Fun, frolics and shopping

The transformation of shopping from a weekly chore to an entertainment activity is, arguably, in its infancy in Britain and continental Europe. In the US, where shopping centres have risen to the status of holiday destinations, the concept has rooted firmly. But its export is increasing, signalled by the announcement earlier this week of the first phase of a £500 million European entertainment and leisure development programme, most of it integrated with a retail project, by Heron International.

The £175 million first phase includes developments in Barcelona, Madrid, Stockholm and Lille. Gerald Ronson, chief executive of Heron, says there is increasing evidence that the inclusion of an entertainment element within a shopping complex - provided it is of the right sort - offers enhanced earnings for both types of occupiers.

For instance, shopping centres which are strictly retail close down when shopping hours are over. "You're not retailing at night," he says. "What do you do with the place after 6 p.m.? If you have the space, you want to be using it 18 hours a day."

The Madrid development plans for a 250,000 sq ft scheme on a prime site adjacent to the city's principal ring road which will include a 24-screen cinema cinema, six restaurants, bars, a family entertainment complex, retail facilities and parking. The on-site retailers will be leisure-oriented, including sports, books, music and video shops. Immediately adjacent to the site, developer Scott Malkin - who built the UK's premier factory outlet centre at Bicester - has plans to build a similar 190,000 sq ft development.

The formula of combining leisure and retail in one complex does have limits, however, as even its leading proponents admit. Michael McCarty, senior vice-president and head of market research at Indianappolis-based Simon DeBartolo, the US's largest shopping centre Real Estate Investment Trust, urges caution. "The conventional wisdom is that entertainment and leisure can enhance the value of a retail development," he says. "But it is not a panacea. It will make a good centre better, but it will not make a bad centre survive."

SIMON DeBartolo's Mall of America, a 4.5 million sq ft building in Minneapolis, Minnesota, has a seven-acre amusement park at its centre and is considered one of the benchmarks of success for the leisure-retailing combination However, in creating the amusement park, the company eschewed the 11 to 18-year-old market which wants "hard rides, scream rides. You know, the type that appeal to your young adult male culture". Instead, it designed a park to appeal to six to 11-year-olds who do not spend money but whose parents and grandparents do.

It has brought in a number of theme restaurants, including the original Rain Forest Cafe, a restaurant which also sells T-shirts and stuffed animals and has been successful in obtaining licences to exhibit rare birds.

Mr McCarty says that up to 30 per cent of visitors travel more than 150 miles to visit the mall and that some families come for a weekend holiday, throwing in a trip to a ball game as well. A visit to the mall is, therefore, as much about entertainment as it is about shopping because, as Mr McCarty says, "they can visit Sears in Des Moines too".

In Britain, the primary leisure-shopping combination has so far focused on cinema operators, who typically pay lower rents per square foot than other retailers. They attract people on site during the evening, which in turn encourages restaurant and food court tenants to take space in the shopping centre. These tenants pay the highest Zone A rents of all. Moreover, their presence typically enhances the ambience of the centre, encouraging still more shoppers and completing a virtuous circle.

Some of Britain's best shopping centre developments, however, remain sceptical about the leisure-retail combination. "As a general statement, there's not much synergy at all," says Douglas Leslie, chief executive of Capital Shopping Centres, the UK's largest chain. "Certainly, non-commercial leisure like swimming and fitness clubs offer no synergy at all. And if a leisure centre is successful, it is using up car-parking spaces which could better be devoted to retail shoppers."

STEVE Wiener, chief executive of Cine UK, a leading developer of cinema sites, says that UK developers initially resisted theatres within their facilities, although many of the larger centres are now eager to have them. Mr Wiener says there is no specific evidence that cinemas are the best leisure facility in a shopping mall and, indeed, that broad generalisations are hard to make.

"If parking is unlimited, then Bingo is best. "If parking is limited, then we like night clubs." However, he adds hastily, "not if the shopping centre is near a rough area. Then I want to be a million miles from a nightclub."

Mr McCarty gives a thumbs down to night clubs. "We've taken the nightclub concept and put it in smaller shopping centres. It hasn't worked." Moreover, he adds, even if there were ample evidence of a leisure-retailing formula which works in the US, that is no reason to believe it will work elsewhere. "Extrapolating the US experience in Europe is a mistake Americans have been making for decades," he says.

Mr Ronson agrees. His Barcelona development, for instance, will feature "skylights, razzamatazz and floodlights going all over the place. The city wants a landmark they can see from the sky," - not a likely feature of a mall in, say, Toms River, New Jersey. "I'm convinced that the retail-leisure combination is exportable," he says. "But you have to adapt it to local customs."