Selling Power
How, in an
area with South Coast Plaza, Crystal
Court and Fashion Island, can new
shopping centers survive? By doing the same thing,
differently.
By Terence
Loose
umbers mean everything to a
retail development firm. And we in Orange County have them. We rank third
nationally in population density, 11th in median household income,
and first in per-household retail sales. So it’s no surprise that existing
shopping centers are booming and new ones are cropping up faster than mustard
plants in Laguna Canyon. And like the vibrant yellow mustard, they’re a
different species altogether.
For better or worse, we live in
the age of the “urban entertainment destination”—a movie multiplex, a dozen
good restaurants and flashy superstores wrapped around a user-friendly
courtyard. Jeer not, its eight to five that sooner or later you’ll be
opening your wallets to their charms. Not much more than a flashy variation on
an old theme (since the first Macy’s Day Thanksgiving Day Parade or department
store fashion show, retailers have known consumers want more from a store than
just items with price tags attached) entertainment centers just do it bigger
and better, usually brighter and cheaper, too.
But the question arises, are
these the lengths to which you have to go in today’s special effects-riddled
world to get people shopping? The answer is as plain as the consumer equation
is simple, says Dave Ball, president of Arnel
Development, which headed the development of Metro Pointe at South Coast. “If you don’t get people
there, they definitely won’t buy anything. If you not only get them there, but
hold them there longer, they’ll buy more.” It’s the newer, kinder, gentler
sell; and it’s making million dollar companies out of those that work it best.
Typically, theaters and restaurants are utilized to lengthen the stay of a
visitor; they create energy and provide entertainment and an atmosphere of
vitality. Hence, flashy neon-lit Edwards multiplexes
have nudged sophisticated department stores out of the anchor tenant spot.
Though those grand retail
giants are still pulling in their share of the Everyman’s take home paycheck
out Bloomie’s or Nordstrom’s numbers if you want
proof—they’re been around since the last century. It’s just not enough to build
another shopping center with a “new and improved” Macy’s—at least not on 10 to
30 acres of prime OC real estate. To stand out, developers have to bedazzle the
public and give them what $200 million dollar movies, virtual reality rides and
world access through a computer has raised their appetite level to: An all senses experience every time they
leave their backyard. Anything short of that is just a chore.
Most local, newer shopping
centers have pulled it off: Niketown, Virgin Megastore and Edwards Theaters define Triangle Square, all heavy on entertainment
and image, with product almost relegated to afterthought. In fact, it’s gone so
well that one of its builders, Mark Burger, is planning a new
“lifestyle/entertainment center” in Mission Viejo. Called Kaleidoscope and due
to open May of next year, the five-acre, multiple level project will include
215,000 square feet of retail and entertainment space that will, says Burger,
take the vibrancy of the street scene and wrap it inward within the center.
“Shopping is a hassle,” he says, “what isn’t is to go out and enjoy yourself, so we’re creating a center focused on lifestyle.”
At press time, an Edwards 10-theater multiplex and
several casual restaurants were slated, along with a ground-level Bristol Farms
market.
Another success? The
250,000-square-foot, $50 million Entertainment Center at Irvine Spectrum. When it opened in late 1995,
The Irvine Company touted not its retail offerings but the fact that the
world’s largest movie megaplex,,
with 21 screens and a six-story high IMAX 3D theater, was coming. Next on the
center’s attraction list were places such as a 14,700-square-foot Sega City featuring interactive arcade
games and virtual reality experiences: Out Takes, an interactive portraiture
studio where patrons can get realistic photos of themselves driving the
Starship Enterprise and half a dozen hip restaurants. Even the Moorish/North
African-inspired architecture took higher billing than hard good content,
which, aside from the 19,100-square-foot Barnes & Noble, was usually summed
up in a line: Visitors without a
premeditated mission to buy a new purse or the latest Grisham novel or even a
spicy chicken dinner, just come, and, after a few dazzling hours wandering the
Moroccan courtyard, leave with a P.F. Chang doggie bag, two bestsellers and a
new handbag. “The Entertainment Center is very soft sell,” says Frederick O. Evans,
president of The Irvine Company’s retail division, which developed the center.
“Our goal is to create a place where people go for an experience, in the way Santa Monica’s Third Street Promenade and Laguna Beach’s Downtown area
attract people. They don’t go to those places for any one thing. With
the Entertainment Center, we’re just creating an interesting place to go. Because if you’re going shopping for a coat to keep warm, you won’t
visit very often. But, if you’re going because you enjoy the experience,
you’ll be back again and again. It’s about entertaining.” Of course, when the
day is done and the receipts are counted, it’s about the bottom line, the black
or red figure that tells if this 90’s, ultra-PC approach is paying off.
It is. According to Evans, the Entertainment Center’s Edwards 21 is the
highest-grossing theater complex in the nation and sales are above the
$500-per-square-foot-per-year retail yardstick for success. Further, leasing of
the 250,000-square-foot second phase is in the works which will include
additional restaurants and entertainment attractions, along with “spontaneous,
fun” retailers. Today, says Evans, it’s not good enough to do merely more.
“It’s got to be surprising, grandiose, and extravagant. Of course, you’ve got
to put it in a format that resembles normalcy.”
The super store
You can’t miss them. They’re
big, bright and just about everywhere. And with a reported $550 billion in
annual sales—a third of the nation’s total retail take—they’re apparently what
we want. Some are just plain big (Home Depot, Staples) but others are big and
entertaining. These are places, very unlike Home Depot and Staples, in which
consumers actually want to spend time:
Think Virgin Megastore or Niketown.
Probably no retailer has
perfected the superstore better than Barnes & Noble Booksellers, where the
soft sell has been taken to the extreme, with the draw becoming casual comfort.
Like Edwards theaters, the Barnes & Noble superstore, at an aerage of 25,000 square feet carrying 150,000 titles (the
Newport Beach Central Library houses 140,000), is fast becoming a staple of the
new entertainment center. Yet, in 1990, when Barnes & Noble first began
peppering every metropolitan area with superstores (which differ from their 566
“mall stores” in size, theme and added amenities such as cafes), cries were
heard across the nation. The public screamed that their local independent
booksellers stood no chance against the sterile, corporate giant. That the
integrity of literature was being undermined and soon nothing but literary fast
food would be available.
But a funny thing happened on
the way to the book frying: Not only
could these naysayers find their favorite Rousseau
essay at Barnes & Noble, they could sip a Starbucks café latte and lean
back in a cushy chair among the old-world library ambiance to read it all with
absolutely no pressure to buy. “We encourage a soft sell approach,” says Aricka Westbrooks, a Barnes &
Noble spokesperson. “We want people to spend hours in our store.”
In the end, Barnes & Noble
did become the destroyer of independents everyone predicted it would, but it
also became hugely popular and, as a result, incredibly lucrative. In March,
the chain announced earnings for the fiscal year ending in February, 1997, as
$2.448 billion, up from 1.6 billion in 1994. Superstores, which make up
approximately half of the over 1,000-store Barnes & Noble chain, were
credited with over $1.8 billion of the 1997, 91 superstores were opened across
the U.S., ranging from 10,000 to 60,000
square feet. In 1997, over 70 more are due.
Which brings up the question,
when does Barnes & Noble run themselves out of business? Just how many
books can they sell? With over 100,000-square-feet of retail space within a six
miles radius of one another—Triangle Square, Metro Pointe at South Coast,
Fashion Island and The Entertainment Center at Irvine Spectrum—can Barnes &
Noble survive the growing pains?
Definitely, says Westbrooks. “It may not be readily apparent, but about 60
percent of each store’s titles are geared toward its surrounding community,”
she says. Plus, they have now entered the music retail business with many
stores offering a separate CD and cassette department and the on-line retail
realm, hoping to compete with Amazon.com, which has cornered the cyber book
buying market. With all that firepower, reading may just become bona fide
entertainment again.
Size Does Matter
At Metro Pointe’ two-story,
27,000-square-foot Barnes & Noble superstore, there’s often not a seat
empty on weekends. The restaurants are bustling with before and after movie
diners and the Edwards 12 screen stadium-seating theater regularly draws
crowds. With it’s open-air California/Italian-themed
architecture, Metro Pointe offers South Coast Plaza and Crystal Court regulars an inviting contrast
and hopes to appeal to a new generation of shoppers. But, these approximately
200,000 square feet of retail and entertainment space is only half of the
52-acre Metro Pointe’s story. Planners hedged their bed with an additional
200,000 square feet of the other retail phenomenon taking consumers by
storm: The power center, a
conglomeration of big box, category killers. These are the Best Buys, The
Container Stores and Ikeas that send tremors through smaller retailers whenever
they unleash one of their 20,000 to 60,000-square-foot
monsters on an area. Like their cousin the superstore, these giants offer the
largest selection in a given product—electronics, home furnishings, casual
wear—at attractive prices. Like their cousin the superstore, these giants offer
the largest selection in a given product—electronics, home furnishings, casual
wear—at attractive prices. Unlike superstores, however, they do it without the
pizzazz a Virgin Megastore emits. Still, whether he’s
going up against Tyson or Ali, Sugar Ray is still going to get the pounding of
a lifetime. At least that’s what centers such as Metro Pointe are counting on.
At Metro Pointe, the large
parking lot is surrounded with big boxers; Linens’ N Things, The Container
Store, Best Buy. As the entertainment portion draws in visitors with vague
ideas of spending a night out, these heavy anchors draw consumers
intent on making a purchase, without shopping around town for what they need.
“Basically, large retailers can go two ways,” says Ball. “They can strive for
consumer dominance, meaning they carry a few products in every category; they
go category dominant, meaning they pick one area and carry everything in it at
the best price point. That’s pure power retailing.”
According to Ball, Metro
Pointe’s mixed formula is doing better than initial projections, with 96%
occupancy, an average of 14,000 people pouring in every day and stores
anticipating $450 to $600 per square foot in annual sales for the first year.
As they say in the business, that’s a lot of votes.þ
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