MACAU — After weathering a two-year-long downturn, Macau is enjoying the good life once again.
One of the hardest hit regions when Beijing instigated its anti-corruption crackdown in 2014, scattering high-rolling gamblers and their luxury purchases with it, the city by every key metric — tourist visitation, gambling revenue, and retail sales — is on the rise.
Since barely eking out positive data in late 2016, retail sales have ramped up to double-digit, year-over-year growth this year. In the second quarter, citywide sales leapt 24 percent compared to a year ago.
It appears to be paying off handsomely for some companies. In June, DFS opened its eighth boutique in the city, the highest concentration of stores in any single city for the global retailer, which is part of LVMH Moet Hennessy Louis Vuitton.
While a roaring retail trade is nothing new to Macau, this time the uptick in spending is a bit different. In previous years, it was mostly men dropping gasp-inducing amounts on watches and other ultra-luxury items following a big win at the VIP baccarat tables. Now the city has turned toward middle-class tourists, who come to see shows, dine and take in the sights.
It’s a new face for Macau that the government has been pushing in a sustained campaign to shift the city’s appeal from heavy gambling to a lifestyle destination. With authorities limiting the number of gaming tables allowed at new casinos, the six gambling operators have been forced to quickly step up their non-gaming appeal.
The launch of Macao Fashion Week was one of those efforts. Now in its second year, the B2C event created by Sands China kicked off on Oct. 18 with an Emporio Armani show. Organized with Rainbow Group, the influential distributor that first introduced international luxury fashion to the city, the week also will highlight the work of Macanese designer Nuno Lopes.
David Sylvester, executive vice president of global retail at Sands China, which operates multiple malls, said Macau is a strong performer, and that many of the 850 brands it works with consider the city a regional leader. While its original mall in Macau was squarely aimed at the VIP segment, with each subsequent property opening Sands has diversified further into the high street and accessible. Its most recent casino resort, the Parisian, opened in late 2016, targets Millennials with more cutting-edge brands, Sylvester said, adding, “There is something for everyone at every price point.”
Melco Crown Entertainment chief marketing officer Frederic Winckler, who used to hold the same position for Louis Vuitton, said one of the problems Macau has historically seen is an inertia in its fashion offering.
“When you arrive in Macau and you look around you, one of the most amazing things is how static things can be,” he said. “People build big properties and they don’t change and this happens in a world that’s changing — not just every year, not just every month, not just every hour, but today every minute and every second.”
That’s why, when the group’s latest property — the Zaha Hadid-designed Morpheus — opened this summer, a third of its retail space was set aside for pop-ups.
“It’s about bringing a newness and freshness, getting that sense of urgency,” Winckler said. “We will have a lot of product but there will be very little depth, only a few of each. And we want to develop our name so we’re pairing artists with brands to try to get them to produce work together exclusive to us.”
Some brands are still wary of the type of shopper that Macau attracts. Dinesh Tandon, chief executive officer for greater China and Southeast Asia at Theory, which does not operate in Macau, said, “it’s a market driven through a leisure customer, and historically brands focused on accessories have tended to do well there.” Although the brand evaluated and passed on the city before, Tandon said it is something they may revisit in time.
The Hong Kong-Zhuhai-Macau bridge, which will have its official opening marked by Chinese President Xi Jinping on Tuesday, could help with that. One of China’s trophy infrastructure projects and nine years in the making, the bridge will put the three cities within an hour of each other, and integrate the two former colonies further into China proper.
The impact of the bridge is expected to be gradual as the use of it requires special vehicle permits, but the consensus is that it will boost transport links and tourism in the region. And with more visitation to Macau, the more diversified the spender base to draw from.
Oliver Tong, JLL’s head of retail for Macau, believes the city has the right mindset now for balanced growth. “Brands and retailers are taking advantage of this emphasis on family-friendly recreation to embrace lifestyle concepts. We’re seeing a lot of pop-up stores appearing in a market that previously just had high street and mall retail.”
Plus, he points to the multi-billion dollar projects still to come. Next year will bring to market the nearly $5 billion Grand Lisboa Palace, a resort in which 90 percent of the space will be devoted to non-gaming facilities. The complex, slated for a second half of 2019 opening date, will include three hotels, two of which will have fashion link-ups: Palazzo Versace and the first Karl Lagerfeld hotel. Then there’s also Galaxy Macau phases three and four, and the Londoner from Sands China to open by 2020.
“The next two years will be extremely exciting,” Tong said.