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World Waterpark, West Edmonton Mall
West Edmonton Mall in Alberta, Canada changed all that when it opened in 1981 with Fantasyland, subsequently renamed Galaxyland. With 26 rides and attractions, in 400,000 square feet, including Mindbender, the world's tallest and longest indoor roller coaster, Galaxyland is, reportedly, the world's largest indoor amusement park. Later entertainment additions to the mall include World Waterpark, Deep Sea Adventure, Ice Palace and Ed's Recreation Center with bowling, a music stage, game room and restaurant.
Mall of America in Bloomington, Minnesota followed in 1992 with the largest indoor amusement center in the U.S. with 292,000 square feet. First known as Knott's Camp Snoopy, it was then renamed Camp Snoopy, then The Park at MOA, and in March 2008, rebranded as Nickelodeon Universe. The mall's entertainment attractions also include Underwater Adventures Aquarium, cinemas, NASCAR Silicon Motor Speedway, Moose Mountain Miniature Golf and a casino.
One other North American mall has an indoor amusement park, Les Galeries de la Capitale in Quebec, Canada with its Mega Parc, reportedly the 2nd largest indoor amusement park in America.
Over the years, a number of other North American malls have incorporated family entertainment centers (FECs) that were at least 30,000 square feet in size:
|Family Entertainment Center
|Forest Fair Mall (Cincinnati Mills)
|Time Out on The Court
|Cincinnati, Ohio, USA
|River Falls Mall
|River Fair Family Fun Park
|Clarkesville, Indiana, USA
|North Park Mall
|Davenport, Iowa, USA
|Sunrise, Florida, USA
|Great Mall of the Great Plains
|Zonker's Family Entertainment Center
|Olathe, Kansas, USA
|Concord, North Carolina, USA
Up until the early 2000's, there have probably been no more than about two dozen other North American malls that have incorporated 30,000 square foot or larger family entertainment center attractions in their mix. Family-oriented indoor amusement parks or entertainment centers have not been a traditional part of the tenant mix. Most malls settled for no more than a carousel, an ice skating rink, a children's s play area or no permanent entertainment attractions at all.
Conversely, many more North American malls have incorporated movie theaters in their mix as their significant entertainment attraction. Approximately 10% of U.S. regional malls have a cinema as an anchor.
Just the opposite is true in many other parts of the world, where no mall developer in their right mind would consider developing a retail center without a significant family entertainment center. Most malls in Eastern Europe, the Middle East, India and Asia have FECs and other types of family entertainment attractions.
Before examining why the FEC historically did not become a part of a typical North American mall's mix and how the entertainment mix of malls and shopping centers are changing in the third Millennium, some insight into shopping center entertainment can be gained by examining the research. Since the early 1990's, there have been a number of research studies in North America, Australia and Singapore that examined what impact entertainment has on both the frequency of mall visits and retail sales.
A 1996 study by Haynes and Talpade of four different U.S. malls with 30,000 square foot and larger family entertainment centers (FECs) found:
The researchers concluded that the entertainment centers do seem effective in drawing younger families visiting malls more for social and entertainment purposes and that FEC customers spend additional time at the food court and mall stores.
Two studies by General Growth Properties during the same time frame found that 10% of mall customers cited the FEC as the primary purpose for their trip.
These studies do show that FECs act as anchor attractions for young families, however, based upon the research findings, the impact on the sales of department stores and mall stores were low.
Three studies have looked at the impact of cinemas on malls. A 1996 survey by the International Council of Shopping Centers (ICSC) found that movie theaters drew in potential shoppers who otherwise wouldn't have been exposed to the mall and that 60% of movie patrons shopped in the mall during their movie visit, spending an average of 35% of what all mall shoppers spent.
The ICSC then conducted a second study in 1999 that found:
Ooi and Sim conducted a study of nine Singapore malls in 2003 to examine the draw of cinemas on malls. Some of their key findings were:
The researchers concluded that cinemas do function as an attractor by increasing mall traffic (footfall) and the sales of other mall stores.
A 2000 study by Kang & Kim examined the cross-shopping in a large open-air power center and an 800,000 square foot enclosed mall located near each other in the greater Toronto, Canada area. The power center had two mega-theaters with 42 screens in total. The mall's cinema had 10 screens. Findings from that study included:
The value of mall entertainment in a broad sense has been examined by three studies. In 1998, Eastlick et al. surveyed adult shoppers on cross-shopping behaviors at two entertainment and retail focused malls in Phoenix, Arizona and San Diego, California. They found that both entertainment-oriented shoppers and cross-shoppers are seeking fun and enjoyment through their mall activities, whereas shoppers pursing particular goods and services are generally not drawn to entertainment activities. They found that regardless of the shopping motivations, positive experiences translate into a higher probability of repeat business and that entertainment can be part of an effective strategy to increase visits and shopping center profitability.
In 1999, Christiansen, et al. examined the effects of mall 'entertainment value' from the consumers' perspective on mall profitability. Consumers basically defined entertainment as some activity that provided a diversion or relief from normal day-to-day activities and could include movies, theater, people watching, entertainment-retail stores, shopping itself, restaurants, bars, and even the architecture and interior design of the mall itself. The study found evidence that demonstrated that there is a positive relationship between entertainment and mall profitability and value.
In 2001, Kang and Kim conducted surveys at three malls in San Diego, Cleveland and Atlanta to examine the impact of 'entertainment as motivation for shopping.' Their survey asked mall patrons to rate "The main reason I visited this type business was:
Shoppers who indicated 'B' or both 'A' and 'B' where classified as being a high entertainment motivated shopper.
Findings from that research found:
A 2005 study by Eppli and Tu examined the impact of 39 mall renovations and expansions between 1995 and 1997 on the performance of in-line retail stores. Some of the expansions were entertainment-based with theaters, restaurants and major bookstores. They found that although entertainment-based expansions did not significantly result in an increase in the per square foot sales growth rates for in-line stores, it did increase aggregate sales and thus helped the mall by establishing its presence of being the dominant regional mall and enhanced its brand image.
These research studies, although clearly showing there is a positive relationship, don't present any quantified conclusion about the overall impact of FECs, cinemas or entertainment value in general on mall traffic and store sales.
One factor that needs to be considered when examining the impact of entertainment on shopping centers is the nature of the shopper and the shopping trip. A 2003 study by Sit, Merriless and Birch in Queensland, Australia looked at just that.
What that study found was that there are six distinct shopper segments with different motivations and varying levels of importance on entertainment. This means that you cannot really evaluate the impact of entertainment based on all shoppers or by demographic or other common characteristic. Rather, you have to examine the impact based on the type of shopper and the trip purpose.
|Total Annual Household Income
|Shopping for a meal
|Shopping for entertainment
Two pro-entertainment segments were identified - the entertainment shopper and service shopper - who are seeking entertainment. In contrast, two anti-entertainment segments are the serious shopper and the convenience shopper.
The Queensland study also found that few studies have examined food as a distinct attribute that impacts a shopping center's image. The authors said, "food and entertainment are pivotal to shoppers because they create an entertaining ambience within a shopping center conducive to a pleasant or exciting shopping experience and provide a needed break from hours of shopping and/or as a conclusion to an extended shopping excursion."
A 2004 study of shoppers in three areas of the U.S. by Hu and Jasper that examined the differences between men and women mall shoppers also found distinctive shopper types. One was hedonic shoppers who view shopping as a way for entertainment and emotional experiences that breakdown into two categories based upon their motives:
Other insights from their research that relates to entertainment were:
Clearly, the motivation for visiting a mall or shopping center varies for different people and also is based upon the trip's purpose. Sometimes 'entertainment' will increase the center's appeal or be the motivating reason for the trip.
So with entertainment clearly having a positive impact on mall traffic (footfall) and store sales, why have family entertainment centers not found their way into the standard mix of North American malls and large regional shopping centers whereas they are an essential part of the mix in emerging markets and other areas of the world? Shopping center industry experts have offered a number of explanations. For one, in many parts of the world consumers live in cramped spaces with few entertainment options or in rather hostile climates where leisure options are limited, so the local mall is the entertainment hub. In North America, however, consumers have many more entertainment options, both in the home as well as outside the home with amusement and waterparks, festivals, etc. A second contributing factor may be that in many parts of the world there is a history and tradition of people meeting, socializing, having fun, eating and shopping in gathering places such as markets and plazas, in contrast to American culture which did not evolve around plazas where people gather. So in much of the world, the plaza tradition has been carried over into the mall where entertainment is considered an essential part of the mix.
Another factor may be that most cultures in the world place much more importance on families with children, as they are the dominant type of household, unlike North America, where the family is no longer dominant. As a corollary to that, although many people in North America consider shopping a hobby, shopping generally tends to be a functional activity. But in many other cultures, shopping is typically a social activity. Entire families, including extended ones, will shop together and collaboratively select purchases, rather than consider shopping as an efficient process. So satisfying all families members, including children with mall entertainment, is much more important to a mall's success.
There are also two other possible explanations. Most of the FECs previously located in North American malls (excepting the large indoor amusement parks previously mentioned) as well as other locations were of poor quality and lacked high repeat appeal. Many were just carnivals in a warehouse, not up to the standards and expectations of most mall customers. Secondly, almost all totally entertainment-oriented North American FECs have performed poorly, whether in malls or elsewhere. Sales were typically in the $100 per square foot range or even less due to limited appeal. Sales that low can't support mall rents. For example, in 2007, U.S. malls had non-GAFO (general merchandise, apparel, furniture and home furnishings and other similar store types)-type store sales of $379 per square foot while mall entertainment tenants (excluding cinemas) only had sales of $131 per square foot. Furthermore, until recently, mall developers considered department stores as their anchor tenants, so landlords directed all their tenant improvement and rent subsidies to the department stores and needed to get higher rents from the mall stores to make the overall real estate economics work. FECs were not considered a use worth subsidizing as a mall anchor tenant. FECs historically were located in lower rent areas such as older strip shopping centers or even warehouse space.
Much has changed since the 1990's and early 2000's. Department stores, either through consolidations or bankruptcies, are disappearing from malls. Many malls are finding themselves with large vacant department store spaces that used to anchor the mall. Furthermore, department stores have lost some of their magnetic power due to specialty retailers such as Abercrombie & Fitch and Pottery Barn as well as discounters such as Wal-Mart and Target, which have been cutting into their market share.
The decreasing appeal of mall department stores among younger shoppers is evidenced by a 2003 study of U.S. shoppers conducted by Anderson, Burns and Reid. That study showed that Generation X (Millennials) shopped far less frequently in mall department stores and that both Generation-Y and Gen-X shopped more frequently in mall in-line stores than Baby Boomers.
|Frequency of Visit
% by Age
% by Age
% by Age
|Frequency of Visit
% by Age
% by Age
% by Age
The study also examined what consumers want in malls. The research found that in addition to their retail preferences, Generation Y wanted entertainment such as movie theaters, taverns and nights clubs, a better selection of restaurants and a spa. Generation X wanted amusement rides and attractions like ice skating rinks, roller rinks or a swimming pool, possibly thinking of their children while they are shopping.
Many mall developers are now looking for either replacement tenants to fill vacant department store spaces or additional anchors to generate customer traffic.
At the same time department stores have been losing their prominence and lifestyles have been changing, the American family entertainment center has been undergoing a major transformation, evolving into three new specialized niches - FECs for young adults, cinema-restaurant-FECs and family eatertainment. All three types use food and beverage as a major component of their appeal, with it typically representing 40% to 50% of revenues for young adult and eatertainment centers. Rather than the old FEC formula of come for the entertainment, the new formula is come for the food and stay for the fun. The formula works, as people go out to eat much more frequently than they go out for entertainment. There are so many entertainment options you can do just staying home, whereas time pressured Americans consider eating out a great value, something they do on average almost four times a week. And when your combine a restaurant with entertainment, you appeal even more to Americans with the time and gasoline saving one-stop option.
Lucky Strike Lanes
Examples of young adult entertainment centers include Dave & Buster's, Lucky Strike Lanes and the GameWorks family of centers. Dave & Buster's has been around for over 26 years and has been used as an anchor by many malls. In 1996, the addition of Dave & Buster's to White Flint Mall in New Bethesda, Maryland contributed to the revitalization of what was then a very poorly performing mall. Many other malls have attracted Dave and Buster's as one of their anchors, including Providence Town Mall, Providence, Rhode Island; Santa Anita Mall, Arcadia, California; The Great Mall, Milpitas, California; Concord Mills Mall, Concord, North Carolina and Palisades Mall, West Nyack, New York to name a few. Lucky Strike Lanes, often referred to as a bowling-lounge, is now found in malls including Vaughan Mills Mall, Toronto, Canada; Yorktown Center, Lombard, Illinois; Palisades Mall, West Nyack, New York and Grapevine Mills, Grapevine, Texas.
New forms of cinemas are also evolving by adding destination dining, bowling and family entertainment components to create another type of one-stop destination. They are starting to appear in malls as anchors, offering another attraction predominately for adults. Two recent examples are Cinebarre cinema-restaurant that opened in Biltmore Square Mall, Ashville, North Carolina and Cobb CineBistro, Dolphin Mall, Miami, Florida.
As many malls are suffering from the loss of department stores, they are also falling victim to a changing consumer who is looking for a different shopping experience, one that incorporates many different aspects of entertainment as part of the visiting experience.
Kim, Jolly, et al, in their 2005 examination of mixed-use projects, point out that the bipolarization of American society into two major demographic groups, high income and lower income households, are driving changes in consumer preferences and shopping formats. The upper 20% of households in the U.S. consume more goods and services than the bottom 60% of all households combined. People in the upper 20% with their discretionary income, require higher-quality goods, additional services, and are driving the demand for more experienced-based leisure activities including entertainment, dining out and social activities.
Kierland Commons lifestyle center, Scottsdale, AZ
The open-air center, lifestyle center, mixed-use project or town center as they are often called is emerging as the new kid on the block. Today, consumers are looking for not only centers that offer shopping, but also places that entertain them, so developers are trying to create places that consumers enjoy, not just a place to buy things. We are in the age of the experience economy where goods alone can no longer drive the mix. Additionally, time has become the new currency for many consumers, so convenience is an important part of the visit decision. Lifestyle centers, by their design and lack of large department store anchors, offer convenience to the large center formula. With their outdoor designs and architecture, they often emulate urban streets and plazas with a strong sense of place, creating a destination where people just want to gather.
Lifestyle centers incorporate significant entertainment and dining, along with a mix of stores, to not only drive traffic, but also to differentiate the centers from their competition, including many enclosed malls.
Destination dining and food play a major role in lifestyle centers with restaurants occupying an average of 13.4% of all non-GAFO store space in the U.S. in 2007 compared to 8.7% in malls. Likewise, cinemas and entertainment account for 9.5% of non-anchor space in lifestyle centers compared to 5.7% in malls. Collectively, restaurants, cinemas and entertainment (leisure tenants) occupy 22.9% of non-anchor lifestyle center space, over 50% more than the 14.4% in malls. Leisure tenants act as major draws to lifestyle centers, making up for the lesser amount of space occupied by GAFO tenants (63% in lifestyle centers compared to 79% in malls). Lifestyle center developers, recognizing the importance of destination restaurants and entertainment, are offering significant rent concessions and tenant improvement allowance to attract them. In a sense, restaurants and entertainment are the new department stores for lifestyle centers.
Entertainment venues such as Dave & Buster's and Lucky Strike Lanes, as well as restaurants such as The Cheesecake Factory and P.F. Chang's China Bistro are some of the most sought after tenants today for both lifestyle centers and malls.
The new cinema-restaurant-entertainment hybrids are appearing in lifestyle centers as anchors. iPic, a combination cinema, restaurant and bowling-lounge opened earlier this year in the Bayshore Town Center in Glendale, Wisconsin. E-Town, a 60,000 square foot combination cinema, restaurant, bar, bowling-based family entertainment center will be a part of the new Villages at Brunswick Forest, Leland, North Carolina.
Another form of fast expanding eatertainment, the family pizza buffet-entertainment center, generally ranging in size from 35,000 to 60,000 square feet, is attracting attention from shopping center developers. John's Incredible Pizza, an eight-unit California chain will be opening a 50,000 square foot unit in Buena Park Mall, Buena Park, California in 2009.
Other family entertainment concepts are appearing as anchors in centers. Legoland Discovery Centre recently opened at the Streets of Woodfield in Schaumburg, Illinois that also has a GameWorks, a 20-screen cinema and a number of restaurants. Discover Mills in Lawrenceville, Georgia has a Medieval Times family dinner theater along with a cinema, Jillian's, and bungee jumping. Simon Property Group, the owner of Discover Mills, says that their strategy is to differentiate Discovery Mills and their other 'Mills' branded malls by evolving them into family-friendly places for a daylong outing. Adding entertainment is a major part of that strategy. Simon is also looking at entertainment options such as Merlin Entertainment's Legoland Discovery Centres and Sea Life aquariums. Red Development is using the same entertainment strategy in developing their destination development, Legends brand centers.
New types of themed restaurants, also known as theatrical dining, as they are as much visual and sensual entertainment as they are a restaurant, are appearing as anchors as well. RainForest Café serves as a restaurant anchor in many shopping complexes and malls. T-Rex anchors The Legends lifestyle center at Village West in Kansas City, Kansas along with Dave & Buster's and a cinema. Steve Schussler, the developer of RainForest Café and T-Rex, plans to roll out other theatrical dining concepts in lifestyle centers, including Orange County Choppers America's RoadHouse, Winter Wonderland, Sorcerer's Kitchen and Musical Garden. Pure FECs are also making reappearance in malls. Shannon Mall in Union City, Georgia recently added a Maxx Fun Family Entertainment Center. During the past few years, Krazy City family entertainment centers have opened in Tri-County Mall, Cincinnati, Ohio; Palisades Center, West Nyack, New York; Poughkeepsie Galleria, Poughkeepsie, New York; Connecticut Post Mall, Milford, Connecticut and Voorhees Town Center, Voorhees, New Jersey.
The lifestyle center or town center concept, with its strong mix of leisure tenants, is so popular with both consumers and retailers, that it posing a serious challenge to all but the 'A' malls of America's approximately 1,200 enclosed malls. Many malls are partially de-malling, converting some of their space to an open-air design or adding lifestyle wings that include restaurants and entertainment. General Growth Properties reports that sales increased $100 per square foot and traffic jumped by double-digit percentages after the company added an open-air retail and restaurant wing surrounding a lake to their Woodlands Mall just outside of Houston, Texas. Park Meadows in Denver is demolishing a vacant department store to make room for a 193,000 square foot outdoor area with retail and restaurants. Westfield Louis Joliet is adding an outdoor lifestyle component. Other malls, such as Santa Monica Place in California, are totally de-malling, converting their entire enclosed center to an open-air design.
It is amazing how in a little over a decade, what used to be the dominant retail concept in North America has evolved in such a way that if the retail is to succeed, the shopping center needs to have a significant amount of entertainment and restaurants. The customer and their lifestyles have changed, and with that, shopping centers are changing to continue to attract consumers. Entertainment centers, eatertainment and destination venues, once of little significance to shopping centers and malls, are now growing in importance as an essential part of the mix, since in order to attract today's consumer, goods alone don't work. Malls and lifestyle centers now offer a fun and a social experience. Today, shopping centers are in the out-of-home entertainment and dining business as much as they are in the retail goods business.
White Paper written in 2008 and first appeared in the September-October 2008 issue of the White Hutchinson Leisure & Learning Group's Leisure eNewsletter, Vol. VIII, No. 5 on September, 14 2008.