NEW DISNEY PARK SPARKS RETAIL HOPES
Byline: Kristin Young
ANAHEIM, Calif. — Disney’s new resorts are expected to bring millions of new visitors — and their wallets — to the area, which is good news for the local economy.
The opening last week of the Walt Disney Co.’s second new attraction in two months as part of Disneyland’s $1.4 billion expansion is heightening expectations over the financial spillover into the surrounding retail communities.
Hundreds of “hardcore Disneyphiles” — what Disney representatives call the early birds who hailed from as far as England and Japan — began lining up for Disney’s California Adventure a day before the new West Coast-themed 55-acre park opened to the public last Thursday.
With thousands filing through the gates on the inaugural weekend, retailers within a 30-mile radius of this new Orange County landmark are hoping the crowds are a sign more locals and out-of-town shoppers to the area will bump up bottom lines.
Seven million visitors annually are expected to walk through Disney’s California Adventure, which is dedicated to the state’s history and natural attractions. The park features a beachfront, a Hollywood-inspired district and a Robert Mondavi winery.
Disney also anticipates about 7 million visitors this year to Downtown Disney, a 300,000-square-foot shopping, dining and entertainment complex that opened to the public in January. The company could not determine the number of crossover visitors between attractions.
Planners are banking that locals and tourists alike will frequent Downtown Disney’s movie theaters, restaurants and 18 specialty stores.
Some retailers are geared as much to locals as tourists: Sephora (the second in Orange County), Liquid Planet surf shop and Basin, a London-based bath and body shop. But the majority clearly appeal to area visitors, hawking small gifts and souvenirs.
The modest stretch of concrete flanked by retailers on either side is a 20-minute walk to the entrances of the Disney’s California Adventure and Disneyland.
But its elements — from the 12-screen megaplex to the House of Blues nightclub to the sunglasses emporium Soliton — take a cue from successful retailtainment pioneers only an hour north. Third Street Promenade in Santa Monica is a brisk walk from the permanent carnival on Santa Monica Pier. And the neon-trimmed Universal City Walk in Studio City, next door to Universal Studios attracts some 60,000 visitors on a typical weekend day.
Disney’s California Adventure and Downtown Disney are expected to bring in about $25 million in new revenue to the city of Anaheim and about $35 million in new revenue to the state.
Already the economy is the wildcard with higher gas prices, uncertainty related to the state energy crisis and consumer confidence hitting a four-year low in January.
Still, retailers are upbeat.
“The addition of Downtown Disney and truly everything that Disney is doing will be a real shot in the arm to overall tourism growth in Orange County,” said Keith Eyrich, president of The Irvine Co. Retail Properties, owners of the Irvine Spectrum Center, Fashion Island and 30 neighborhood and community retail centers in Orange County. “We all stand to be winners.”
Retailers said most of the growth will result from an increase in tourism. Few believe the parks will hurt their local traffic.
Disney is rolling out advertising and promotional campaigns targeting cities mostly in the Western U.S. and internationally in Mexico, Canada, Asia and the U.K. Travel agencies, hotels and airlines are participating in promotional efforts.
In addition, Disney is promoting the parks, which include the original Disneyland, as a multiday destination. The new 750-room California Grand Hotel brings the total rooms surrounding the resorts to 2,242.
The Los Angeles Economic Development Corporation projects tourism is expected to increase in Orange County from 37.6 million in 2000 to 38.9 million 2001.
“We’re looking for a real stimulus to the tourist business in Southern California,” said Jack Kyser, chief economist of LAEDC, noting as the U.S. dollar weakens, international tourists will view American vacations as a bargain.
“People are going to stay a week,” Kyser continued. “Tourists spend quite a bit of money. They buy a lot of gifts to take back to friends and family. You will do well if you’re a specialized retailer.”
Tony Cherbak, a partner at the Orange County office of consulting firm Deloitte & Touche, is also optimistic.
“Anytime you have such a big draw there’s a risk that traditional malls will be cannibalized. I’m not really hearing concern from different retailers. Any cannibalization will be negligible.”
In fact, the big traditional malls are positioned to make sizeable gains, observed several mall representatives.
The Block at Orange, about three miles from the new Disney park, is expecting 12 million to 14 million visitors this year, with a sizeable uptick in international traffic.
“I’ve already seen increases,” said Christine Carpenter, a spokeswoman for the open-air shopping and entertainment complex. The Block usually draws 70 percent local traffic, 30 percent international. “January is typically a slower month. We see between 100,000 to 150,000 people per week. But now we’re consistently seeing about 200,000 people per week.”
South Coast Plaza in Costa Mesa, Calif., has been gearing up for the Disney openings, according to a spokeswoman.
Already under way are a number of partnerships with Disney, including benefits for local charities, cross-promotions and special offers.
“We have had a partnership with Disneyland for the last 10 years,” she said, noting the two entities have similar customer profiles — affluent families.
Two busses will make two 20-minute trips daily between Disneyland hotels and the upscale shopping center, which is expecting 21 million visitors and $1 billion in sales this year. Disney will contribute at least a few million of those visitors, said Downing.
South Coast Plaza retailers are ready. Alex Sarkissian, managing director of the 2,700-square-foot D&G store, opened last September, echoed his neighbors saying the location is positioned well to take advantage of the Disney expansion.
There are a few retailers, mostly small specialty stores in nearby cities, that aren’t betting on Disney.
“It’s irrelevant,” said Lena Mamari, owner of Maries, a high-end shop in Laguna Niguel, “I get business from the Ritz Carlton, not Disneyland.”
Suzanne Palmer, owner of The Queen Bee, a high-end contemporary store in Newport Beach, agreed.
“Disneyland is not going to affect my store or any stores around me,” she said. “The tourists that go to Disneyland are after souvenirs, not fashion.”
But some smaller centers like The Lab Anti-Mall, a retail-dining-theater complex that contains a dozen youth lifestyle-oriented shops located down the street from South Coast Plaza, welcome the added traffic.
“Even if we get 5 percent [of the 7 million projected visitors], that’s a lot of people,” said Shaheen Sadeghi, the mall’s owner. Evenso, he will not begin targeting them through ads or other promotions, or altering his sales expectations.
“We definitely get lots of foreign tourists who do make the trail down to this area,” Sadeghi said. “But I don’t think anybody in our territories is relying on Disney traffic to survive.”