Luxury brand sales on Las Vegas Strip driven by tourists, millennials

Fragrance brand House of Creed just finished expanding its presence at the Forum Shops at Caesars and executives already have their sights on a second outpost along the Las Vegas Strip.

“We stayed last week at Aria — when you’re over there the likelihood of you shopping and experiencing Creed is very unlikely,” said Thomas Saujet, co-founder and president of International Cosmetics & Perfumes, which manages Creed’s North American operations. “You’re not going to come to Forum, and if you’re at the Forum you’re not going there (to Aria) as well, so I think there’s just so much retail opportunity.” 

Creed and a number of other luxury labels are itching to grow their retail presence in Las Vegas as big spenders among tourists and millennials propel the luxury retail market.

At your service

The global luxury market is expected to grow at a rate of about 4 percent a year and hit roughly $1.5 trillion by 2025, according to a 2019 luxury market report by Boston Consulting Group.

Representatives for Forum Shops, Grand Canal Shoppes and Wynn Plaza all cited the high volume of tourists, particularly international shoppers, as the biggest driver of luxury retail’s growth along the Strip.

Grand Canal Shoppes Senior Marketing Manager Janet Lafevre said more than 90 percent of Grand Canal shoppers are tourists.

“Our luxury retailers really thrive with the international customer that comes in and that’s a real focus for us,” she said.

The average amount spent on shopping by international visitors is significantly higher than other tourists.

Foreign visitors in 2018 spent an average of $296.39 on shopping during their stay, while Southern California visitors spent $138.01 and those from other states spent an average of $206.34, according to the latest visitor profile from the Las Vegas Convention and Visitors Authority.

Another segment pushing the luxury trend are millennials, or those born between 1981 and 1996, who are expected to make up half of the $1.5 trillion luxury market, according to the Boston Consulting Group report.

Millennials are having such an impact that some brands — Louis Vuitton, Gucci and Chanel — are adapting to their preferences, such as a demand for luxury streetwear apparel.

Wynn Las Vegas Senior Vice President of Retail Frank Visconti said last summer’s opening of Off-White — a luxury streetwear brand founded by Louis Vuitton’s menswear artistic director Virgil Abloh — at Wynn Plaza was the center’s way of catering to that fashion-forward crowd willing to spend over $200 for an Off-White graphic T-shirt.

“People dress differently than they did 20 years ago,” Visconti said. “They’ll carry a Chanel bag and wear sneakers, and men will wear Kiton tuxedos with sneakers.”

‘Luxurious fish bowl’

The market for luxury retail is so strong that Creed had to wait two years before a space became available, said Maureen Crampton, director of marketing and business development at Forum Shops.

Creed Director of Stores Luis Cavallo said the brand was bursting at the seams in its former home in front of Tourneau, which he described as a “luxurious fish tank.”

In Forum Shops, Crampton said luxury is a significant contributor to the mall’s success and many brands recently took steps to meet increasing demand.

Gucci, near The Fountain of the Gods, added nearly 2,000 square feet of space, unveiling a renovated 6,217-square-foot store last year.

Neighboring retailer Louis Vuitton also stretched out by spinning off its men’s offerings into a separate 2,702-square-foot store several steps away — making it one of only four independent men’s boutique in the world. It then used the extra space at its existing 6,056-square-foot location to create a dedicated women’s store.

Balenciaga more than tripled its space when it unveiled a re-imagined store late last year, growing to 4,315 square feet.

Visconti said he simply can’t satisfy demand at Wynn Plaza.

“I have 60 stores here and I’m probably not exaggerating that 50 of them would probably like more space,” Visconti said. “It’s rare that someone leaves…when opportunities come up they’re pounced on.”

He said Chanel got lucky when its next-door neighbor vacated. Now, the Parisian brand is undergoing an expansion and is expected to finish its remodel at the end of this year. Visconti added Hermès will also be moving into a space that’s triple the size of its existing store this year. Then, new luxury tenants will be opening up. Balenciaga, at Forum and Crystals, is opening another location at Wynn Plaza by June.

Visitors to the Shops at Crystals can also expect to see some changes, according to Director of Marketing and Business Development Monique Clements.

“While we aren’t ready to make any official announcements at this time, we do have (over) 15 stores remodeling, right-sizing or relocating to new locations in the next 18 months,” Clements said in an email.

Still growing

Saujet said Las Vegas is likely one of the only cities outside of New York where luxury retailers can open multiple locations along the Strip’s roughly four-mile stretch.

“If Chanel can have three stores in Vegas (when) they’re completely not the type of brand that over saturates the market, same thing with Hermès, that means there is definitely room for more than just one boutique — no question,” Saujet said of Creed’s expansion.

Cathy Enderwood of CBRE pointed out rents are likely much cheaper for luxury brands on the Strip compared to New York. It’s unclear what the rates are as hotels handle leasing internally but Enderwood said it’s rumored to be $250 to $300 per square foot, compared to cities like New York where brands can expect to pay well over $1,000 per square foot.

“They probably feel in Las Vegas they’re getting some value and incredible traffic from all over the world,” she said. “Plus, all these brands want to have their physical experience in the store compliment the digital so it brings brand awareness.”

Lafevre of Grand Canal Shoppes noted luxury retailers know how many of their stores a market can support.

“Luxury is typically not looking for department-size stores,” she said. “They’re very particular. It’s a lot of courting (and) we have several luxury tenants that we’re trying to get over the lease line.”

Visconti admits he does worry about the day-to-day sales volume but quickly puts things in context when thinking about retail giants like LVMH, whose portfolio includes Louis Vuitton, Christian Dior and Loewe.

“Bernard Arnault, chairman of LVMH Corp., vacillates between first and second richest man in the world and his business is luxury retail,” he said. “He just acquired Tiffany & Co., so when I start to worry about yesterday’s sales I think to myself, ‘Well…he’s still expanding so I think I’m OK.’”