Originally published in the San Diego Union-Tribune
March 26, 1989
by Rod Riggs

Not one to admit marching to a different drummer, Seaport Village president Lee Stein instead sees his retail center as leading the parade.

“The key is to be the place San Diegans can bring visitors,” he said. “To be a very special place run in a very special way.”

He characterizes that special way as “entertainment retailing,” built on elements of fun, excitement and appeal and designed to draw consumer traffic.

Stein can quote figures to show that entertainment retailing produces more than theoretical results.

Last week, Seaport Village announced sales of more than $43.4 million, up 11 percent from the previous year, a phenomenal increase for an established center.

The total works out to more than $510 per square foot for the 85,000 square feet of retail space in the center, more than twice the productivity of the average retail specialty shop.

Not bad for a nine-year-old retail center which was viewed with reservation at its opening in 1980 and which has yet to change what outsiders see as its most obvious oversight: lack of a traditional “anchor store” tenant.

“San Diego Bay is our anchor,” said Stein with only a slight smile.

“I don’t think the waterfront is the place for a huge anchor department store, but a place to walk and browse, to explore and shop. Here we blend a mix of retail, experience and entertainment. There is a new trend to add entertainment to retailing. We were ahead of the curve.”

Entertainment has been a feature of Seaport Village since its opening.

“We have had nine or ten years of Symphony Pops concerts,” Stein said. “Kazoo the mime has been here since the first days and our calendar of events is fairly strong.”

That calendar shows events on Wednesday, Saturday and Sunday of most weeks, daily during spring school vacation. Kazoo the Mime, jugglers, magicians, clown face painting, music groups are featured: There was a Spring Fling Festival Benefit for Easter Seals, an Irish song, sing-along on St. Patrick’s Day, Easter Egg Hunts yesterday and today.

The center’s restored antique carousel is another draw and frequent special events such as an antique car show also attract visitors.

“We consider Seaport Village a place for local to bring friends and families,” said Stein, adding that surveys show a consistent 50-50 mix of residents and visitors among the traffic.

“The tourists spend more dollars, but the average San Diegan is here about five times a year.” Stein says. “We draw from a 22-mile to 25-mile radius on a regular basis.”

Comparisons with other centers of the same size, “makes the story more dramatic,” Stein says.

“An 85,000 square foot center without an anchor doing advertising for it needs special events that have recognition. We have been extremely successful in respect to our size. We do not have the budget in the center or among the tenants to do this, so we use the situation. And, corporate event sponsors are oriented to promote and provide marketing muscle.”

The trend will be continued in the planned expansion of Seaport Village into the area occupied by the San Diego Police Department headquarters and the redirected Harbor Drive.

In some ways, the center is a victim of its own success.

Lenders with reservations about the nontraditional concept required 100 percent tenant lease up at opening of the then $10 million center, Stein said. Occupancy has been at 100 percent nearly all of the time and there is a waiting list for space, he said.

But some tenants now want more space, and retailers “who see the space and traffic patterns” want to come in. An evolution is about to take place.

“Over the years, we have changed the tenant mix to have more merchandise for retail customers and less tourist-type merchandise,” he said. The present distribution puts about 33,000 square feet in restaurants, 8,100 in fast food and 45,000 in retailing.

Seaport Village has won approval of a $40 million, 10-acre expansion which will add some 140,000 square feet of retail space. Tenant space will double in number from the present 85 and will be larger in size, according to Stein.

Scheduled for completion in 1992, the expanded area has entertainment features of its own: “water, so you can see water wherever you are .. to bring the bay right up to the old police station site at Market Street.”

The expanded area will swing the balance with “serious merchandising” to about 50 percent retail and 50 percent entertainment including a six-theater cinema, he said.

The larger stores will focus on retailing and “more serious shopping opportunities,” Stein said. “There are some very good operators here.”

Entertainment will be the focus of the “Night Court,” collection of restaurants, clubs, and bars around the center court of the onetime police station.

“We registered the name for this use because of its great awareness,” Stein said. “This will be night entertainment to which patrons and experience all situations by going from one environment to another. It’s not something we’ve seen in this market.”

Common management of the Night Court complex is “key” to permitting patron movement, he said, adding “Port District rules are really strict, but workable. We’ll work with them because of the number of events which will go on.”

In a new plaza facing a new lake, 16 store spaces, each of only a few hundred square feet, will be furnished with electronic services, counters and other fixtures and offered for month-to-month lease.

They are “for the person with a great idea and not able to lease space for a year and do (tenant) improvements,” Stein said.

“These are people who can’t afford the risk to quit a job and go into a business they’ve not been in before. This way, the only cost is inventory.”

Stein sees the area as a “tenant incubator” with new occupants every few months, “always different and unique, a staging area for entertainment retailing. We will want to put the successful ones into full stores but meanwhile they will be within existing traffic with some of the finest retail stores in the country.”

The concept is, he said, “another case of breaking the mold.”

He also expects the incubator to add to the variety found in the center.

“In regional centers, many of the stores are the same. With this expansion, we want locals to open stores here. We’re not anxious to have franchises. We want to have a unique marketing position.”

Uniqueness runs throughout the Seaport Village operation. While sales have shown steady increase, the 12 percent and 13 percent annual gains of earliest years slowed to 7 percent in 1985 and 1986 before last year’s jump.

But unlike most retail sales patterns in which the fourth calendar quarter is responsible for the heaviest sales, Seaport Village merchants report 10 to 11 percent of sales in July and 11 to 12 percent in August, Stein said. Weakest sales are in January and November.

Reprinted by permission of the San Diego Union-Tribune.
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