1) Escape rooms blossom, but need to evolve beyond a fad to stay alive.

What happened

  • Escape rooms—curated sets where visitors are trapped and must solve puzzles to chart their “escape”—grew from about 24 locations in the U.S. in 2014 to more than 2,300 in 2018. Attracting anyone from teenagers and puzzle aficionados to corporate teams, escape rooms often charge $30 a head.
  • Though the trend began in Japan and Hungary, escape rooms have since come to the U.S. What began as a small business opportunity has since morphed into companies like Puzzle Break, which operates four locations in three cities, as well as escape rooms on Royal Caribbean cruise liners.

Why it matters

  • Back in 2015, when escape room growth peaked, media painted the phenomenon as a scrappy way to “get rich quick”—in truth, some entrepreneurs created their own escape rooms with investments as low as $7,000. But this picture ignores the fact that establishing an escape room—a hybrid of entertainment, theme parks, mental games, team-building activities and retail—requires expertise. When done correctly, these aspects make escape rooms a solid investment in the experience economy—like a stage set, they are designed and decorated to immerse visitors in a foreign environment.
  • For entrepreneurs, escape rooms are a way to sweep up cheap real estate—from former insurance agencies to malls and hospitals—and convert these spaces into anything from a fantastical dungeon to a futuristic laser maze. While there is a huge value proposition in infusing vacant real estate with attractive new opportunities for consumers, turning the escape room phenomenon from a passing fad to a regular retail experience, requires finding ways to evolve the narratives at each location—once a visitor solves the puzzle, what will make her come back again? How can entrepreneurs redesign their space over time? How can they provide a different experience for kids versus corporate teams? What special expertise can they bring to make their escape room stand out? Finding answers to these questions will cement the phenomenon as a long-term destination rather than just a one-time experience.

2) PepsiCo acquires SodaStream, ditching sugar to satisfy consumers.

What happened

  • PepsiCo, owner of brands such as Mountain Dew, Aquafina and Pepsi, struck a $3.2 billion deal with SodaStream—a purveyor of carbonating machines and refillable cylinders that shoppers can use to make their own carbonated beverages. The acquisition will bring PepsiCo into customers’ homes in a new way.

Why it matters

  • The PepsiCo deal marks a necessary shift—soda just doesn’t have the same hold on consumers as it used to. SodaStream currently retails in 80,000 stores internationally, with the biggest markets in Germany, France, Canada and the U.S., where sales are growing and which PepsiCo can take advantage of. Though acquiring SodaStream may in some ways cannibalize the beverage brands central to PepsiCo itself—not only in terms of sugar, but also in terms of bottled water—it’s venturing into the carbonated water category to match consumer interests more closely.
  • The deal also responds to rising competition from other beverage companies, including Keurig Green Mountain, which acquired Dr Pepper Snapple in July, merging Keurig’s single-serve pod business with the massive retail distribution capabilities of Dr Pepper Snapple and giving the companies access to the coffee empire of their parent company, JAB Holding. But SodaStream gives PepsiCo a leg up—Keurig, which once was developing its own in-home carbonated water offering, gave up on the project back in 2016.

3) “Game of Thrones” fans boost tourism in Croatia—a more authentic Disney World with real-world problems.

What happened

  • In the past few years, the city of Dubrovnik, Croatia has witnessed an influx of tourism spurred by devout “Game of Thrones” fans. The number of so-called “set-jetters” has risen so high that 300 TV show-related tours in 2015 grew to 4,500 in 2017—this year, the number has already grown 180%.

Why it matters

  • The genius of set-jetter tourism, a huge part of Dubrovnik’s problem, is that fans can literally embed themselves in the world of their favorite fantasy show—it’s like visiting Disney World, but even more authentic, because it’s a historic city and UNESCO World Heritage site. Tour guides delight fans by dressing up as characters and allowing them to sail around the harbor in a renovated wooden ship that was featured on the show.
  • Consumers are spending more on travel—a trend expected to grow. According to the UN World Tourism Organization, international tourist trips will grow to 1.8 billion by 2030 (up from 1.2 billion in 2016). When it comes to Dubrovnik, the swelling of the tourism industry provided a huge boost to the city’s economy, but it has also engendered a number of problems: overcrowding on streets and in harbors, highly congested traffic and disrespect to local property. Often times, tourists are simply not aware of history of the city, asking “when HBO built Dubrovnik.” Next year, city officials will bar cruise ships from docking at specific times in order to limit the number of people on land. Moving forward, cooperation between tourist agencies, cruise liners and the municipality will be crucial to maintaining a healthy tourism industry in Dubrovnik that excites “Game of Thrones” fans and takes advantage of commercial opportunities, without eroding the city itself, which isn’t only a Hollywood set, but also a place many call home.

4) As some malls flail and some take in unconventional tenants, others invest in bringing consumers the mall of the future.

What happened

  • Taubman Centers Inc., which owns 24 malls, is finishing up a $500 million renovation of its Beverly Center in Los Angeles, expected to open for the 2018 holiday season. The transformation, which takes design, technology and big data into consideration, is bent on turning away from the traditional department-store centric strategy in order to reel in more LA shoppers and tourists—especially those from Asia.

Why it matters

  • With the reality of rising ecommerce, vacant retail real estate and store bankruptcies, any mall that wants to stay afloat needs to make drastic changes. Some are bringing in coworking offices to fill out now-vacant spaces, others are welcoming gyms to sign on to leases once held by legacy retailers.
  • But Taubman’s plan is all about not giving up on malls. Instead, it’s raising the number of luxury tenants on its Beverly Center property, breaking up what used to be Bed, Bath & Beyond into four new food & beverage tenants—higher-end destinations like Eggslut and the organic Mexican restaurant Tocaya Organica—and experience-minded retail, including a Canada Goose store with a 12-degree cold room. After analyzing consumer data, the company also found that personal shoppers and a concierge service are valuable assets to have in house, especially for wealthy foreign consumers who may visit LA to shop, but also want a stylist and courtside seats to a basketball game. The mall also accepts Union Pay, the Chinese international credit card, making shopping at its location more seamless and a one-stop shop.