Thoughts of Macau don’t usually conjure images of luxury, let alone luxury shopping.
All of that has changed with the help of a massive frenzy of casino-building. The Special Administrative Region of China — the only place in China where gambling is legal — is expected to have more than 6 million square feet of new retail space in the next three years.
The projects are grand and the transformation of a sleepy former Portuguese colony impressive — the notion of “build it and they will come” seems appropriate.
Tourist arrivals in Macau jumped 17 percent to 22 million last year compared with the previous year. Of that figure, 12 million were from Mainland China. That number is close to eclipsing Mainland arrivals in Hong Kong — 13.6 million last year — known as a shopping capital in Asia.
While the tourist volume is edging closer to Hong Kong, the spending in Macau is mainly in casinos, and a luxury shopping sector hasn’t developed quite yet, said Anne Ling, Deutsche Bank Regional Sector head of consumer and media research for Asia.
The total value of retail sales grew 20.3 percent in the second quarter of 2006 to 2.5 billion pataca, or $311 million, compared with the same period the previous year, according to retail services provider Colliers International. In that same period, luxury goods, such as watches, clocks and jewelry, saw the strongest growth rate at 55.5 percent.
It does look promising though, as the high-end luxury brands have set up shop and continue to look at other opportunities.
The Wynn Macau opened its doors in early September with a showcase of the highest-end fashion and jewelry brands in its Wynn Esplanade, including Chanel, Christian Dior, Fendi, Giorgio Armani, Louis Vuitton, Prada, Tiffany & Co., Piaget and Bulgari.
Business continues to be very strong at Prada’s Macau shop, equal to a midsized Hong Kong store, said Sebastian Suhl, chief executive officer of the Asia-Pacific region. Prada opened its 2,000-square-foot leather goods store on Sept. 6 during the Wynn Macau Resort grand opening.
High-end leather items are selling well, Suhl said, adding that favorite items include the Nappa Gauffre leather bags group, as well as leopard-print leather bags.
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Leather goods, as well as shoes, watches and jewelry, are doing well at Louis Vuitton, according to a company spokesman. Louis Vuitton’s 2,153-square-foot shop at Wynn is the brand’s second in Macau. The first made its debut at the Mandarin Oriental Macau in 2002.
“With the rapid development in Macau in recent years, the local retail market is expanding and we see high demand on luxury goods not just from the locals, but also the increasing number of travelers from Asia, especially China,” said the Vuitton spokesman. “Macau is a high-potential consumer market.”
Chanel also has opened a shop at the Wynn Esplanade. The 2,700-square-foot shop includes ready-to-wear, watches, accessories, handbags and shoes. Chanel also has a cosmetics counter at the local New Yaohan Department Store and one at the airport.
“At Wynn Resort, new and much higher standards of facilities and comfort have been established,” said a Chanel spokeswoman. “There was a constant flow of people going to the casino on the opening day, making for excellent prospects for the new development and for luxury retailing.”
But that doesn’t mean Chanel is jumping into the market and opening up multiple shops right away.
“We are reviewing the situation constantly” as far as opening new shops is concerned, said the spokeswoman. “It will depend on Macau’s successful transition to becoming the dominant conference and convention center of China, which will attract a new audience that will be coming to Macau not only to gamble, but to spend more time staying at five-star hotels and enjoying other sophisticated facilities.”
Prada plans to open a larger store, about 3,000 square feet, in the Four Seasons on the Cotai Strip, which is connected with the future Venetian Macao.
In addition to leather goods, this shop may carry rtw, as well, Suhl said. Prada is eyeing another shop opening early next year, but details haven’t been confirmed.
The Venetian is expected to open in the second half of this year with 968,000 square feet of retail space on three floors at its Grand Canal Shoppes. The space will include 350 shops and will be twice as big as its sister property in Las Vegas.
Las Vegas Sands will have more than 3 million square feet of retail space on the Cotai Strip. That space includes its Grand Canal Shoppes at The Venetian Macao-Resort-Hotel and the ground floor of the mall at the adjacent Four Seasons Hotel, as well as The Shoppes at The Palazzo as part of The Palazzo Resort Hotel Casino that also will be adjacent to The Venetian.
“Macau currently has about 26 square feet of retail per hotel room compared with more than 300 in Las Vegas,” said a Wynn Macau spokeswoman. “If current projections come to fruition over the next three years, we may expect the amount of retail space per hotel room to become about 180 square feet, well within similar growth and retail development patterns of Las Vegas, where some of the most productive and profitable retail space in the world is located.”
While Macau attracts visitors from around the world, the bulk so far is from Mainland China.
“We have seen an interesting mix” of customers, Suhl said. “Of course, there is a dominant [Mainland Chinese] clientele, but we also see strong potential from the Macanese population.”
Other projects that will have retail spaces include the Crown Macau in the second quarter of this year, Ponte 16 in the Macau Peninsula that’s set to open in June, Wynn Macau’s second phase in the fourth quarter, City of Dreams and Galaxy Cotai Mega Resorts next year and Macau Studio City in 2009.