Two Way Hard Three | Las Vegas Casino & Design Blog

December 16, 2011

The purpose of casino retail

Posted by daveschwartz

Why do casinos have shops? After all, every dollar that's spent buying stuff is money that's not spent in the casino. Prompted by a recently-announced closure, I share a few thoughts about what casino shops should do for the rest of the operation...after the jump.

Although you'll find some "experts" who will say that casino retail is a recent phenomenon, casinos and shopping go back a long way. The El Rancho Vegas, the first Strip resort, had a few small shops, including a men's and women's clothes stores and the House of Enchantment gift shop. So, going back to the beginning, if you wanted to buy stuff while you were on vacation, you could do so in the casino.

That makes a lot of sense because people will often bring less with them on vacation than they need, and you don't want them spending hours away from the tables while they tromp around town. So most casinos had at least small retail selections.

As casinos got larger in the 1960s and 1970s, their retail component got larger as well. But it wasn't until 1992, under the direction of Terry Lanni, that a Strip casino went into retail in a big way. The Forum Shops were more than the usual men's store/women's store/jewelry store/sundries store assortment: they were a complete shopping mall and a destination in their own right.

By way of comparison, let's look at Bally's Las Vegas, which opened in 1973 as the MGM Grand and was the final major casino hotel (I'm excepting smaller projects like the Holiday, Barbary Coast, Treasury/San Remo/Hooters here) of the pre-Mirage era. I'd say Bally's is representative of the older model for casino shopping, and it pushes that model to its limits. There's a nice range of shops in that semi-subterranean corridor of "Avenue Shoppes." You've got a magnet store, a Harley Davidson store, shoe store, Marshall Rousso (the ubiquitous casino women's store), leather store, Bijoux Terner (luxury at $10) accessories store, and a nut shop. Because you can never know when you're going to transition from a hot session at the craps table to a yen for some hot honey-roasted peanuts.

You wouldn't mind browsing those shops for a few minutes while waiting for someone to finish gambling (although after a few hours you would), and if you urgently needed a new handbag or pair of shoes, you'd be pretty grateful for them. But nobody, unless they are a completely depraved shopaholic, would make a trip to Bally's Las Vegas for the shopping.

Contrast that with the Forum Shops. More than 160 stores and boutiques along with more than a dozen restaurants. While many of the shops there are ones you can find in virtually any mall in the United States (Abercrombie & Fitch, Gap, The Walking Company), others are harder to find (Ted Baker, James Perse, Judith Lieber). But having that concentration of shopping in one place makes the Forum Shops a destination--it's easy to spend a few hours there.

That boosts the retail component of the casino from an amenity to an attraction. And while not every casino to open since 1992 has focused on retail as an attraction, most have given it some thought. Even when there aren't dozens of shops (Bellagio, Wynn), those shops are chosen with care and designed to add something to the property.

We've all heard that Caesars Palace is, by sales per square foot, the most profitable mall in the country. But it's hard to get accurate statistics that measure retail's financial impact on casinos. The Gaming Control Board lumps retail and entertainment revenues into the "other" category. On the Strip, "other" has risen, since 1999, from 13% to nearly 16% of all casino revenue.

Retail's place in the casino comes most sharply into focus when it fails. In a recent Review-Journal story, we learned that Droog, the Cosmopolitan's oddball furniture store, is closing soon.

Droog (which is Russian for friend, if that makes any sense) sells wildly impractical furniture like a chair you can make yourself by banging out a metal box. It's obscenely expensive (over $7k for a chair made out of rags) and not exactly the kind of thing that you'd expect people to be loading up on as they amble from Bellagio to New York-New York.

If the store was paying its rent, it really didn't matter what they were selling. The effect on the Cosmopolitan's bottom line would be the same. Or would it? As Terry Lanni demonstrated with the Forum Shops, retail can be an attraction in and of itself. You could argue that funky, overpriced, impractical furniture fits in with the hipster art beat vibe the property was shooting for, but, unlike the Art-o-Mat machines, this was both inaccessible and out of reach for 99% of the people who would visit the property, and the one percent who might be able to afford a bookcase that couldn't hold books wouldn't be walking by outside. So outside of filling space with stuff that was mildly amusing to look at, it didn't do anything outside of generate rental income for the property.

It makes sense, when margins are lower across the industry, retail is going to be asked to do more than just pay the rent. I'd say the lack of destination shopping that's within the reach of the average Vegas visitor is also why Crystals doesn't do much for Aria.

What's Droog going to be replaced with? I've already put a few chips on "gourmet popcorn store" (those things are turning up everywhere here), but I could also see it being an Apple Store. Even though they have outlets at the Forum Shops and Town Square, that's a great Strip-front location (provided you open it up), and there's nothing antithetical about iStuff and the curious class that the Cosmopolitan's shooting for. Except for charging $15 a day for wifi, but I digress.


Read archived comments (13 so far)
December 16, 2011 10:46 AM Posted by Eric

An Apple Store would be amazing right there. And you'd get the free wifi from Apple offsetting the $15/day Cosmo wifi.

December 16, 2011 11:14 AM Posted by mike_ch

You forgot Fashion Show, as well. We have three Apple stores. Given that there's usually people asking to assist me when I wander around one, I suspect that Apple probably isn't interested in building a fourth (NYC and London are the only cities with four.)

I'd hope Cosmo doesn't go down that head bangingly simple route, anyhow. The Allsaints store is a nice example: The stuff is a little expensive to someone who buys their clothes at Sam's Club, but not so ungodly by import standards that I couldn't afford a nice looking something at some point.

I don't know about Dave, but I have trouble telling what is reasonable and unreasonable in Strip retail because I can't quite mentally accept the "tourist tax" that comes with them. Just the other day I was in the Mirage to meet Hunter, and went to the sundries shop for a chapstick since it gets so dry in the winter. The chapstick was $4, and where most people would say "oh well, THAT'S VEGAS FOR YA!" but the problem is I can't accept that because I don't see Vegas as this magical wonderland, I see it as this place I go to all of the time. Instead I walked all the way across the Mirage, out the front entrance, down the sidewalk, cross over the bridge to Palazzo, and bought a $1 chapstick from The World's Most Luxurious Walgreens. Then I walked back to where I started for our meet.

Now you might laugh when you consider that I changed resorts for the purposes of saving $3, but I saved $4 the day prior doing something similar, and that starts to add up. Not so much that I would tell the average MGM Grand visitor that there's a Vons if you head east to Maryland that serves a mean turkey sandwich for half the price of Studio Cafe, but enough that I have no real idea of what I'm talking about on the casino retail subject.

December 16, 2011 12:24 PM Posted by Ted Newkirk

First of all, great article. I too wondered who the hell was going to buy anything at Droog. Was the store offering free shipping home? Cosmo is a failure, the curious class showed up and didn't gamble. The hotel appeals to Vegas visitors who want big rooms and a cool view. It isn't exactly stealing away people who would have otherwise visited NYC or San Francisco.

@mike_ch I hate to be dicked around by resort pricing as much as the next guy. I actually have a checklist I use before I leave my house and head to The Strip or Downtown that includes everything from extra bottled water in my car to a cigar to (sometimes) a flask with a little Crown Royale in it and/or an unopened beer to lip balm. All of which are 90% cheaper when bringing them from home. Couple of sips of Crown out of my flask and I just saved $11.

Having said that, when I do forget something, I just pony up. Think about it, you saved $3 on the chapstick (whatever happened to Suzy Chapstick ), you burned up 15-20 minutes of time. Even for a local, time is money. Even more so for a tourist who is spending $10-20 per hour just to be here (airfare-gas/hotel/food costs per waking hour of your visit divided out).

I think an Apple store would be a great fit for Cosmo. Absolutely and just as there are a bunch of Walgreens/CVS on The Strip, you can't have to many Apple stores in that space. (As much as I consider Town Square to be an extension of The Strip, it really doesn't count).

Finally, the Forum Shops is a true destination. I couldn't agree more. It is all I can do (after visiting Case Fuente) to not drop $500 at Tommy Bahama then go to Spago for pizza and spend the rest of the day people watching. The shopping area at Cosmo does not remotely have the same vibe.

Appears they (Cosmo) are losing all of their business across the street:

December 17, 2011 8:30 AM Posted by Hunter

Apple would seem to fit the brand but in a purely practical sense, I'm not sure that space would work.

Apple Stores require a fair bit of back of house/storage space for stock and other uses. I don't know of any other location where they don't have that space in tandem with the retail floor. The DROOG space isn't all that big.

Either way, I think they'd be well advised to get someone like Apple in there - something that appeals to the audience but actually gets people interested - it's prime real estate.

December 18, 2011 2:22 AM Posted by Wrinklebottom

For the wives & girlfriends.

December 18, 2011 6:16 PM Posted by detroit1051

What's the ratio of tourists vs locals at Fashion Show Mall?

The most depressing retail, imo, are the subterranean Star Lane shops at MGM.

December 19, 2011 1:12 AM Posted by Paul Shanahan

I had to make a sales call to the Planet Hollywood restaurant in 1995 ( I sold printing for American Printing in Las Vegas from 1995 to 1998) inside the Forum Shops and I had no idea there was a shopping mall inside Caesars Palace. It was really nice and I was surprised and quite impressed. There were not many shopping malls back then but there was plenty of overpriced "theme" restaurants in Las Vegas like Planet Hollywood, Motown Cafe (in New York New York), All Star Cafe, etc.

December 19, 2011 8:03 AM Posted by jinx

Enjoyed the article. I can see the appeal of an Apple store at Cosmo, although I'm not a fan of their stores in general.

I do think Cosmo needs to find something flashy and if not Apple, something new, more of the same won't help, as there's no reason to visit Cosmo for it, if it's available at Bellagio, Wynn, or Crystals.

From when I first saw Cosmo's shopping area, it put me in the mind of Bally's avenue shops far more then Bellagio or Wynn's integrated shopping. Although they weren't on the same scale as the magnet shop.

I do wonder what the Avenue shops looked like when they first opened, were they all offering junk?

If I was Cosmopolitan, I'd look more to LVS for ideas around shops, while I know there shopping isn't as big a deal as the Forum Shops, the time I've walked through the Canal shops and Palazzo, I've been surprised to see some of the offerings and it would seem to fit the theme Cosmo's aimed for from the start.

December 19, 2011 12:52 PM Posted by musicmansimpson

Toronto proper has 4 Apple stores as well

December 20, 2011 3:23 PM Posted by sbpewsaw

Does anyone know if this is the Droog replacement? It sounds about right judging from the description

"where people can get married on the fly and tourists can gawk at the nuptials. The chapel, adorned in a wall of oversized windows, will be located next to the resort’s Strip entrance with clear views from Las Vegas Boulevard."

December 20, 2011 5:43 PM Posted by Hunter

I wondered the same thing.

December 21, 2011 5:14 AM Posted by Dr.Dave

That article was an even less informative reprinting of the press release than usual. Ugh.

But it sounds like that could be Droog.

I might get accused of a failure of imagination, but I've never had the urge to "gawk at nuptials." Why would I want to watch two people I don't know getting married? Or pretending to get married?

Now, a pop-up divorce court, that could be interesting.

December 21, 2011 11:20 AM Posted by Jeff in OKC

Depending on the bride and groom, I might want to gawk at/in the honeymoon suite.