I have served on the UCLA faculty for five years. During this time, retail stores in Westwood Village continue to close. This trend hurts UCLA and surprises long time residents. They recall the good old days when Westwood Village was a more vibrant shopping area. Today, its restaurants and movie theaters are shutting down.
Fortunately, today when I was walking to the local Starbucks in Westwood Village --- I saw the movie theater next to the Starbucks being proactive. It had a sign up that said; "For $10 per year, UCLA students can have their popcorn bucket refilled each time for free when they attend a movie." Such bundled incentives could save Westwood! Given the close proximity betweeen UCLA and Westwood Village, it is surprising how few students I see in this Village. This new incentive program could generate extra revenue for the movie theater through a couple of different pathways.
First, some students may believe that they will attend multiple movies over the year but instead just attend one and pay $10 for the popcorn. This "overpaying" will help the movie theater.
Now, imagine a different case in which the student says to herself; "I had planned to attend X movies per year at this theater but I do like popcorn and if I pay the $10 upfront, I face a zero marginal cost for future buckets."
If this student now attends X+Y movies at this theater then the theater owner now collects extra revenue = 9*Y + 10 - Y*(cost of popcorn). I'm assuming that the UCLA student pays $9 per movie. If the student watches more movies because the popcorn is "free" , then profits will be even higher.
This sort of creative incentive schemes is exactly what Westwood Village stores need to try out to generate new business. Today, there are too many empty stores and this creates a "ghost town" in my local area. Real estate owners need to drop retail rents so that these stores will be occupied and Westwood Village's vitality can rise again.
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