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LAS VEGAS — Trevi Fountain water flows under a blue sky with clouds that seem airbrushed to near perfection. There are gilded marble columns and, of course, tourists who put down their Louis Vuitton, Chanel and Neiman Marcus shopping bags for a moment to snap pictures — of Elvis impersonators.

That’s right, this isn’t Rome. Welcome to the new and expanded $140 million The Forum Shops at Caesars Palace, set to open on Friday, where commerce, couture and camp intersect.

The 175,000-square-foot addition to the existing 510,000 square feet of retail space is more than just a new attraction for a city whose visitors and residents stroll by the desert versions of the Eiffel Tower, the Statue of Liberty, a Venetian palazzo and a pirate ship, not to mention the Trevi Fountain.

The project, owned by Simon Property Group, the biggest U.S. developer and manager of retail space, is the latest incarnation of Las Vegas as a growing retail powerhouse that is challenging Los Angeles for dominance in the western U.S. and promoting the transformation of the gambling mecca from Sin City to Shopping City.

“Vegas used to be a cheap place to get away, but not anymore,’’ said Art Jimenez, a sales executive at Las Vegas Convention and Visitors Authority who heads the Shop Las Vegas program. “We’re coming into our own right now and finally earning our share of the pie. The number-one reason five years ago for people to come to Vegas was gambling, now it’s third” behind entertainment and shopping.

Buoyed by almost 36 million domestic and international tourists who visit almost as much for the bling as the bets and shows — each spent about $139 on retail items in 2003 — developers such as Simon Property and resort mogul Steve Wynn are upping the ante on retail. Overall, there are $6.2 billion in retailing and entertainment projects under way in the nation’s fastest-growing city, which is increasing its population at a rate of 7 percent annually, the Las Vegas convention and visitors group said. The Las Vegas metro area has more than 1.6 million people.

The existing Forum Shops average sales of $1,433 a square foot, the highest in the U.S., and the latest phase is anticipated to do at least as well, said Maureen Crampton, a spokeswoman for Simon Property.

This story first appeared in the October 20, 2004 issue of WWD. Subscribe Today.

The new project features 60 luxury retailers, including Harry Winston, Baccarat, Carolina Herrera, Scoop NY, Celine, Pucci and Kate Spade. It is one of at least a half-dozen developments enticing luxury retailers to establish full-line stores in Las Vegas. Some, such as Juicy Couture and Ted Baker, are making their West Coast debut here instead of L.A. Christian Dior, while located in the existing Forum wing, is also opening a renovated door this week, which, at three times its previous size, will feature ready-to-wear.

Still, every empire has weaknesses. And for the Forum Shops and other retailers in Las Vegas, the strength of the tourist dollar may also be the greatest vulnerability in a era of terrorism and economic anxiety.

“In an optimistic vein, it will continue to be strong as long as the economy is strong and we’re living in a safe world where people can continue to travel — those things will continue to be key,” Crampton said.

Sharing the spotlight with Caesars Forum Shops as a much anticipated opening is resort mogul Steve Wynn’s new Wynn Las Vegas Resort and Country Club, slated to open in April. The $2.7 billion property, which sits on the site of the demolished Desert Inn — one of the Sixties haunts of Frank Sinatra’s famed Rat Pack — is being promoted as the most expensive resort project in the world and the signature showpiece for the developer behind the Golden Nugget, Mirage, Treasure Island and Bellagio.

Wynn, who sold his Mirage Resorts Ltd. in 2000 to the MGM group for $6.4 billion, plans to raise the luxury competition. His retail concept will feature Maserati and Ferrari dealerships, as well as the second U.S. Manolo Blahnik store, an Oscar de la Renta unit and stores from Jo Malone, Louis Vuitton, Chanel and more.

Wynn declined to comment.

Among the other projects under construction is the $1.6 billion, 53-floor Palazzo resort, which is owned by developer Sheldon Adelson. It will offer about 300,000 square feet of retail space.

Retail development is “booming,” said Zack Hussein, an associate at CB Richard Ellis, which handles retail real estate deals in the city. He said the 3.6 percent retail vacancy rate is its lowest ever.

That wasn’t always the case. When Caesars opened the initial wing of the Forum Shops in 1992, it was the first shopping venue at a casino, and there was concern about whether the project would succeed. That anxiety quickly dissipated.

“Some stores literally ran out of inventory when we first opened,” Crampton said. “The Express store and Warner Bros. called frantic because they were running out of inventory and shopping bags. It was a phenomenal occurrence.”

Sales at the end of the first year reached $1,000 a square foot, and phase two of the shops opened in 1997, adding 35 retailers.

Paul Griffin, U.S. retail manager for the hip, country club-chic British contemporary line Ted Baker, said that the move to Las Vegas is almost a no-brainer.

“I think Vegas has evolved over the last few years,’’ he said. “It’s much more of an entertainment center now. From a brand-building point of view, if you’re serious about having a global presence, then you have to have a location in Vegas.”

This will be the fifth location for the line, which already has a California presence in San Jose and San Francisco, but none in L.A.

Retailer Scoop is establishing its first West Coast location in Vegas.

“L.A. has the best boutiques in the country — Tracey Ross, Ron Herman, Planet Blue, Fred Segal Flair,” said Stefani Greenfield, co-owner of Scoop, which also has stores in New York and Greenwich, Conn. “Vegas is giving us a West Coast presence without putting us in the same gene pool as my friends and the people I admire and who inspire me.”

Juicy Couture co-founder Pam Skaist-Levy echoed that sentiment.

“We really feel like Ron Herman at Fred Segal is our L.A. store and we feel like if we open, it would hurt Ron Herman and Fred Segal,” she said. “We feel very strongly about that and we are extremely loyal and love the people who gave us a leg up when we began.”

Juicy Couture’s store in Las Vegas “was a way to try the Juicy concept and still be successful and to showcase the full collection the way Gela [co-founder Taylor] and I see it,” Skaist-Levy said.

Asked whether L.A. eventually would be the site of a Juicy Couture flagship, Skaist-Levy said that a flagship of any kind was a few years away, and that New York was high on the list.

Flagship or not, retailers view Las Vegas as prime territory.

“We see it as an a door,” said Kate Spade president Robin Merino. Kate Spade operates 13 full-line stores, one Jack Spade store and the original unit on Manhattan’s Thompson Street. The success of those has prompted the company to accelerate its rollout. “We have exceeded our financial projection in every store opened and they were established aggressively,” Merino said.

About 80 percent of the customers at the existing Forum Shops are tourists, and 40 percent of them are international customers, according to retailers. Twenty-five percent of the international customers are from the Pacific Rim and spend three to five times the amount of the average domestic customer.

The opulent Forum Shops at Caesars used 65,000 square feet of marble tile and 10,500 cubic yards of concrete. Its 104-foot-high skylight bathes the structure in natural light, and it is only the second location in the U.S. to have a spiral escalator.

The natural light was key for jeweler Harry Winston, which has a more than 1,000-square-foot store done in Sycamore wood.

“It’s very important to see jewelry in natural sunlight,” said company president James Seuss.

Courting the local consumer and stressing convenience also is important, say retailers such as Seuss and Talulah G’s Meital Grantz, who owns locations in Las Vegas’ Fashion Show Mall and in suburban Summerlin, Nev., and will soon open her biggest location at Fashion Island Mall in Newport, Calif.

“Vegas has a wonderful core domestic tourist business and the local market is growing,” said Seuss, who noted that one indication of the area’s retail expansion has been the increase of charity functions. Local customers are “very important to us,” he said.

“The fact that the Forum Shops is expanding this way, with Scoop coming out, etc., really puts Las Vegas on the map in terms of fashion,” Grantz said. “I’m excited to go the Juicy store and Chrome Hearts store, but am I going to go there to pick up a top or sweater or something for an outfit I want that night? Probably not.”

Convenience was a major consideration for the Forum Shops, which has designated limousine and valet areas to help make shopping easier. “Let’s face it — we know we shop out of convenience, and we were watching that closely,” Crampton said.

And the aura of escapism that Las Vegas represents entices retailers as well as customers.

“It’s not a real city,’’ said shoe designer Giuseppe Zanotti, who is opening his first West Coast location at the Forum shops. “It’s a dream city and the same goes for my creations. If you think about Vegas 10 years ago and today, it’s just as unbelievable.”