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Best of Liz Benston

Gaming Guru

Liz Benston
 

Weak dollar fuels high-end Palazzo retailers' optimism

28 January 2008

LAS VEGAS, Nevada -- Maybe this limited-edition trinket will help take your mind off the crumbling stock market: The new Piaget boutique at Palazzo is selling diamond- and ruby-encrusted, solid white gold dice featuring 1,000 diamonds and 1,000 rubies for $280,000.

At the Cole Haan boutique, a pair of colorfully dyed python skin ballet flats will set you back about $500.

Ferragamo handbags? Those are closer to $1,000.

For visitors from Britain or Japan — home to most visitors to Las Vegas from abroad — there's an added bonus. These high-ticket items are 10 percent to more than 50 percent off what they might have cost a few years ago.

So while luxury retailers warn of lower earnings this year and malls prepare for the worst, Palazzo's high-end retailers — 30 of them new to Las Vegas and some making their international debut — are cheering the weak dollar in a town where an estimated 13 percent of tourists come from overseas.

Rob Kuppens, who operates luggage stores in malls nationwide, is one of them.

Some time ago, Kuppens approached Palazzo mall owner General Growth Properties about launching a higher-end luggage store exclusively selling luxury brands such as Tumi, Ferragamo and Armani.

The resulting Niccolo & Maffeo boutique has opened in the Palazzo.

"For someone who travels every week for business, there's value" in premium bags that can take a beating, said Kuppens, the company's chief financial officer. Leisure travelers also appreciate luxury baggage, he said.

The economic downturn has cut into business somewhat, though Las Vegas' international appeal is a big plus, he said.

"That Tumi bag will cost you a lot less in dollars than it will cost you in yen."

Larry Boland, president of Piaget North America, launched the Swiss company's third U.S. store — after New York City and Palm Beach — with the opening of Palazzo. Most of the company's 50 stores are overseas and familiar to wealthy globe-trotters.

"We're a global brand. So these watches will cost less than those in the Place Vendome in Paris," he said.

Even if the rich feel some psychological, if not real, bite from the economic downturn, the store's location amidst such top-drawer retailers should help seduce them.

"These are some of the best names in fashion and luxury that you can't find in your local mall," Boland said. "People come here to find something special."

The volume of tourists who cycle through Las Vegas every few days is "incredible" and unlike any other urban destination, he added.

Likewise, London designer Anya Hindmarch brings a big following of eco-friendly hipsters in Britain and Japan with the launch at Palazzo of her fifth U.S. boutique.

"People aren't coming here to Las Vegas to save money," Hindmarch representative Ashley Wick said. "Of all of our stores in North America I'd anticipate this to be the best-performing location."

It's not an unfounded expectation.

Retailers at Caesars Palace's Forum Shops mall — the first of the Strip's upscale retail centers — generate more sales per square foot (about $1,600 per square foot in 2007) than stores in any other mall in the country, and many of those boutiques lead sister stores in other cities.

"Las Vegas is such a strong market with high-end luxury brands that they tend to raise the bar in performance," said Maureen Crampton, vice president of marketing at the Forum Shops. "Many other top-tier markets now look at Las Vegas as the numbers to beat."

Retailers such as Cole Haan, which opened in Palazzo with an existing store across the street at Fashion Show Mall, are continuing to open duplicate boutiques because big spenders have ensured that "you can own multiple outlets on the Strip without (cannibalizing) sales," said Dan Sheridan, executive vice president of mall owner General Growth Properties in Las Vegas.

For example, the British shoes and accessories company Jimmy Choo has a boutique at the Venetian — across the street from its Forum Shops location.

The company's chief executive, Joshua Schulman, calls Las Vegas "one of the most important luxury markets in America" that's "only getting stronger."

"In addition to strong international tourism, the market also benefits from an increasingly sophisticated and diverse population of local residents," Schulman said.

For the Palazzo opening, Cole Haan dispatched more than a dozen managers from its New York headquarters to help establish the boutique, which looks like a modern living room with lacquer tables, exotic-print couches, pile rugs and even a fireplace. It's the first store to feature the new look as well as an updated logo for the 79-year-old institution.

General Growth isn't sweating the action just yet.

High-end mall business is "still strong" and the weak dollar presents a newer opportunity, especially in Las Vegas, for international tourism, Sheridan said.

"The international visitor is a big factor," he said. "We don't know how huge that is going to be, though their spending is growing."