High-end retailers along the Strip — think Tiffany, Louis Vuitton and Chanel — are mourning the loss of splurgers — vacationers who reach deeper into their wallets for a big-ticket purchase because that’s one of the frills and thrills of the Vegas escape.
These days, Macy’s is the day’s fancy outing.
And it helps explain why Strip malls are branding down, and a new retail center planned across the street from the $8.5 billion CityCenter and its uber-posh Crystals mall will be anchored by Walgreens.
“The success of high-end luxury retail before the Great Recession was attributed to those who could afford it, and the aspirational consumer who wanted to trade up to luxury,” said Pamela Joy Ring, president of the Ring Retail Advisory in Las Vegas. “Those aspirational people are gone. They are spending within their means and patronizing the middle market.”
Well, it makes sense. So many of us have changed our spending habits, so it makes sense that a number of tourists have, too. Maybe five years ago they would have splurged on a Burberry scarf, but now they just want an "I Got Lucky in Vegas" t-shirt.
But wait, are we over-simplifying this? Is the uber-high-end really dead? Actually, no... Far from it!
The Forum Shops, which kicked off the move to luxury when it opened in 1992, said the upper-end market shouldn’t be written off. It cited recent remodeling and expansion by some of its retailers.
Versace, Gucci and Ermenegildo Zegna have recently expanded their stores, and others that are expanding include Burberry and Cartier.
The Forum Shops reports its sales were up double digits during the first quarter of this year, coming off a down 2009 when sales were about $1,400 per square foot. Even though sales dipped from $1,500 a square foot in 2008, the mall kept its No. 1 ranking in the country. [...]
Crystals’ operators say they are not second-guessing their high-end tenant-mix strategy, even in the face of the recession and competition from other luxury stores in town.
“We leased the building in the worst economic time ever and we know that,” said Farid Matraki, vice president and general manager. “But despite that, we had a mission, and we stayed on course on that mission. We knew we wanted a certain type of client and we pursued (that client).”
“I think our tenants appreciated the strategy as well. You don’t want to put a magnet souvenir store next to a Louis Vuitton.” [...]
“Las Vegas continues to draw high-end customers who enjoy certain dining and shopping,” Hermes USA President and CEO Robert Chavez said, citing high-end domestic and international travelers. “We are very optimistic about the potential upside of our business in Las Vegas.”
Come on, let's face it. High-rollers and big spenders do NOT come here to "save money and be thrifty"... They want the most lavish and extravagant experience of their lives! So as long as those big spenders keep coming back to Vegas to live out their fantasies, I guess there will always be a need for Prada and Chopard.
So where does it all fit in? Diversity. That's it, diversity.
Vegas has all sorts of people coming here for all sorts of different experiences. Some just want $5 blackjack tables, cheap dinner buffets, and that "I Got Lucky in Vegas" t-shirt, while others want private gaming salons, exquisite multi-course haute cuisine dinners, and that perfect Chanel little black dress.
The Strip's retail scene needs all sorts of stores to please all sorts of people. Perhaps the malls were in over their heads packing in the same ol' luxury brands four years ago, but now it would be foolish to completely drop them.
This is probably the key to The Forum Shops' continued success. They have ultra luxurious boutiques, kitschy souvenir shops, and everything in between. They seem to have something to target any tourist stopping by.
This makes me wonder how Crystals can keep going as is. Have they tied themselves too tightly into just one niche (luxury clothing & accessories)? Or are they being smart in sticking with the big spenders who just need to make their regular splurges to keep them afloat? We'll have to wait and see...