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Las Vegas goes luxury as high-end boutiques proliferate the Strip

SHARE Las Vegas goes luxury as high-end boutiques proliferate the Strip

LAS VEGAS — When the doors to The Forum Shops at Caesars Palace were poised to open for the first time in May 1992, some questioned whether a mall of luxury boutiques would succeed on the Las Vegas Strip.

Maureen Crampton, the mall's marketing director, heard the skeptics and remembers waiting expectantly behind closed doors and thinking to herself, "I do hope somebody is on the other side."

Crampton need not have worried.

More than a decade later, The Forum Shops is one of the most successful retail centers in the country, and high-end shopping is one of the lures that has helped transform Las Vegas from a one-stop gambling spot into an ultra-luxe destination.

Gucci, Prada and Dior are now neighbors along a gilded stretch of the Bellagio hotel-casino. Neiman Marcus, Saks Fifth Avenue and Nordstrom anchor the expansive Fashion Show mall farther down the Strip. And boutiques like Burberry, Mikimoto and Jimmy Choo dot The Venetian landscape inside the Grand Canal Shoppes.

"Shopping has become an incredible part of the allure of Las Vegas," said Hal Rothman, Las Vegas historian and author.

So much so that shopping tends to be a top draw for the 36 million tourists who visit each year. A survey conducted this summer by MRC Group Research Institute found visitors to Las Vegas shopped (63 percent) only slightly less than they gambled (69 percent).

A visitors profile estimates tourists spent something on the order of $2.9 billion shopping last year.

It wasn't always that way. Gambling defined Las Vegas.

But when Atlantic City began competing for gamblers and Indian tribes started building casinos, Las Vegas realized that changes were needed. Casino executives discovered that allowing customers to wander away from the gambling floor might be good for business — as long as they kept spending their money with the hotel property.

Casino hotels became resort destinations, where guests can pamper themselves with a $165 specialty facial, dine on a $60 Kobe beef burger and buy a $1,570 Christian Dior handbag without ever going across the street. Cheap buffets and souvenir kitsch are the rarity, not the norm.

"Competition for gaming dollars has done us more good than harm," Gov. Kenny Guinn told the 20th annual Governor's Conference on Tourism earlier this month. "It gave us cause to develop adventure shopping, fine dining and other amenities."

Keith Schwer, director of the Center for Business and Economic Research at the University of Nevada, Las Vegas, said attached retail areas makes sense.

"If you have millions of people visiting, walking by, all you have to do is capture a small percentage of them to be profitable," Schwer said.

A three-story spiral escalator whisks customers high above the Italian marble flooring at The Forum Shops at Caesars Palace, which recently expanded to encompass 685,000 square feet and make room for such luxury staples as Harry Winston, Pucci and Celine.

The Roman-themed mall is such a financial success that at the end of October, its average annual sales reached $1,471 per square foot. That crushes the national average of $345 per square foot in 2003, according to industry statistics.

Crampton credits the mall's sales to extensive research before the 1992 opening.

Researchers discovered Las Vegas had a strong, affluent local customer base, along with an influx of tourists who were fashion-savvy and willing to spend on luxury brand-name goods, said Crampton, who works for Simon Property Group, which owns and manages The Forum Shops.

At the Via Bellagio, which opened in October 1998, an affluent tourist roaming the resort's 50,000-square-foot shopping enclave can select a $550 silk Hermes scarf before walking a leisurely few steps to buy a purple python Gucci bag for $2,650.

"It was certainly taking a chance at the time we conceived (of Via Bellagio)," said Frank Visconti, president of MGM Mirage retail, which oversees the center. "It turned out to be a very good business decision. The productivity level has been wonderful."

Visconti declined to release sales figures, citing confidentiality clauses with retailers, but said hotel executives are pleased with the center's ability to keep casino customers on property. To that end, purchases can conveniently be charged to guests' hotel rooms.

"We want our customers to have everything they want here, whether it's food or shopping or a fabulous nightclub," Visconti said.

The Grand Canal Shoppes, which was recently sold by The Venetian hotel-casino to General Growth Properties Inc. for $766 million, spans 500,000 square feet and pulls in just under $1,100 in average annual sales per square foot.

"In many markets, if we have $300 a square foot, we are very, very happy," said Dan Sheridan, executive vice president of General Growth, which owns or manages 225 malls nationwide. "$1,100 is outstanding."

General Growth's other Las Vegas mall, Fashion Show, reports average annual sales of $550 per square foot and encompasses 1.9 million square feet of retail space.

When the Wynn Las Vegas resort opens next year, the luxury hotel-casino by industry maverick Steve Wynn will have the Strip's first car dealership — Maserati and Ferrari, of course.

Shops already lined up for the Wynn resort include Louis Vuitton, Manolo Blahnik, Cartier, Jean Paul Gaultier and only the third Oscar de la Renta boutique in the United States.

For Alex Bolen, chief executive of Oscar de la Renta, the decision to open a store in Las Vegas was simple. The clothier wanted to build on already brisk sales of its merchandise available inside luxury department stores at the Fashion Show mall.

Bolen said Las Vegas is a viable destination for luxury retailers because of its large number of visitors, particularly those 21 percent with household incomes of $80,000 or more.

"We're looking for high-volume shopping areas with an affluent, tourist-oriented customer base, where we can not only do a brisk business but also gain substantial exposure," Bolen said. The 9 percent who are also international visitors are a boon to the company, which wants to build name recognition as it plans for global expansion, he said.

Pam Danziger, president of New York-based Unity Marketing who studies consumers of luxury items, said several factors, including accessibility, have helped propel Las Vegas into the top tier of U.S. shopping destinations, behind such Meccas as New York and Beverly Hills.

The retail space tends to be highly concentrated in Las Vegas, allowing visitors to wander in and out of stores in air-conditioned comfort. There's no inclement weather of a Manhattan winter to endure.

And the doors are always wide open and welcoming to tourists and other casually dressed shoppers, as opposed to the exclusivity of Rodeo Drive.

Leaving Tiffany & Co. at Via Bellagio with gifts in hand, Kyle Sprague had a sense of the haughty within the world of haute couture.

Dressed in baggy jeans, sweat shirt and sneakers, the 41-year-old Las Vegas resident said he and his friend could never have walked into the fine jeweler's Beverly Hills location in "hip-hop" style.

"If we would have walked in the way we're dressed," Sprague said, "they would have stopped us at the door."