Macau still shopping for retail sell By Muhammad Cohen
MACAU - In the home of the world's highest casino revenue, non-gaming spending
remains a chancy proposition. With convention business slow to develop and more
than half of Macau's visitors staying for less than a day, shopping provides
the best hope for opening wallets beyond casinos.
To seize this opportunity - and meet government demands to diversify the
economy - Macau's casino resorts have added acres of retail space, most of it
for luxury brands, with mixed results. A handful of stores, such as the Louis
Vuitton at Wynn Macau, reportedly produce enormous sales figures. The more
typical case appears to be the Shoppes at Four Seasons in Cotai, where staff
vastly outnumbering customers, and the Grand Canal Shoppes at
Venetian Macao, mainly a climate-controlled space for residents and tourists to
pass time.
In this situation, developers of two of Macau's less successful casino resorts
have done the illogical, if predictable, thing: add more luxury retail.
One-year-old City of Dreams is doubling its 85,000 square foot shopping
component. Adjacent to the MGM Macau, the One Central complex includes a
400,000 square foot high-end mall. The developers must think it's a good idea.
Dynamic dream
City of Dreams, owned by US-listed Melco Crown Entertainment, has made great
strides since opening in June last year at the head of the Cotai resort area,
opposite the Venetian Macao. Finishing touches absent at the opening, such as
light-box displays of memorabilia in its Hard Rock Hotel lobby (plus more
mementos and great tunes in the Hard Rock Casino) and scalloped walls and
lighting effects in its retail area, dubbed The Boulevard, give the resort a
more dynamic feel.
The complex's 800-room Grand Hyatt Macau, aimed at business travelers and
upscale holidaymakers, opened in September. With it, Melco Crown has three of
the most attractive hotels in Macau, the others being Crown Tower at City of
Dreams and Altira on the north shore of Taipa overlooking downtown Macau, the
latter two geared toward high rollers. In addition to guests, Grand Hyatt
attracted more than 150 events during its first 10 months of operation, with
meeting space for up 2,000 on a far more human scale than the neighboring
Venetian.
The Venetian remains a blessing and a curse to City of Dreams, drawing traffic
to Cotai, but exerting an overwhelming pull on visitors. Streetwalkers, the
ultimate arbiters of foot traffic, pace outside City of Dreams but only on the
path leading to the Venetian. Analysts report City of Dreams attracts 30,000 to
40,000 people a day, but only half enter the casino, and most appear to be
low-end tourists unlikely to spend on luxury goods. City of Dreams visitors try
to get tickets for the free Dragon's Treasure 10-minute multimedia show, make a
quick circuit of The Boulevard, and head for the Venetian, where they tend to
spend more time.
"In today's marketing environment, just having huge corridors of luxury and
branded shops lined up is another out-dated mode of designed-to-fail," said
Felix Ling, managing director of consultancy firm Platform Asia Management
Services. "The huge space at City of Dreams does not have any element that can
hold on to visitors. It lacks the soul of any entertainment hub - great
content."
Walt Power, chief executive of New Cotai, a partner in the long dormant Studio
City Macau project, observed, "You need an identity to be successful in Macau,
you need to be number one in something." Adding more luxury brand stores is
unlikely to change the equation for City of Dreams.
Size matters
Developers believe that One Central is a game changer for Macau retailing. "The
obvious thing is scale," Hongkong Land head of retail David Martin said. "One
Central certainly has the largest luxury stores in Macau." Hongkong Land
co-developed One Central with Shun Tak Holdings. Shun Tak managing director
Pansy Ho is a partner in the adjacent MGM Macau casino resort.
Size matters, according to Martin, because luxury brands have developed the
flagship store concept. Over the past decade luxury brands have extended their
lines, and flagship stores can carry those fragrances, luggage, ties and other
extensions. "People go to Paris to visit the original Chanel store," Martin
said. "Increasingly, brands are looking to recreate a similar experience at
their flagship stores." Unlike hotel outlets or most other Macau malls, One
Central is designed to accommodate these 30,000 square foot multilevel outlets
and can even offer them street visibility.
"The retail format is aimed at a more sophisticated customer. They probably
have enough Louis Vuitton bags, so they are looking for something different,"
Martin explained. "When customers are looking for a wider variety, they'll come
to One Central." He added, "We're keen to build a destination that is a
compelling draw for customers who are falling through the cracks." Martin
suggested it could become "the last Sunday destination" for weekend visitors."
Beyond size, there's the key real estate factor: "This was definitely a prime
location for luxury retail, and no doubt there is a market for luxury retail,"
Martin said. One Central is in the midst of the Macau peninsula casino hub, and
physically linked to MGM Macau. Macau's new Mandarin Oriental, which opened
late last month, is also part of the complex.
"We're looking to team up on advertising and particularly link up with VIP
players," Martin said. Many One Central stores have VIP rooms and are ready to
offer special services such as bringing goods to high rollers' suites or
opening for shopping outside normal hours.
International style, local identity Although One Central targets the
tourist market, Martin said, "It's important for us that we're part of Macau,
physically open to Macau. We're not trying to be Venice or Las Vegas." The mall
frontage on Nam Van Lake presents an opportunity to develop One Central as a
signature downtown venue and create a unique experience for visitors and
residents alike. "There's a lakeside promenade in front of the mall that we're
anxious to develop at a place for activity," Martin said. "We'd love to work
with tourist authorities and other parties to develop that space."
On a recent Saturday afternoon, the mall looked more like a ghost town than a
prime shopping center. "Spending and traffic are not as closely aligned as you
might expect," Martin said, while admitting he's like to see more people
visiting the mall. "Traffic at One Central is not particularly high, but the
people who go there spend, and spend a lot."
He added, "This kind of retail works, the proof is with the brands themselves."
Martin said turnover at stores is "at or above their own expectations" - the
developers collect a base rent against a share of sales - and that some brands
are already matching their Hong Kong sales per square foot. "That's quite
extraordinary given that the Hong Kong stores have been open for 10 to 15
years. It's a pleasantly surprising start and we'd like to build on that going
forward."
Perhaps he's right, but some analysts don't see it that way. "In essence, there
isn't a large enough market for luxury goods and hence, currently such products
are over-catered," Platform Asia's Ling said. "Most of the mainlanders with
purchasing power are now flocking to Japan for luxury goods, not Macau."
"The malls are boring, there's too much of the same," CB Richard Ellis head of
Asian gaming Sean Monaghan observed. "Macau has more Louis Vuittons than
McDonald's."
Developers don't want to admit it, but McDonald's is closer to what many Macau
visitors want.
Macau Business special correspondent and former broadcast news producer Muhammad
Cohen told America's story to the world as a US diplomat and is author
of
Hong Kong On Air,
a novel set during the 1997 handover about television news, love, betrayal,
financial crisis, and cheap lingerie. Follow
Muhammad Cohen's blog for more on the media and Asia, his adopted home.
(Copyright 2010 Asia Times Online Ltd. All rights reserved. Please contact us
for information on
sales, syndication and
republishing.)
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
,
a novel set during the 1997 handover about television news, love, betrayal,
financial crisis, and cheap lingerie. Follow 
