The Experience Economy Meets the Power of Place at Today’s Shopping Centers

by Alex Tostado

It’s a Millennial world; we’re just living in it. Though this might sound defeatist, the Harris Poll would probably tell you this information is quite useful. After all, we’re also living in a data-driven world. With that in mind, Harris Poll cites that Millennials make up two-thirds of the working population, with 10,000 Baby Boomers retiring every day. A recent survey by the market research firm also notes that 75 percent of Millennials would rather purchase an experience than fungible goods, or an item that can easily be replaced or interchanged with another item.

Stats like these bring a new meaning to the phrase “entertaining the masses” – particularly when it pertains to where that entertainment occurs.

“The experience economy has arrived and Millennials are in the driver’s seat,” says Mathew Focht, CEO of Emerging Concepts, a Chicago-based real estate services company that works with restaurants and entertainment concepts. “Landlords and developers are looking for innovative concepts to fill vacancies. From the consumer end, shoppers are looking for an experience — a centralized location to dine, shop and be entertained.”

The key for shopping center owners is turning their space into a sense of place. This, of course, is easier said than done in today’s smartphone era.

“The real competition is time,” explains Andrew Darrow, entertainment strategist and advisor at Darrow Consulting Corp., a Los Angeles-based consulting firm for entertainment properties, brands, talent, content and programming. “The diversity of time consumption across multiple media has resulted in less time — and less desire — for visiting retail destinations. Technology is impactful in that streaming media, gaming and social media, for example, consume a growing portion of leisure time that previously was spent in shopping center environments.”

The solution, it may seem, is to take a page out of the digital handbook. Netflix, Amazon and Instagram have garnered widespread appeal because they offer users exclusive content and products that are difficult or impossible to find anywhere else.

For shopping centers, that could mean a movie-watching experience like none other; a restaurant where the food and service must be experienced to be believed; or an array of games like ping pong, miniature golf or any number of virtual reality experiences that let guests step out of their daily lives and into something completely different.

Whatever that concept(s) may be, Darrow is quick to point out that you’re not selling the movie or the dish, or the ping pong balls and paddle. It’s the experience that matters. The way it makes people feel will determine whether they stay or go — if they choose to come at all.

“As developers and retail venues adjust to the experience economy, they are allocating significantly more real estate to entertainment concepts, attractions and businesses,” he continues. “Landlords are seeking content that will drive footfall, repeat visits, increase dwell time and per-cap spending. Centers that have successfully embraced new models understand that, to drive customers, they need to provide content and social interaction that consumers can’t get at home. They have also discovered that smart entertainment concepts with efficient execution are consistent profit centers that are not dependent on the vagaries of fashion.”

Feeding a Need

Food and beverage has been the low-hanging fruit, sort to speak, when it comes to internet-proofing a center.

“Food is the new entertainment like entertainment was the new retail,” says Leslie Lundin, co-founder and managing partner of LBG Real Estate Companies. “And combining food with entertainment is essential to any successful operation. Food is entertaining and must be Insta-worthy.  If it isn’t sharable, it’s not worth the admission.  And if there’s no admission, there’s no profit and no long-lasting venue.”

Food as a form of entertainment is even more important nowadays as technology has found a way to digitize this as well. Uber Eats, DoorDash, GrubHub and Postmates now make it possible to enjoy your favorite restaurant at home. This has also resulted in virtual or ghost kitchens where cooking space is dedicated to online-only orders.

China Live, a 30,000-square-foot restaurant, market, bar and food hall by executive chef George Chen, is located at 644 Broadway in San Francisco’s Chinatown neighborhood. Chen considered location, size, market penetration and local competition before settling on this space, where he’s confident he can achieve more than $1,500 per square foot in sales.

George Chen, founder, CEO and executive chef at China Live Ventures Limited, which operates a 30,000-square-foot restaurant, market, bar and food hall in San Francisco, believes that in order to combat the online onslaught, you have to beat Millennials at their own game.

“Even with today’s Millennial and their short attention span cycles with social media engagement at an increasing pace, people still want to spend money eating, socializing,” he says. “That cannot be replaced with ghost kitchens or digitalization. Restaurants that are commodified are not going to succeed. That’s the zillion-dollar question, right?  What concepts are going to become destinations where people are going to get off their butts to experience live?”

Chen considered location, size, market penetration and local competition when he was looking for his ideal space for China Live before choosing 644 Broadway in San Francisco’s Chinatown neighborhood.

“I think I can get to $1,500-plus per square foot in sales and be defensible against competition,” he adds. “It has to be designed for the Instagram age, in addition to being functional, which means a unique, authentic, immersive dining experience. Delivery apps are here to stay and ghost kitchens will increase for sure — but for whom? Food still needs to be made by humans that have a skill to create the human touch.”

Another way food and beverage is penetrating our shopping centers is through retailers themselves. For those that offer fungible goods, it’s another way to diversify and add that elusive element of experience. What was once reserved for department stores like Nordstrom has now spread to retailers like Restoration Hardware, Crate & Barrel, Tommy Bahama and Anthropologie. Even AT&T and Capital One offer cafes in some of their stores.

“Retailers will continue to reduce their footprint but will be focused to be more experiential with adding food and beverage,” Focht says. “Crate & Barrel opened The Table in Oak Brook, Illinois, in 2019 and it has had a big impact on the energy of the space and bringing a more challenging Millennial into Crate & Barrel.  Mixing restaurant with retailing is the way to build frequency into an infrequent shopping destination and to re-introduce the brand to consumers.”

Eatertainment Tonight

Then, there are shopping center tenants that always had food and beverage, but are taking their offerings to a new level. This includes movie theater concepts like Alamo Drafthouse Cinema, Cinépolis, the Lot and Studio Movie Grill (SMG). Though SMG offers in-theater drinks and dining that includes everything from Bento boxes to smoked ribs and flatbreads, the anchor still prefers to be located near other restaurants.

“Studio Movie Grill focuses on great properties and communities that need us — not numbers,” says Brian Schultz, founder, CEO and owner of Dallas-based SMG. “We like good restaurants around us. We like for our patrons to have other places to go and other entertainment concepts.”

In 2020, those “communities in need” include Northpoint Mall in Alpharetta, Georgia, the Shops at Chisholm Trail Ranch in Fort Worth, Texas, Willow Grove Park in Philadelphia, Citrus Heights in Sacramento, California, and Aliana Waterview Town Center in Pecan Grove, Texas, which will roll out a new prototype featuring 12 screens, 1,160 luxury recliners and an outdoor viewing area for movies on the yard.

Puttshack is another entertainment anchor with a penchant for foodie neighbors and an active expansion pipeline. The “super-tech mini-golf” concept is scouting locations that can offer 25,000 square feet to 30,000 square feet with high visibility and accessibility. Puttshack is slated to open two to three new venues this year, which includes the Interlock in Atlanta and Oakbrook Center in Oak Brook, Illinois, with plans for at least four more in 2021 and 10-plus locations every year thereafter.

Puttshack is miniature golf reimagined, thanks to the power of technology. The concept has done well in England where it has four locations (the White City, London location is pictured above), and is set to open stateside in Atlanta and Oak Brook, Illinois, shortly.

“We ideally like urban environments surrounded by young professionals and corporate businesses,” says Joe Vrankin, CEO of Puttshack. “We’d like existing foot traffic, but our new concept also drives traffic, so it’s a win-win for everyone. We’d prefer our co-tenants to be upscale food and beverage and entertainment options. A hub of entertainment creates a destination for young adults, and that’s really beneficial.”

Like SMG, Vrankin welcomes neighbors in similar categories. As a newer-to-market concept, he’s happy to learn from the trailblazers.

“In our digital-heavy world, competitive socializing is a growing vertical,” he continues. “People want to participate and feel connected to the people they’re with.  We’re following and learning from all activity based eatertainment concepts.  From bowling to shuffleboard to darts and ping pong, there’s a lot of choices for consumers now. We’re also seeing more people switch from a food and beverage-only option to activity-based entertainment, and that’s good for all of us in this space.”

Learning from what works and what hasn’t isn’t just good advice for new concepts, White argues, but for shopping center landlords as well. As the old saying goes, what’s hot today is history tomorrow.

“Landlords need to be very selective in adding entertainment tenants,” he cautions. “They should avoid legacy business models that are quickly becoming obsolete. They need to select ones with repeat appeal. This means not relying on just the entertainment attractions, but also on the tenant’s continual programming of one- and limited-time events and delivering culinary, foodie-worthy food and drink.”

An Immersive Opportunity

Like fast fashion, many of today’s popular attractions can easily become stale, boring and yesterday’s news once they’ve been experienced, shared and talked about. One of the easiest ways to prevent this is by releasing an ever-changing selection of media options, which is precisely what virtual reality (VR) does today.

“The VOID and Dreamscape Immersive are excellent examples of site-based VR attractions that cannot easily be reproduced at home because they use a variety of external stimuli to create 360-degree experiences,” Darrow says. “Their popularity has created an attractive destination for retail centers because they provide refreshable, world-class content and state-of-the-art equipment.”

Steve Zhao, founder and president of Sandbox VR, has seen firsthand how VR experiences can reinvigorate a mall, or at least the patrons who visit it.

“Since our first U.S. Sandbox VR was inside a mall, the popularity of our experience brought in fresh incremental traffic,” he says. “We ran a survey and discovered that 90 percent of the guests who visited Sandbox VR had either never been to that mall or hadn’t been to the mall in over a year.”

Sandbox VR has been known to bring guests back into the mall setting, according to its founder and president. The concept currently has locations in San Francisco, Los Angeles, San Diego and Chicago, with more planned for New York, Dallas and Austin, Texas.

Sandbox VR currently has locations in San Francisco, Los Angeles, San Diego and Chicago, with more planned for New York, Dallas and Austin, Texas. Zhao believes his concept is resonating well with Millennials because it provides exactly what shopping centers are looking for, but may be lacking: exclusive content.

“I think shopping centers should triple down on experiential elements that are distinctively unique, compelling and on brand,” he adds. “I would say most content is consumed either individually or quite passive socially. As a result, I believe people are seeking premium social experiences out of home. There’s a lot of noise on social media and, anecdotally, 10 percent of what’s popular gets 90 percent of the mindshare, so, for anything experiential to work, it must stand out from the rest of the pack.”

Darrow believes FOMO, or fear of missing out, can also be a large motivator for keeping any entertainment-based attractions fresh.

“Programming limited-run concepts, attractions, events and photo opportunities allow shopping centers to leverage FOMO,” he says. “Malls should generally approach these as shorter-run engagements that create a sense of urgency and immediacy, which are highly attractive to next-generation consumers.”

Interactive theater is another concept gaining steam due to the FOMO factor and the fact that no two people ever have the same experience as you’re free to move about the space and interact as much or as little as you want with the “actors.” Think sophisticated dinner theater mysteries or escape rooms with live actors.

Christian Dieckmann, senior vice president of corporate strategy at Cedar Fair, points to PunchDrunk’s “Sleep No More” in New York City as the bar for this new-generation of interactive theatrical experiences.

“’Sleep No More’ tells the tale of Shakespeare’s ‘Macbeth’ across a 100,000-square-foot space enveloped in a haunting 1930s aesthetic,” he explains. “Due to guests having the freedom to roam the premises at will and the multiple plotlines unfolding simultaneously, everyone has real agency in crafting their own individual experience; no two visits will ever be the same.”

Cedar Fair took a similar approach when crafting Ghost Town Alive at Knott’s Berry Farm in Buena Park, Calif. Guests are immersed in a Wild West adventure unfolding across multiple areas in the park throughout the day.

“By participating in specific tasks and activities, they are becoming honorary citizens of Calico,” Dieckmann explains. “Ghost Town Alive has become a huge hit because of the interaction with real-life performers that is central to the attraction.”

Darrow is also a fan interactive theater, calling it “one of the most exciting trends in location-based entertainment.” He points to Jon Braver’s “Delusion,” “Pip’s Island” and “Evermore Park” as his favorites.

Though there are clearly many exciting entertainment-based concepts, experiences and tenants for shopping center owners to consider, White wants to make sure they don’t simply pass the onus for entertaining onto these new arrivals. Instead, he believes the art of entertaining is everyone’s job.

“We believe the success of many shopping centers will be dependent on not just entertainment tenants, but landlords themselves becoming producers of one- and limited-time entertainment and transformative experiences as part of the common area experience,” he says.

— By Nellie Day. This article originally appeared in the February 2020 issue of Shopping Center Business.

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