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Exton Square department-store space is turning Japanese, as mall-entertainment company expands

Japan-based game-center operator Round One Corp. is getting ready to gobble up space in U.S. malls with an appetite like Pac-Man's.

Round One's Philadelphia-area gaming site opens this week. Here, stuffed toys in the "Fun Zone."
Round One's Philadelphia-area gaming site opens this week. Here, stuffed toys in the "Fun Zone."Read moreED HILLE / Staff Photographer

Japan-based game-center operator Round One Corp. is getting ready to gobble up space in U.S. malls with an appetite like Pac-Man's.

Just six years after arriving stateside, the company is poised to bring its combination of bowling, billiards, karaoke, and cutting-edge arcade games to more of America's suburban masses. It opens its 12th U.S. store at Exton Square Mall on Friday, with a target of 10 new stores a year starting in 2017.

"We're still minor compared to the household-name brand we built in Japan," said Shane Kaji, director of business development at Round One's U.S. subsidiary. "It will take until store 30 or 40 or 50 before we're nationally recognized here."

Fueling Round One's ambitions is the ample space left behind in the nation's malls by disappearing and downsizing retailers like Macy's and J.C. Penney - and the eagerness of mall owners to fill that space with crowd-drawing tenants.

Others in the entertainment-center sector looking to expand include Main Event, a subsidiary of Australia's Ardent Leisure Group, and the more-established Dallas-based Dave & Buster's Entertainment Inc., with 87 locations as of early September.

The amount of mall space dedicated to entertainment is still small - 0.6 percent nationwide in 2015 - but shopping-center revenue generated by such uses has grown every year since 2012, according to data from the International Council of Shopping Centers.

"Malls are looking for ways to draw traffic," said Douglas Green, managing principal at the Philadelphia-based brokerage MSC Retail. "In 2016, that's through experiential retail."

Round One was founded in the 1980s, when company president Masahiko Sugino boosted business at a roller rink his father ran in western Japan by filling its free space with arcade games, Kaji said.

Over the years, the concept was refined into the multistory entertainment emporia now found in 113 locations throughout Japan, primarily on roadsides away from the most expensive urban real estate, he said.

Round One's first U.S. store opened in 2010 at a mall in an eastern Los Angeles County area with a large Asian population, which proved a ready market, Kaji said. It was a stroke of luck, he said, as the location was chosen for its cheap rent, rather than its demographics.

The company has since opened stores in Texas, Illinois, Massachusetts, and Washington state, slipping into spaces formerly occupied by downsizing and defunct retailers such as Sports Authority and the apparel discounter Steve & Barry. More locations are coming soon in Colorado and Georgia, in addition to the 58,000-square-foot Exton Square site on the ground floor of what had been a J.C. Penney.

On a recent afternoon at the yet-to-open Exton Round One, employees in red-and-black uniforms were still unpacking boxes and huddling for training sessions. The vast floor of more than 300 arcade-game consoles - many with replica guns to be fired, motorcycles to be mounted, and drums to be pounded - was a cacophony of flashing lights and digital chirps.

The store's cultural roots were on clear display, with plush-doll versions of Japanese animation, or "anime," characters filling the claw crane machines, and text portions of some arcade games appearing untranslated. Plans also call for sake to join the domestic beer and pub snacks at the concession bar.

Charles Stevens, a Lehigh University assistant professor researching East Asian business issues, said such touches could help Round One stand out in an increasingly crowded sector of mall-based entertainment providers.

"A generation grew up on anime, and they grew up on Pokemon, so they might be excited there's a place they can go that has these kinds of things," Stevens said. "If [Round One] just tried to do what the competition is doing, they would probably hit a brick wall pretty quickly."

Joseph Coradino, chief executive of Exton Square owner Pennsylvania Real Estate Investment Trust, said the Japanese flair could draw shoppers from Asian communities beyond the mall area. PREIT also owns Plymouth Meeting Mall, which has a Dave & Buster's and will soon host region's first Legoland Discovery Center.

"Our instincts tell us that [Round One] is a unique kind of tenant that we think is going to do well in this market," Coradino said.

Kaji, meanwhile, said he sees the company appealing to a wider range of ages than other operators, a competitive advantage. "We wanted to be cool while we ensure a safe and fun environment even for kids."

But Randy White, chief executive of White Hutchinson Leisure & Learning Group, a development consultancy focusing on entertainment centers, said the company may struggle to attract customers beyond teens and youngsters. Older visitors might be turned off by Round One's cluttered arcade spaces and sparse dining options.

"More upscale bowling venues are popping up everywhere, a lot of the new ones with major restaurant components," he said. "Round One is kind of an oddball."