater plunged to almost nothing, said Romulus Gintautas, assistant manager.

UC Irvine students shunned the theater on the edge of campus to go see first-runs at the entertainment center. The company was forced to turn the Irvine screens into a showcase for lower-budget art films.

“Once we switched over, they started coming back,” Gintautas said. “Now we get a lot of senior citizens coming from as far away as Los Angeles or San Diego,” he said.

The Newport Beach-based theater giant also has had to shutter three other Orange County cinemas that were foundering. And as each new entertainment center goes up, the company has had to spend more money protecting its turf.

For example, when a 30-screen AMC theater was signed for Ontario Mills, Edwards opened 22 more across the street--an unthinkable number of competing screens, experts said, for such a small city. Although both theaters performed well initially and certain movies including “Godzilla” have drawn big crowds, Haffar said the theater hasn’t been one of its best performing locations.

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But, the flood of theaters and shoppers to Ontario Mills has dramatically changed that small city, injecting new life into gas stations and other small businesses in the area.

And now, restaurant and building owners in Orange are hoping the Mills Corp.’s next project, the Block, slated to open this fall, will do the same for them.

“It was kind of scary at first, with all the construction and fences people thought we were going to be torn down,” said David Zielinski, general manager of a nearby TGI Friday’s restaurant. “Now it’s starting to build some anticipation. I think it could wind up boosting our sales about 25%.”

Even volunteers at the glittering Crystal Cathedral, which towers over the center a block away, are hoping that the new entertainment center will bring more visitors to its campus.

But perhaps most important, real estate companies have started betting on the entertainment center’s ability to turn around the sleepy Orange area. Menlo-Park based Spieker Properties purchased two buildings in the surrounding business district called the City earlier this year, in part because of the new retail project will provide office tenants with a slew of restaurants, coffee shops and other entertainment.

Spieker executives believe it will have such a positive effect on their rents that they are planning a major face-lift to one of the area’s plain-looking 27-year-old high-rises, a building its owners struggled to fill in recent years.

“I think there is a revival going on in the area that will change the city of Orange,” said John Davenport, senior vice president of Spieker.