Published Wednesday, Aug. 9, 2017 | 2 a.m.
Updated Wednesday, Aug. 9, 2017 | 3:56 p.m.
Recent headlines, "The slow death of the retail industry ... ” and “What in the world is causing the retail meltdown of 2017?” reflect the harrowing state of the retail industry in the online shopping age.
According to The New York Times, the number of store closings in the U.S. this year will be greater than in 2008, the height of the recession, even though consumer confidence is higher and unemployment is lower. But on the Strip, retail centers are opening, not closing. Specifically, Wynn Resorts is building 75,000 square feet of high-end shopping across the street from the Fashion Show.
While one development is hardly a boom, the added space, along with the aforementioned deals, reveals a confidence about retail on the Strip not found elsewhere.
One reason for the difference may be that Las Vegas is naturally ahead of the curve in one of the industry’s major trends — the shift to experiential retail.
The incredible ease of online shopping means simply having a collection of stores isn’t enough to get people off the couch. So to attract visitors, retail developments must create an overall experience by adding more dining, entertainment and sometimes even residential offerings.
According to one expert, malls with these features are the only ones being built. “The (malls) that are getting done are experiential,” said J. Rogers Kniffen, a retail analyst and consultant.
Las Vegas has been creating experiences — gambling, food and entertainment — since the opening of the Flamingo in 1946, if not before. And in more recent years, it’s done the same for retail.
The Forum Shops at Caesars, which opened in 1992, is a good example. With animated fountains and a ceiling with a faux sky, it seemed like an extension of Caesars Palace and has enjoyed steady success.
“The experiential aspect of the Forum Shops has really been key,” said Maureen Crampton, director of marketing and business development at the Forum Shops. “It speaks volumes to our success over the last 25 years that it has been and continues to be a key destination when people visit Las Vegas.”
Another example is Grand Canal Shoppes in the Venetian, where tourists can float past restaurants and stores in gondolas. But a mall attached to a casino can be considered experiential even if it lacks fountains or singing gondoliers.
In Vegas, retail is typically thought of as an amenity that attracts gamblers to resorts. But it also works the other way around. Gaming, convention, dining and entertainment features help bring shoppers to stores.
“One of the things real estate people say is ‘density cures all problems.’ In our case, tourism growth cures most of the problems,” said Matt Bear, a retail expert and vice president at the commercial real estate firm CBRE.
It’s why pedestrian traffic to and from casinos often winds through a retail area in the same way theme park rides frequently end in souvenir shops.
Brian Robison, general manager of the Shoppes at Mandalay Place, may have one of the best examples of this: His mall is on a sky bridge between the Luxor and Mandalay Bay.
“The benefit to the Shoppes at Mandalay Place is it’s the only center in Las Vegas that connects two primary resorts,” he said.
Caesars Entertainment might have something to say about that; it has retail space in the space between Paris Las Vegas and Bally’s Las Vegas.
And you’ll also find shopping areas placed between the pedestrian entrances of casinos and the sidewalks of the Strip. One example is the mall between the Bellagio and the intersection of Flamingo Road and the Strip. Another is the Miracle Mile Shops, which has an entrance between Planet Hollywood and the intersection of Harmon Avenue and the Strip.
Another experiential advantage Las Vegas retail has is the wide variety of shops, some of which are only found in higher-end retail districts of major, sometimes international, cities.
The Forum Shops, Crampton said, boasts stores not available in other cities. And the shops that do have locations elsewhere are often built and operated differently in Las Vegas
“When we talk to those brands about doing business here, whether it’s their store design or buildout or merchandise mix, it might be different in Las Vegas than it might be in another city,” she said.
This means retail on the Strip often has an aspirational quality to match tourists’ expectations of a Vegas vacation.
“When people come here, they have a different attitude,” Crampton said. “Their worries are kind of gone for the weekend and they are willing to spend a little more money, to live it up and spend a little bit more or eat a little bit more.”
Bear agreed. “Whenever you’re here, you are slightly different than what you are when you are at home.” But, he added, it’s easy to take the aspirational theory too far.
“All of that, the aspirational aspect, is true,” he said. “With that being said, there are two Ross Dress for Less (stores) on the Strip, and there’s one of those in every city in America. So, yes, you will be different here. But you won’t be wholly different. And also it’s more fun to shop on vacation. That’s just a fact.”
So shopping on the Strip is ahead of the retail curve and may be immune to the brick-and-mortar retail downturn. But is there too much confidence? Will the success continue after the Wynn’s mall opens or if more retail is built, say, in front of Caesars Palace, as Caesars executives have hinted in earnings calls?
Michael Fisk, head of strategic transactions in the Americas for TH Real Estate, which has ownership stakes in the Fashion Show, the Grand Canal Shoppes and Town Square, believes it will.
In the past, Fisk has expressed concern that a large new development, like a new mall on the (former New Frontier) site of the Alon project, might cannibalize tenants from other stores. But, overall, he says Strip retail is not overbuilt.
“I don’t think so,” he said. “It’s competitive, but with over 40 million visitors annually there is a new group of customers coming in every three or four days.”
For Crampton and Robison, overbuilding is not a concern. Both think any new additional Strip retail development will add to Las Vegas’ appeal and drive more business.
Bear, however, says the only sure way to know if an area has too much retail is when it’s obvious there’s too much retail.
“It’s like everything else,” he said. “Everyone’s kind of right and everyone is kind of wrong, and we’ll only find out when it’s too late.”
Las Vegas Sun extra: More with Brian Robison
Brian Robison is the general manager of the Shoppes at Mandalay Place, the mall located on a sky bridge between Mandalay Bay and the Luxor.
His experience in managing the Shoppes, which has 43 tenants and opened in December 2003, reveals much about how retail operates on the Strip.
Tourists shop close to their hotels
Robison said according to traffic studies his company has conducted, Las Vegas visitors tend to shop near to where they stay, even if they visit other retail on the Strip. “They are very location-centric,” he said.
But casino attractions do help to pull in other shoppers
“Fortunately, we pull people down that want to see the Mandalay Beach and the Shark Reef and what’s good is so many people have to walk through the Shoppes to get there,” Robison said.
Still, you can’t take customers for granted
Even with the Shark Reef and two hotels within short walking distance, Robison doesn’t take the customer base for granted. He’s made sure the Shoppes aren’t just another mall.
“We have lot of unique individual stores that have not been replicated elsewhere in Las Vegas — or, if they have, at least in small numbers,” he said. You won’t find a Gap or a Bed Bath and Beyond. Instead, you’ll see Ron Jon Surf Shop and Chapel hats.
And you should have something for everyone
“We try to satisfy everyone, from the convention attendee to the leisure traveler to the business traveler to the casino customer,” he said. “They can all find something in the Shoppes that they have an interest in.”
But Robison isn’t worried about too much competition
“In my mind, and having been here for number of years, every addition made to the Strip creates additional synergy,” he said. “I don’t think there’s any danger to adding extra retail.”