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Betting on Entertainment

Photo: FG file

The entertainment component is becoming increasingly important for large shopping centers. Audience research suggests that today people go to the malls not only to shop, but to receive positive emotions and to have a good time.
Experts note that over the past few years preferences of customers that visit the entertainment areas in the shopping malls have shifted towards family recreation parks, high-tech cinemas, and educational centers. The owners of commercial real estate are monitoring the trends, and are ready to adjust to the changing preferences since entertainment areas can generate up to 20% of the profit. 

The model of consumer behavior has changed significantly over the past few years. Malls are not  just places for shopping anymore. People come to the malls to relax and have a good time. The share of entertainment content at the malls has significantly increased and new approaches are being tested. According to Polina Zhilkina, the head of retail consulting department in charge of commercial space utilization at JLL, the growth occurred partly because shopping malls had to fill vacant spaces during the crisis. Attracting entertainment operators helped fill this gap and generate additional traffic.

Ms. Zhilkina said that the entertainment segment for the modern shopping centers, especially large-scale, is one of the most important “anchors” that keep customers at the shopping centers longer and, as a result, increase the average bill.

A New Approach

According to Darya Sizykh, deputy commercial director at FORTGROUP, visitors are not just interested in movies, that have always been the main entertainment component at the malls. More visitors are attracted by family parks designed for various age groups, such as climbing walls, sports and martial arts, rope parks, and more.

“Movie theaters are still popular and they are constantly being improved, implementing new technologies and adding more functions. Some companies open separate facilities for children,” Daria Sizykh said.

Ekaterina Aridova, executive director in charge of real estate management at Colliers International, added that the latest trend is “edutainment”, when children and their parents can enjoy their time together in a meaningful way. Ms. Aridova said that such projects include cultural and educational spaces, co-working, and events with interesting interactive content, where visitors can act not only as spectators, but also as participants. Some of the entertainment programs that have been very popular until recently begin to disappear. For example, pool tables and bowling alleys are practically gone. Daria Sizykh believes that their market share has significantly declined. Quests that used to be popular just a couple of years ago, are beginning to lose their popularity. “Traditional entertainment is increasingly being replaced “edutainment”. At the shopping centers, we see more public and cultural spaces that are not yet as popular (primarily for economic reasons). However, it is possible that they will attract more visitors in the near future,” FORTGROUP's deputy commercial director said.

“The choice of tenants depends on the format, the price range of a particular shopping center, and on the composition of its target audience”, Polina Zhilkina said. A large shopping center that is aiming to generate traffic of 100,000 daily, would offer various formats of entertainment. For example, sports and educational activities. Ms. Zhilkina believes that it is necessary to study the composition and image of each target audience, as well as synergy with other tenants at the mall, and find a unique model that would allow an entertainment company to implement its “anchor” function.

A Profitable Segment

Market experts believe that areas used for entertainment at the shopping malls steadily increase. According to Daria Sizykh, on average, areas used for entertainment constitute 10-20% of GLA. However, there are projects on the market where it can reach up to 40%. This indicator depends on a particular shopping center and its surroundings, the target audience, and why people go to this mall.

According to experts at Colliers International, up to 20% of the profit may be generated by the entertainment segment. Daria Sizykh says that it is difficult to analyze the indicator of the “net” increase in attendance of the shopping center only based on the entertainment component. It depends on the venue, the share of entertainment component, and what is represented. “As far as the audience of our first project, which is ANGRY BIRDS Activity Park, it looks as follows: 33% are the regular customers at the mall and 67% come just to visit the park. These are additional visitors of Europolis,” Daria Sizykh said.

“In this case, the goal of the park is to make sure that as many of the new visitors as possible become our loyal customers at the mall. Therefore, while creating a tenant mix, it is necessary to achieve maximum synergy among all components of the shopping center. "

We must mention that the entertainment market is quite complicated. Preferences of the customers are constantly changing, and it is important for the management company to interact with the audience constantly, in order to understand such changes and offer new interesting content, and avoid losing customers. “For example, at the GORILLA PARK, located in the “Five Lakes” shopping mall we are constantly offering something new to the customers. The area for sporting events was replaced with a laser tag; new gaming machines were installed; the party room area was expanded; we organized various events and master classes. In addition, we launched our own line of hamburgers,” Daria Sizykh shared her experience.

Return on investment in the entertainment projects depends on the type of business and on a particular format. Polina Zhilkina estimated that it can take up to 2-3 years if the concept is compact or inexpensive, or more than 10-15 years in the case of multi-million investments.

Alena Sheremetyeva

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