Nevada’s shopping arena is where Wal-Mart and Dillard’s coexist profitably to give consumers exactly what they’re after. Although it may seem an unlikely combination, here in Nevada, high-end retailers, multi-use developments and value-oriented supercenters are all thriving and exceeding national sales averages. Two undeniable trends in Nevada’s retail segment are the growth of multi-use projects, as well as an increase in the economic impact of Wal-Mart.
With nearly 10 new residents per hour moving to the Silver State, it’s no wonder Nevada has popped up on retailers’ radars. Coupled with a growing population base, Nevada offers national retailers another attractive demographic profile: approximately 5 percent above the average national household income, as nearly a quarter of the state’s residents earn between $50,000 and $74,999.
One of the first population benchmarks major retailers look for is a minimum of 500,000 residents living in the region. Las Vegas hit that number years ago; just recently, so did the Reno/Sparks/Carson City/Douglas County area. According to Kelly Bland, senior vice president of retail properties for Reno-based Alliance Commercial Real Estate Services, “A growing population base and high-income demographics are what retailers look for in new markets. They seek out markets that make sense today, as well as those that present future growth opportunities.”
Nevada’s retail segment is thriving, thanks to support from both residents and visitors. The Reno-Sparks Convention and Visitors Authority reported that non-gaming revenue per person increased 20 percent from 2003 to 2004. According to Kevin Bagger, director of Internet marketing and research for the Las Vegas Convention and Visitors Authority, “Sixty-three percent of Las Vegas visitors spend time shopping during their visit to the area. In 2004, we saw the average expenditures for shopping per trip increase 28 percent over 2003.” Shopping has become such an attractive amenity of the area that it made its way into the Visit Las Vegas promotional campaigns. “The recent retail additions in the area have positioned us as an attractive shopping destination. We’ve begun promoting shopping opportunities to travel agents, hotel tour operators and other travel intermediaries as a key part of leisure sales to Vegas,” explained Bagger.
High incomes, a growing population and interest in shopping from tourists are the backbone of Nevada’s emerging retail market. But where are these shoppers shopping? Nevada has seen an influx of high-end, destination retailers and new lifestyle shopping centers. Northern Nevada will soon be home to two open-air lifestyle shopping centers and a Cabela’s outlet store that is expected to lure as many as 4 million visitors annually. Centers like the Las Vegas Fashion Show Mall, which has a real fashion runway, aim to make shopping more of an “experience” by combining it with entertainment. Las Vegas’ Strip hotels have begun combining resorts and shopping by attaching malls, such as the Desert Passage at Aladdin, Mandalay Place at Mandalay Bay and The Forum Shops at Caesars.
Make Way for Wal-Mart
Another major trend in both Southern and Northern Nevada is the growth and success of Wal-Mart. Plans are underway for the eighth Wal-Mart Supercenter in the Reno/Carson City area. The influence of Wal-Mart on the Nevada economy is unquestionable. Now representing an incredible 1 percent of total jobs in the United States, Wal-Mart helps increase purchasing power, bringing a number of new jobs to the locale and affecting the mix of other retailers in the vicinity.
“Most of the publicity tends to be negative for Wal-Mart,” said Tom Outland, principal of Reno-based Powerhouse, an advertising and strategic planning agency specializing in retail and municipalities. “However, recently a local nail salon decided to lease space inside a new Wal-Mart. They’ve been in business for many years, but their move to Wal-Mart allowed them to successfully capitalize on a tremendous vortex of customers. They are doing quite well at Wal-Mart.”
Retailers also capitalize on the success of Wal-Mart. Many national retailers strategically place their stores in close proximity to Wal-Marts. The retail giant itself locates its new Wal-Mart Neighborhood Markets within two miles of a super center. According to Voit executive Kit Graski, “Everyone in the grocery industry is having a hard time finding sites, because they are well aware there could eventually be another Wal-Mart close by.”
Land Prices Change Market
The scarcity and high price of land are driving other trends in Nevada’s retail segment. “Land costs have increased immensely for a couple reasons,” said Graski. “First, the overall market is increasing. Second, residential developers now have more purchasing power and can buy land at a much higher rate and are competing with commercial land developers. Demand is much higher for the space remaining, and it’s more difficult to develop large centers. We’re seeing higher land prices, rental rate increases and more tenant demand. The market is filtering out only those retailers that can afford to pay higher rates.
“Because land is so expensive, we’re seeing a lot of mixed-use proposals,” explained Graski. Mixed-use is the latest trend to hit growing urban areas around the country, and Nevada is no exception. Las Vegas’ The District at Green Valley Ranch, which opened its doors in April 2004, represented the state’s first mixed-use development, with great success.
Sandi Marvin, marketing director for American Nevada Company, developer of The District at Green Valley Ranch, said she believes people are looking to get away from the “hustle and bustle” of shopping. “The District is an open-air, pedestrian-only shopping village,” said Marvin. “It’s built to feel like northeastern downtown rather than a traditional mall.”
“The District at Green Valley is a holistic destination that brings together commercial, hotel, spa, casino, residential and shopping all to one location,” explained Outland. “Lots of municipalities are identifying this critical mix. Europe has to do it and the East Coast understands it. Bottom line: make a destination holistic for consumers and they will come.”
The success of The District certainly speaks to Outland’s assertion. In a year and a half, The District has successfully sold all residential lofts and flats and has landed a number of high-profile destination shops and restaurants, such as Williams-Sonoma, REI, Pottery Barn, Chico’s and PF Chang’s.
Summit Sierra Coming to Reno
Following the trend in demand for open-air shopping centers, Reno’s new Summit Sierra (scheduled to open March 2006) is Alabama-based developer Bayer Properties’ interpretation of a lifestyle center. “The Summit Sierra is designed to meet the needs of today’s time-starved consumer,” said David Silverstein, principal of Bayer Properties. “Customers can pull up to the store of their choice to readily shop, or spend time enjoying the environment.”
The people-friendly design of The Summit Sierra boasts large sidewalks, quality architecture and an atmosphere that facilitates browsing. Understanding that Northern Nevada is cold in the winter and hot in the summer, The Summit Sierra features hardscape that transforms from fire pits to water fountains, along with ample space to sit and enjoy the ambience. “People love the outdoors in Reno, and now they can enjoy the outdoors while shopping,” said Silverstein.
Silverstein’s project has brought new names to the local shopping arena. Dillard’s, Ann Taylor Loft, Banana Republic, Coldwater Creek, Pottery Barn and Chico’s are just a few of the high-end retailers locating in The Summit Sierra. Convincing them Reno was the right choice took a bit of work, however.
“We needed to educate retailers about the opportunities available in Reno. We invited them to come and visit, and once they were here, they better understood the potential it represented. Many of the retailers weren’t necessarily looking at Reno beforehand. But they soon recognized there was a tremendous void in the community for retail,” shared Silverstein. He further explained that Northern Nevada’s tremendous growth, great quality of life and strong cultural base helped seal the deal with these retailers.
Northern Nevada has historically been underserved in regards to retail. “Reno has tremendous sales tax leakage to locations like Sacramento and the Bay Area,” explained Silverstein. “We’re bringing the city additional retail that’s not otherwise available there.”
Both Silverstein and Tony Vail, general manager of Reno’s Meadowood Mall, agree that the Truckee Meadows area is large enough to support additional shopping opportunities. For many years, the Meadowood Mall was the primary shopping destination for folks in the area. Meadowood, which is home to Macy’s, JC Penney, Gap, Ann Taylor and Eddie Bauer, has seen increases in productivity across the board. “Our retail tenants are doing well and our food court is extraordinary. We’ve seen more customers shopping here and making larger transactions with significant increases mall-wide,” said Vail.
Shopping as an “experience” is something the Meadowood Mall is also working toward. Focused on a family-oriented atmosphere, the shopping center introduced Muggsy’s Meadow, a twice-monthly free kids program, ages newborn to 12, that gives families fun things to do all year long, such as themed explorations, story time and interactive games.
The Future May Be Green
What’s next on Nevada’s retail horizon? According to Outland, there is tremendous momentum in the “green” retail industry. Guess who’s leading it? Wal-Mart. The retailing giant has introduced two stores, one in Texas and another in Colorado, which have received a LEED (Leadership in Energy and Environmental Design) Green Building Rating. “They generate their own power and purchase materials produced by green factories,” he said. “Soon, we’ll all be thinking green.”
