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In new twist, entertainment pursues retail

By KEVIN KENYON

With ever more retailers gravitating towards entertainment, it was probably just a matter of time before the entertainment industry turned its eyes to the world of retailing.

In the last year alone, major television networks, including ESPN, Nickelodeon, and The Discovery Channel, have announced plans to open retail stores, with a view to expanding on a national basis in the future.

Even a major casino, Harrah's, has decided to take the retail plunge (see page 188), creating four stores selling themed merchandise at its Las Vegas flagship.

These developments, besides adding an infusion of much needed tenants to the retail market, are evidence of a convergence between the retail and entertainment worlds that could turn shopping venues into amusement centers and vice versa.

With competition for customers at an all-time high, just about every retailer today is looking to become more entertaining. At the same time, a growing number of entertainment companies are diving headfirst into retail, with hopes of promoting their brands and enhancing name recognition.

What does it all mean? According to Kevin Roche, president of FRCH Design Worldwide, Cincinnati, it means competition from all sides.

In a speech at the 87th annual National Retail Federation conference in New York in January, Mr. Roche said his retail clients are increasingly looking to become more entertaining.

"They're trying to discover how to use the retail environment to evoke emotional responses from customers, the way the major bookstore chains have done," he said.

The problem with doing that, however, is that most retailers lack the content necessary to utilize entertainment's full potential, Mr. Roche added.

Content is one thing that the new breed of entertainment retailers have in abundance.

A prime example is the Discovery Channel Store, a four-story, 30,000-square-foot flagship which opened in Washington's new MCI Center in March.

The museum-like store, which aims to take visitors on a "mind-bending journey," includes a 42-foot-long cast of the largest assembled T-Rex in the world, a walk-through forward fuselage of a World War II B-25 bomber, 15 interactive terminals and a giant ant farm.

The "journey" begins deep beneath the surface of the earth and culminates two levels above in outer space, and utilizes a one-of-a-kind elevator that takes visitors on a high-tech ride through the store.

While this is not the first foray into retailing for Bethesda, Md.-based Discovery Communications Inc. -- Discovery Channel's parent company -- it is the firm's first opportunity to express itself fully as a retailer, said Greg Moyer, its president and chief editorial and creative officer.

"This is the first store we have designed from the ground up as Discovery Channel retail," he said. "Everything up until now that we own we purchased as an already up-and-running retail establishment."

In 1995, Mr. Moyer explained, the company purchased Discovery, a small chain of 11 stores out of Dallas, and changed the chain's name to Discovery Channel. But the product mix was never fundamentally changed.

The chain ultimately grew to 16 stores before Discovery Communications purchased The Nature Co. in May 1996 from the CML Group, Acton, Mass.

After utilizing the flagship store as a "laboratory" to learn all it can about retail, Mr. Moyer said the firm plans to eventually convert all of its stores into Discovery Channel locations.

"The Nature Company gave us an opportunity to go national -- a platform where we could effectively utilize the national distribution of our cable networks to promote our retail endeavor," Mr. Moyer said. "The Nature Company also had prime real estate in malls that we could not have duplicated had we tried to build a new chain on a one-by-one basis."

The Discovery Channel isn't the only television network interested in retail.

The first ESPN -- The Store is a collaboration between ESPN and The Disney Store. (ESPN is 80% owned by ABC Inc., an indirect subsidiary of The Walt Disney Co.). The store opened in September at the Glendale Galleria, a 1.4 million-square-foot mall owned by Donahue Schriber, Newport Beach, Calif.

Billed as a "possible prototype" for a new retail chain, the 4,500-square-foot store features an expansive line of sports apparel, sports-related gifts and high-tech activities, including wall-to-wall video monitors and a 120-inch television screen -- all designed to bring customers into the action.

Not stopping there, Disney is also planning on putting the ESPN name on a series of theme restaurants, the company recently announced.

The first 35,000-square-foot ESPN Grill is scheduled to open later this year at the Power Plant retail/entertainment complex on Baltimore's Inner Harbor. A second ESPN Grill is planned for a 1999 opening in Chicago.

As for ESPN -- The Store, officials at Donahue Schriber say ESPN is taking it one step at a time, with plans for only three more locations in the United States this year.

Another newcomer to the retail scene is Nickelodeon (SCT, April 1998).

Following the successful debut of three stores last winter, the kids' network has plans to open 15 to 17 more units this fall, according to officials at Dallas-based Viacom Retail Group (VRG), a division of Nickelodeon's owner, Viacom International, New York.

The 4,000-square-foot stores offer merchandise related to the channel's programs. Each location carries more than 2,000 branded products, 75% of which are created exclusively for the stores by VRG.

While the idea of turning a television station into a retail store may seem unconventional, it might seem even more unusual for a world-class hotel and casino to seek a retail niche for its theme.

The Shops at Harrah's Casino, a group of four original stores (see page 188) which made their collective debut following last year's renovation and expansion of Harrah's flagship hotel and casino in Las Vegas, is yet another example of an entertainment company with retail ambitions.

The world of retail has been an educational experience for Harrah's, according to Katherine Gonzalez, the hotel-casino's retail director.

"We opened with a specific mix, understanding what the concept of the store was. Then, after listening to what our customers were asking for, we added a second layer. Now the third part is just about fine-tuning that," she explained.

Although officials at Harrah's say they are initially only looking to expand the concepts at some of the company's own 17 locations, Ms. Gonzalez said there may be possibilities elsewhere, including mall locations, in the future.

"I think there could be some legs with that," she said. "We're looking at maybe one or two more Harrah's projects this year, and have talked about an airport location, so there are definitely some other possibilities for expansion."