Seeing Traffic Build Despite Tariffs, Tanger CEO Says

Bloomberg

Watch Seeing Traffic Build Despite Tariffs, Tanger CEO Says - Bloomberg on Dailymotion

Transcript

00:00So you're known for these open-air shopping centers. As I mentioned, you have a portfolio

00:05that includes both Tapestry and Ralph Lauren. As we really get closer and closer to holiday

00:10season, maybe it's already started in your view, what are you seeing in terms of traffic and trends

00:16when it comes to this consumer? Well, first of all, holiday shopping has started. Halloween

00:21decorations. Does it ever end? Well, you know, Halloween decorations, you know, these holidays

00:25are so important in a shopping center now. You know, we talked about back to school being the

00:29second biggest shopping holiday of the year. Then you go right into Halloween, which is really

00:35important, particularly in the open-air shopping centers. This is a safe place for families to

00:39bring their kids to go trick-or-treating. And then 31st of October, the Halloween decorations go down

00:46and the Christmas decor comes up. Not only that, our trees are up, the music is on, and the season

00:52has started. And we start with our first promotion, and that's Black Friday every day of the month of

00:58November. We're pulling the season forward so that some of those folks who you were talking

01:03about earlier, that, you know, maybe some of the younger consumers that are a little bit more

01:07concerned have an opportunity to catch value. I just want to say, that light switch flip that you

01:10see on that, I mean, there was one of those Halloween stores near our house, October 31st,

01:15two days later, walked by the same place, and it was decked out in Christmas year. They had cleaned out

01:20all the Halloween stuff, and it was already Christmas. I got to say, Hoboken, you're still seeing a lot of

01:23hobswebs there. I don't think people have gotten out their Christmas decorations yet. But to that

01:28point, promotions, how does this year, how is it shaping up to compare to last year? Because we have

01:34yet another year where inflation, it's come down somewhat, but still, we're sitting at overall

01:39higher levels, and the rate of change, too, has still been pretty sticky. You know, in the outlet

01:45space especially, and that's really our core business, the retailers have a tremendous amount of

01:49flexibility to flex their pricing. So it all starts with inventory. And when the stores are

01:54stocked with inventory, you know, you can't sell what you don't have in the store, it gives the

01:58opportunity for the retailers to check out pace. If they're turning goods, they're going to hold

02:03their price. But if they feel like they need to stimulate traffic into their stores, they're going

02:08to break their price. And we'll see it, we'll see that happen a little bit earlier if traffic is,

02:12if traffic's off. But if October's any indication, and at least the first weekend of November that

02:18we've seen, the traffic is still continuing to build.

02:21So you're anticipating, at least with regards to the foot traffic on your properties, that that

02:26will be higher than what we saw the last holidays?

02:30Yeah, holidays. Yeah, look, we're really optimistic for a number of reasons. First of all,

02:34like I said, there's plenty of inventory in the store, so you can't sell it if you don't have it.

02:39Critically important to the retailers. But more importantly, you know, we talk about inflation,

02:43and we talk about pricing keeping up with inflation. I think there's a deflationary

02:48economy in the outlet business in that the retailers have the opportunity to bring that

02:53price down to a certain level that reaches the customer. And when you see the price break,

02:57you know it's because they're driving customers into this.

02:59When you talk about inventory levels, because obviously there was a lot of concern earlier this

03:04year with regards to the tariff uncertainty and the long lead, relatively long lead times you need

03:10to get stuff from overseas. So as we head into those stores now, basically everything these

03:14stores need more or less for the holiday season, you're saying they basically have.

03:18Yeah, I think a lot of that product had already been landed a quarter ago. And, you know, some of

03:24the retailers that were, you know, sort of flexing their pricing with tariff might have flexed their

03:28pricing as early as the second quarter, even though there wasn't any tariff impact. They were testing

03:33their pricing. Also, there was inflation. So they were building their pricing accordingly.

03:37But, you know, what we saw when tariffs were first announced at the beginning of April,

03:41we've seen traffic built. It built through the summer. We had that early summer promotion to bring

03:46back to school shopping a little bit earlier this year. Great promotion for us. Totally drove traffic

03:51during the entire summer. We're going to do this other program I just told you about in November.

03:55But again, I think the customer is looking for value. They want the brands they want.

03:59They want the products they want. And, you know, in our shopping centers, it's more than just

04:02shopping stores. You know, we now have food and beverage. We've elevated the food offering.

04:07We've elevated the entertainment offering. We now have services in our shopping centers, too.

04:11So a local customer who may come for a spin class can stay for the shopping.

04:16So it's a whole experience there. And I do want to talk a little bit more about your business. You

04:20recently reported earnings. This number stuck out that your quarter end occupancy was 97.4%. How much

04:29of that is lease renewals versus you bringing on new partners and signing new leases?

04:33Well, it's definitely a mix of the two. You know, in order for a tenant, first of all,

04:39there's a couple of macro things that are happening in the marketplace right now.

04:41Really important to understand, particularly as it relates to our portfolio, there's not a lot of

04:46new retail space being delivered in the market. And what that does is it causes each square foot

04:51of space in our portfolio to be that much more valuable. Because of that, retailers, they want to

04:57renew. If their stores are cash flowing positively, if that store is fully amortized,

05:02the construction of that store is amortized, who wants to close that store? But it gives us the

05:07opportunity to really push rents. And that's what you're seeing in our growth of our NOI. You're

05:11seeing that in our transaction volume. And for us, we have to make some tough decisions. Now,

05:15there's retailers out there that might not be keeping up. You know, perhaps they're not reinvesting

05:20in their brand. Perhaps they're losing market share to some other better, cooler, newer brands. I think

05:25it's up to us as sort of the stewards of the shopping center, as the merchandiser of the center,

05:29to make sure that we're constantly bringing in new brands, the brands that the consumer wants.

05:34It's a two-way street. You know, you just, it's not all about the guy who can pay the most amount

05:38of rent. It's really, you want the brand that's in that shopping center that can draw the most amount

05:42of traffic, but just as importantly, draw the retailers that want to be in your center as well.

05:47But also getting that foot traffic, it also means offering things beyond just the retail,

05:52if you will. And you mentioned going for a spin class and services. You have a partnership also with

05:57basically unrivaled sports. And I am curious as to whether you see that translate. So if people

06:03come and they bring their kids in to, you know, play, you know, play games that unrivaled, does it,

06:08did they then go down the, you know, down to the next door and buy, you know, a t-shirt or shoes or

06:14whatever? Well, that partnership, it's a great partnership for us. Now, remember, you know,

06:18we've talked about it in my visits in the past, that what's unique about the outlet platform is that

06:22it's incumbent on us as the landlord to drive traffic into our shopping centers. We don't rely

06:27on the brands to use their marketing capital to say, hey, come shop us off price. We're basically,

06:32what we're saying is, we'll do, we'll do that heavy lifting for you. And we're going to go out

06:36into the market and we're going to make sure we're driving traffic. And one of these great

06:39partnerships, the unrivaled sports partnership, if you know what they do, they host a lot of these

06:45travel tournaments for travel teams, kids from five to 18 that have teams in their, in their

06:51communities that come to these tournaments to up their level of competition. Well, they do get,

06:57it's lacrosse, it's soccer, it's football, it's basketball, it's tennis. And for us, we're quite

07:03proximate to a number of these venues and that cross promotional opportunity gives us a chance to,

07:08you know, host the receiving. When these folks come first come, you know, for that, for that

07:12tournament, we'll hand out bags. We'll, we'll welcome them, uh, using our shopping center as a

07:17venue to, uh, to greet these folks. But similarly, when they're there, if they have a game at, you

07:22know, 10 o'clock in the morning and then another game at two o'clock in the afternoon, there's

07:25something that they're going to need to do between that, those two times. One of it's going to be

07:29shop. Maybe it's our, our dining opportunities and maybe it's our better entertainment. We're

07:33looking forward to really playing this, uh, this partnership out.

Category

Transcript

Be the first to comment

Recommended