Apparel Group, a huge retail fashion conglomerate, signed a franchise agreement to open 25 new Sandbox VR locations by 2028 across the Middle East region. In addition to 2200 retail and fashion stores across 85 brands, Apparel Group operate a Sky Zone Trampoline Park in Dubai.

Sandbox VR has 46 locations, opening about one a month for the last year and a half. Following their smash hit Squid Game Virtual, they just released their newest Netflix collaboration, Rebel Moon, exclusively in their London, UK location to celebrate the launch of Zack Snyders second film in the series, The Scargiver.

Sandbox VR’s partnership with Apparel Group is a response to the challenges retailers face. Mall developers are increasing the mix of entertainment in relation to retail as a means to staying relevant as online shopping continues to grow. Before the pandemic, Westfield invested in The VOID in an attempt to draw a younger audience to their malls.

It worked out for Westfield as research showed that most patrons of The VOID had never been to a Westfield Mall. However, it created a challenging operating environment for The VOID. As a low-volume attraction (relative to mall traffic), they were paying premium rents yet still faced high customer acquisition cost. Ultimately The VOID went bankrupt under cover of the pandemic.

In 1991, Edison Brothers, then the largest mall retail store operator in the US, launched its mall entertainment division. They acquired a fledgling 2-store arcade chain called Dave and Busters, built large anchor entertainment centers called Exhilirama, and installed Laser Storm laser tag arenas with Virtuality VR arcade centers in malls across America.

The partnership between Sandbox and Apparel Group is just the latest in a long line of mall retailers looking to expand into entertainment. History shows this is a challenging transition. While entertainment, especially VR, with a low cost of goods sold, looks attractive, the operational models can prove a challenging transition. This deal is more like Edison Brothers than The VOID, as it combines experienced operators with an existing franchisor. If Apparel Group can succeed with Sandbox VR in the Middle East, watch for more retailers to enter the location-based VR business.

For 7 Reasons The VOID failed, check out this deep dive article

Thanks for reading the first edition of Inside. If you have comments, suggestions, or other feedback, let me know by sending an email to news@thevrcollective.com.

[Read the press release on Yahoo Finance]