Village Solutions

In the midst of a virtual retail freeze, Legoland thrives.

It seems like everywhere you look, retailers are closing shop and filing bankruptcies, and empty storefronts are lining the streets. Last year we saw the closing of retail giants, Circuit City and Linens N’ Things, and luxury retailers such as Versace also closed stores around the world. So why is it that Legoland Discovery Center, an attraction centered on the LEGO building blocks, is opening stores in Chicago, Dallas and Atlanta?

I believe Legoland sees an opportunity in the recession because consumers are looking for free or affordable cost entertainment in their malls. This trend also corresponds to a consumer who expects their news to be free on the web. Consequently, we see malls across the globe add entertainment and amusement venues to draw consumers who have relegated shopping to obligatory time, which is something close to work. These consumers are bored with the same stores in every mall and with higher gas prices, lost home values and depressed 401K accounts they do not have the funds for a shopping spree.

Yet, Legoland charges on with a strategy to open in Grapevine Mills mall in Dallas, TX and are they are looking for a location near the Georgia Aquarium in Atlanta. Additionally, the city of Dallas will give Merlin Entertainment, the operator of Legoland, a $1 million TIF (Tax Incremental Financing) incentive package to open in the mall. The facility is projected to open in March 2011 in 40,000 square feet.

Glenn Earlam, a managing director with Merlin, said in a statement that “the inclusion of a quality leisure attraction like the Legoland Discovery Centre will . . . deliver significant incremental business to both the mall, to the Dallas-Fort Worth Metroplex and the greater region as a whole.”

Likewise, Disney earlier this month announced that they are turning 340 of their Disney Stores into “entertainment hubs” and renaming them Imagination Park with the help of Apple’s Steve Jobs. The goal is to make children clamor to visit the stores and stay longer, perhaps bolstering sales as a result. Over the next five years, analysts estimate that Disney will spend about $1 million a store to redecorate, reorganize and install interactive technology. Some Disney board members fretted though that the concept was so lavish that parents would try to use the stores as day care centers. Others worried that people would come for the entertainment but not buy anything. Disney is pitting landlords against each other to try and get the best deals in top-tier locations.

The Middle East seems to be leading the trend with the biggest entertainment venues as attractions in malls. Examples include the 15,000 square foot Wahooo! Waterpark which just opened in Bahrain City Centre mall, and the now infamous Ski Dubai at the Mall of Emirates.

Ski Dubai located in Mall of EmiratesBut will these large financial investments hold up in the long-run? Or are they a 21st Century repeat of the previously failed versions of entertainment in malls, such as Warner Brothers, Gameworks, FAO Schwarz and Niketown? The 1990s saw the end of roller rinks in malls and affordable home video game systems killed the mall arcade.

With all the focus on entertainment will the new shops fail like many others in the past, especially when Target and Wal-Mart offer the lowest priced toys in a warehouse envirnoment?

Disney claims sales at its original stores, which opened in 1987 and sold to Children’s Place in 2004, plummeted because they oversaturated the market. However, many analysts believe that the stores’ visitation was high due to the entertainment but not enough people bought to sustain the rents and overhead.

I remember stopping in The Disney Store on every mall visit but only purchasing merchandise a handful of times. Is my experience the norm or a rarity?

Additionally, FAO Schwartz which was a New York destination failed when it tried to bring their concept to malls proving that high entertainment value does not always translate into high sales figures. So I ask the question, are these high investment entertainment venues going to last or are they a trend that will be a lecture in business school ten years from now?

Tags: bahrain, Disney Store, Dubai, entertainment, lego, Legoland, mall of emirates, malls, shopping center, shopping mall, ski dubai, wahoo water park

This entry was posted on Thursday, October 29th, 2009 at 10:19 am and is filed under Culture, Real Estate, Retail, Shopping Centers. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.