TheaterXtreme to Launch Retail Stores Nationally, CEO Says

TheaterXtreme Entertainment is set to launch retail stores nationally, CEO Scott Oglum says in a letter to shareholders.

Oglum says TheaterXtreme had a 2,000 percent increase in closing rates, adding that he believes there is a billion-dollar market out there for the company.

That's why TheaterXtreme is continuing its national rollout plan, moving and opening stores in super-regional malls and shopping centers. Just last month, TheaterXtreme announced it signed letters of intent to lease space in malls in Florida and Pennsylvania.

In January, it announced the opening of a store in the East Gate Shopping Complex in Moorestown, N.J.

Oglum says these mall moves may just be the tip of the iceberg. He explains that the Pennsylvania venture results from a relationship with Pennsylvania Real Estate Trust (PEI) and the Florida stores reflect work with Taubman Centers Inc.

Collectively, the two developers probably operate over 100 malls, Oglum estimates. The acceptance among these developers "has opened doors," he adds.

"It can be difficult to get into malls, especially the good ones. We've been able to get our foot into the door of two of these large groups."

Why Malls?

While it's not an ultra-high-end custom installer, TheaterXtreme is, in fact, a custom installer. Specializing in home theaters —- or "movie theaters for the home" as it calls them —- Oglum says the company's room packages start at about $5,000 and always include "the attachments that make everything come together —- the control, the audio, etc."

Traditionally, malls haven't played host to custom service providers, but that may be changing. At least, some malls are changing, according to Shawn Southard of PEI. He explains that some of the malls his company develops are "destination" malls, meaning they're more suited for planned purchases than typical big parking lot malls.

Oglum says many malls seem to be moving away from female-centric design and toward including stores that appeal to men. He points to the popular Bass Pro Shops which are popping up in "different types of malls" across the country.

Oglum says there is a mainstream market for high-performance home theaters and TheaterXtreme is ready to capitalize on it. In setting up shop in malls, "we are profiling a very different, middle-income customer," he says.

By tapping that market, Oglum is "adamant that movie theaters for the home have the potential of being the No. 3 home improvement category" behind kitchen and bath.

"The custom installation group has really focused on the higher end, the top 1 percent, which is about 2 million or 3 million," Oglum says.

"Our demographics show that there are 30 million people out there that haven't been exposed to bringing custom installation into the home."

A big portion of that market, once exposed to custom installation, will recognize home theaters as another home improvement option, according to Oglum. "We're trying to take a lesson from Bose and Apple, which use malls heavily and get more product exposure."

Mall-Ready

Not just any store can operate in a mall, given the heavy volume of demographically diverse traffic. Oglum says TheaterXtreme's sales approach lends itself well to mall customers. "It's based on tours and choreographed demonstrations," he explains, as opposed to an immediate one-on-one system.

It's the same sales approach TheaterXtreme has used in all its stores, regardless of location. The company noticed a pattern that developed. In stores with light traffic, as low as two customers per day, Oglum says TheaterXtreme was converting sales for one out of 10 prospective clients.