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Opportunities for FECs with Retail Industry in a State of Flux
By: Lance Treankler
The shift of family entertainment from malls to standalone locations has been quite dramatic over the past 25 years. In the 1990s you could find an arcade in many of the malls in the United States. Today it isn’t as frequent as many family entertainment centers are popping up as standalone locations. This is due to multiple factors but the number one major reason is due to traffic continuing to decline year over year in malls. Currently 330 out of the roughly 1,300 malls in the U.S. are at risk of closing due to lack of traffic affecting sales. In 2016, analysts have confirmed that mall traffic has dropped 10% year over year on average and it is expected to continue on that pace. Many retailers, such as Sears, are struggling to stay afloat.
As we see this type of traffic decline in the U.S., in Latin America shopping centers are booming; traffic is strong and more malls are popping up annually. Most malls have game rooms in the majority of countries in Latin America. Shopping centers seem to be the epicenter for people to meet, eat, shop and spend time with their families and friends at the game room. Ecommerce has not affected mall traffic in Latin America as it has in the United States. As for now, malls are a great opportunity with strong traffic and more opportunity to expand with more shopping centers opening up.
It will be interesting to see the how U.S. malls transform over the next decade with the continued growth of ecommerce where more folks shop from home versus spending time in actual stores. There may be opportunities for FECs and other forms of business to take over leases of failing retail real estate within these markets. The openings for leases in malls are at recent highs so there will be plenty of opportunity for space.
While the retail industry is struggling, the gaming industry is booming. FECs are being opened at a rapid pace and revenues are hitting records for many locations. As ecommerce affects brick and mortar retail negatively, this has not correlated to brick and mortar amusement game rooms being negatively affected by online games and apps. The market looks great for the amusement gaming industry and with retail malls in a state of flux it may be a great real estate opportunity to continue the trend of FEC openings.
No matter the setting or the geographical location, games bring families and friends together. It doesn’t matter if you’re in Pittsburgh or Peru, the idea is the same: money goes in, fun is had, and memories are made. And that’s a pattern that will never go out of business.