ffer the intimidating figures of a retail market exploding online and offline in every measure calculable, but it is Macau which appears the most sublime. It’s nearly a decade since Inside Retail was taken to a large plot of newly reclaimed land linking two former islands, Taipa and Coloane, dubbed the Cotai Strip (in deference to the Las Vegas Strip). A row of cranes stood in the midst of a giant dust bowl. Seven years ago, the massive Venetian Macau opened, a recreation of the Venetian Las Vegas complex, only bigger; the first of a series of themed hotels, casinos, shopping malls and entertainment complexes, literally the execution of a dream of billionaire owner, Sheldon Adelson. Before then, Macau, a special administrative region of China with a population of just 650,000 and an unemployment rate of just 1.9 per cent, offered less retail sophistication than Humpty Doo. When it first opened, The Shoppes at the Venetian Macau mall wowed, with towering internal facades, expansive artificial blue skies, and meandering streams with Venetian gondolas helmed by singing gondoliers. But the retail execution felt strained, the tenant mix more reflective of who would sign up to an unproven, potentially risky commercial proposition than a who’s who of brands. Having never had a shopping centre before, Macau now had 1 million sqft of duty free retailing, with 330 tenants ranging from luxury to convenience. Adelson’s mantra was ‘Build it and they’ll come’. And the people came. Fast forward to November 2014 and Macau is most likely the world’s fastest growing retail destination. The Venetian has an entirely new tenant mix – established brands we all know, and names we’ve never heard of – and they’re trading their socks off. Sands, Adelson’s listed casino, retail, and hotel operator, which dominates the Cotai Strip, now has three interconnected malls and a fourth under construction. The Venetian mall has been joined by a luxury precinct beneath the neighbouring Four Seasons Hotel and another newer centre across the road, Shoppes at Cotai Central. They’re all thriving. So much so that rival operators are developing their own mall offer and Sands will soon face intense competition for a slice of the retail pie, albeit a fast growing pie. Figures released last week show tenant sales per sqft reached US$6399 in the 260,000sqft Four Seasons luxury retail precinct, and $2289 overall in the three Macau properties. That’s considerably higher than Sands’ Singapore flagship at Marina Bay, where tenant sales average $1423 psqft. Gross revenues from tenants on Macao’s Cotai Strip and Marina Bay rose 17.6 per cent year on year, to $149.5 million, and Sands Retail’s operating profit rose 19.6 per cent year on year, to $131.9 million. Retail sales rose 27 per cent in 2012; 38 per cent in 2013; and 21 per cent in the first half of this year. Malls which seemed empty when I last visited three years ago are now thriving, and the people inside are all carrying shopping bags – they’re not just browsers. More shopping Now Sands has a new project on the boil – The Parisian, another integrated resort with gaming, accommodation, entertainment, and shopping. The US$5 billion project will feature a half size replica of the Eiffel Tower and 320,000sqft of retail, housing 150 boutiques grouped in replicas of five famous shopping precincts of Paris, including the Champs Elysees and Rue du Faubourg Saint Honore,as well as 3000 hotel rooms. It won’t open until the second quarter of 2016, but the retail space is already 85 per cent leased. Macao is unashamedly focusing on Chinese tourists to turn its profits – they like to gamble, eat, and shop, and the Cotai Strip offers all of this in an entirely self contained, air conditioned network of massive buildings. Nine out of 10 customers come from China’s mainland. A Sands executive informally and candidly told the Westfield Study Tour group that while Australians might find themed resorts and retail precincts copying historic world cities kitsch, the Chinese love it. “Our customers, they want to escape. It’s what they want. “Forty three per cent of Chinese luxury consumers say they want to visit Paris. So we’re going to replicate Paris in Macau. The next favourite destination is Venice, and we’ve already got that.” Sands may have first to market advantage in Macau retailing, but it is well aware serious competition is on the way. The rival Galaxy resort under construction next door to the Venetian will span 1 million sqft, another 500,000sqft is being built at another resort, and Wynn’s has a small, but established, luxury retail offer in downtown Macau. Just 5000sqm of retail space generates US$1 billion in sales annually. A larger mall will also be built nearby and One Central is under construction in Macau central, yet more is in planning. Macau is now by far the world’s largest gaming hub, accounting for some seven times the turnover of Las Vegas, but China’s war on corruption, a downturn in tourism, and slowing economic growth are dampening the urge to wager. Revenues fell a record 23 per cent in October, the fifth consecutive monthly decline. Gambling is illegal in China, and so is advertising it. The mainland government has no appetite to allow casinos outside Macau – a common view being it is easy to control in the tiny 36 sqkm territory. A $10.7 billion 50km long bridge and tunnel link under construction will cut travel time between Hong Kong and Macau from an hour by ferry to 20 minutes by road when it opens in 2017. Another $30 billion is being spent on a high speed rail link which make Macau reachable in just six hours from Beijing. Both projects prove China is not moving to discourage its people from travelling there. But it has warned casino operators that it will be looking for evidence of non-gaming activities when casino licences come up for review in 2022. “So there is a lot of focus on theme parks and other non-gaming activities,” the Sands executive said. “The market is changing. It’s a sign of maturity. When Sands and the Venetian first started, retailing was an unknown entity in terms of how it would go sales wise and here we are with three malls and another one coming.” Pick up a copy of Inside Retail Magazine’s December/January issue out next month for exclusive coverage on the Westfield Asian Study Tour.