As resorts grow, retailers follow

Thursday, July 15, 1999 | 10:58 a.m.

For those who say retail is on the verge of being overbuilt on the Las Vegas Strip, George Connor has three words: Mall of America.

Connor, senior vice president of retail properties for Colliers International, said six locations will house a total of nearly 4 million square feet of new retail on the Strip by the end of 2001.

The scenario is similar to the arrival of the Mall of America to suburban Minneapolis several years ago, Connor said. There, local residents were concerned that the opening of about 4 million square feet of stores on a four-level mall would be overwhelming.

"In their case, the weather was awful and transportation into the city wasn't too good," Connor said. "Compare that to Las Vegas where the weather is great and the transportation is excellent.

"Today the Mall of America is thriving. I'm sure the same will be true in Las Vegas."

Connor offered his assessment to the Las Vegas chapter of the Society for Marketing Professional Services in a lunch meeting Tuesday. He and Terri Powers, senior vice president of leasing and merchandising for TrizecHahn, a mall developer, were panelists on trends in the city's real estate market.

Connor said the first 500,000 square feet of the 4 million is starting to open -- the Canal Shoppes at the Venetian.

Still on the horizon are about 80,000 square feet at the Paris hotel-casino, due to open around Labor Day; the 500,000-square-foot Desert Passage at the New Aladdin hotel-casino opening next year; a 500,000-square-foot expansion at the Forum Shops at Caesars; an expansion of 1 million square feet at the Fashion Show mall; and a 1.3 million-square-foot mall being anchored by Nordstrom between Mandalay Bay and the Luxor hotel-casinos.

That type of square footage would result in $2.8 billion in sales per year and an additional 15,000 new jobs -- the equivalent of opening three or four new resorts.

Connor said existing retail accounts for about $18 billion in sales on the Las Vegas Strip already. The 4-mile corridor has as much retail sales as the entire cities of New York ($13 billion) and San Francisco ($5 billion) combined, he said.

Connor said he doesn't expect the new malls and expansions to have great difficulty filling space because demand is so high.

Waiting lists

There are waiting lists to get into the Forum Shops, and several big-name high-end retailers will have multiple locations on the Strip because they know most tourists won't get to every shopping center and will have to build more than one store to ensure reaching the estimated 36 million tourists who will visit the city within two years.

Desert Passage, the Aladdin project being coordinated by TrizecHahn, already is 75 percent leased a year before opening, Connor said.

Connor said he expects many of the retailers adding or building new stores in Las Vegas will send their most experienced employees to the city because the stakes are so high here.

The Forum Shops are the acknowledged leaders in annual sales per square foot, averaging about $1,300. Connor expects the Desert Passage sales to be nearly as high at $1,200 per square foot. Although the Canal Shoppes at the Venetian got off to a slow start, he expects sales to reach $800 per square foot there.

He said the Venetian's location on the northern end of the new Strip development would prevent the mall from achieving the stellar numbers of the other properties, citing Fashion Show's estimated $500-per-square-foot sales.

But the sales have to be good because retailers are paying top dollar to get into the malls. Connor said the price per square foot ranges from $60 to $300 depending on the size of the store.

Retailers also look at the Strip as a prime location because they've found that shoppers are willing to pay more for products when they travel than they would at home.

Powers said shoppers are willing to spend four to six times as much on their vacation shopping trips than they do at their home stores and "merchandise is rarely returned." Since most of the Strip's shoppers are tourists on vacation, the inventory moves easier at the Strip stores.

Powers said TrizecHahn and other mall developers are closely watching those and other trends to make intelligent decisions on how to build malls that not only have to satisfy customer needs, but entertain them as well.

Enhanced experiences

Enhancing the shopping experience is critical to compete with the online shopper that has discovered the ease of Internet retail, she said.

Powers said malls have to redefine the shopping experience to meet changing customer expectations.

Other trends retailers are seeing:

* Shoppers are drawn to "upscale simplicity." They're looking for brand-name merchandise and will seek out the stores that have what they want at the most affordable price rather than stay loyal to a specific store.

* Health and beauty products are popular. Men and women are shopping more for complexion care and skin treatment products. Desert Passage will devote more than 20,000 square feet to aromatherapy and fragrance lines.

* Shoppers are learning "the joy of not cooking," Powers said. Cooking at home is more of a hobby. Today's shoppers are seeing home meal replacements -- gourmet takeout and comfort food that is easy to prepare. Powers said Desert Passage is responding with 7,000 square feet devoted to packaged gourmet foods.

* More store space is being dedicated to "fashion for the home." Items that make life easier at home or make a home more livable are continuing to increase in popularity at the malls, Powers said.

Powers said shoppers at Desert Passage will find many of the stores at their hometown malls -- but they'll be more inclined to buy from the Strip location because they're on vacation.