For the last 23 years, a three-million-square-foot mall in East Rutherford, New Jersey, has been abuilding. On October 25, after more than $5 billion of investment and two bankruptcies, the first stage of the American Dream mall will open. Consumers will finally get to see what $5 billion buys.
I previewed the place, and it turns out you can get a lot for $5 billion. What’s more interesting than that, however, is how the current developers, Triple Five Group, have chosen to allocate space: 55% is allocated to entertainment and dining, and only 45% is devoted to retail. That allocation recognizes that what’s driving consumers into stores isn’t buying things; it’s the fun and exploration they can have and what they can experience with friends. Malls can’t go back to what they were—consumers don’t want that anymore—but no one is clear about what comes next. This large investment is a stake in the ground on the next iteration of shopping.
American Dream has several entertainment features that haven’t been together in a facility before. There is a Nickelodeon-themed park, which will be in the first part of the facility to open, with 25 rides and attractions, where you pay one price for the day and you can go in and out all you want. Also opening on October 25 is an NHL-sized ice rink that has three tiers for observation and can hold 2,400 spectators if they’re one deep and 4,800 if they’re two deep.
In several stages starting later this month and completing in March 2020, American Dream will also be opening:
- A Dreamworks-related water park, the second-largest water park in the world, which will include the largest wave pool in the world and cabanas designed by Jonathan Adler.
- A ski hill that can hold 500 people at one time.
- Numerous other features including a luxury movie theatre, a 300-foot observation wheel overlooking Manhattan, an aquarium, Legoland, two 18-hole miniature golf courses and many other features.
The idea here is clear: get consumers to come for non-shopping reasons and make money doing it. Then offer convenient shopping opportunities so that when visitors are in the mood, it’s right at hand. It’s not conventional mall thinking; it’s more like the idea of having expensive shops next to a casino, or gift stores inside theme parks. The idea isn’t to attract people with shopping; the idea is to offer shopping after they’ve come for something else.
Yes, it’s a mall, but it turns the idea of mall shopping on its head by offering entertainment as the key motivator for coming with shopping as the sideshow-afterthought-bonus. American Dream expects visitors to spend four to six hours per visit, which is not what shopping malls typically get. Another atypical expectation: American Dream expects only half its visitors to live within 50 miles of the mall. It is expecting to be a major attraction for New York-area tourists.
Don’t be fooled; American Dream has a lot of hurdles to overcome. Here are some:
The prices for the facilities like the theme park, the skiing and the water park have not been announced. Nothing like a facility of this type has ever been built, so no one knows how the pricing will affect demand.
American Dream is in Bergen County, New Jersey. Among other things, that means blue laws, which mean it’s illegal to operate most non-food retail on Sunday. Blue laws were created to keep Sunday a chuchgoing day and not a shopping day, and the developers of American Dream are trying to change the laws or work around them. But county voters have turned down the change before, and it’s not clear that Bergen County will be open to it now.
American Dream has both parking and bus transportation to Manhattan. That makes it tempting for commuters to use American Dream as a Park-n-Ride facility. The mall operators could use pricing to prevent that from happening, but that would put them in the position of making it harder for commuters who want to use public transport. It’s a tricky political spot to be in when they’re trying to get Blue Laws overturned and be good corporate citizens.
The facility is next to MetLife Stadium in East Rutherford, New Jersey, where the New York Giants and the New York Jets play. On game days, the backup on local roads is highway madness, and American Dream uses many of the same access roads.
Finally, Bergen County is not Times Square. No one knows how many New York area tourists will be tempted to come.
Because two entities went bankrupt before Triple Five took over American Dream, it means that Triple Five got the benefit of the previous investment without having to pay the full price for it. So the question is whether it can be replicated. Triple Five is already trying to answer that question, having committed to a similar-size facility in the Miami area. It hasn’t broken ground yet, but I am told that the learning from American Dream in New Jersey is being implemented in Miami.
The other unknown about American Dream is what will happen around it. What we are seeing now in the latest mall designs is less discrete shopping malls and more integrated neighborhoods. Triple Five has committed to construction of some hotels near American Dream, but they also own land nearby that can be used for residences and offices. If they commit to building those kinds of structures, it means that the trend of building malls into neighborhoods is taking deeper root.
There’s A Lot To Learn Here
If you’re a retailer, there’s a lot to learn from American Dream even if you don’t have three million square feet and $5 billion to spend. One important lesson is that if American Dream is successful, it’s because when you give consumers an engaging reason to leave home, they’ll shop if your destination is compelling. The second is not to give events away; consumers will pay if they think it’s worthwhile.
It used to be true that every store had the same purpose: hold stuff that people have to come in to buy. But now no one has to go to a store to shop, and stores have to develop new purposes. What’s becoming clear is that every store needs to be uniquely relevant to its brand and that what works for one won’t necessarily work for another. Finding the right mode for every brand and retailer is critical to getting the best utilization of space, leveraging events and selling products.
The most interesting thing I found about American Dream is the acknowledgement that retail is evolving, and the only way to find the answer for what retail space should be is to try. As I walked the place, I couldn’t help thinking that I wanted to come back, and isn’t that what great retailing is all about?