Tanger CEO Sees Retail Rebound

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00:00Let's talk a little bit about Black Friday, how it went.

00:03I mean, there's always a lot of people, I imagine.

00:06That's when you go shopping.

00:08But was it better than last year?

00:10It was.

00:11It was for the retailers, and I think it was for the shoppers, too,

00:14because there was a lot of great sales this year,

00:16and that's what's bringing the shoppers in.

00:18You know, Black Friday is really, that's an outlet,

00:21that's a value shopper holiday.

00:23And that's why, you know, our sweet spot, we're in the outlet space,

00:26and that's why the customers seek us out for holidays like that.

00:29And it's not a Black Friday, it's like a black week, a black month.

00:34Everyone loves to say, like, oh, it gets longer every year,

00:36but it genuinely is.

00:37The deals are starting so much sooner.

00:39Does that say something about the state of retailers

00:42and the desire to sell discounted goods,

00:44or is something else at play behind it?

00:46Hang on, every day is Black Friday.

00:48That's right.

00:48So that was our promotion this year, starting November 1st.

00:51Every day is Black Friday.

00:52And, you know, I don't think it's, it's really a momentum builder.

00:56It's about building energy.

00:57It's about getting the consumer inside of your shopping center.

01:00Maybe one of their visits is a window shop.

01:02The next visit, they're actually going to go and buy things.

01:05It's not, because one interpretation of this could be that the consumer is so weak,

01:09the only way you can get them to buy stuff is if things are discounted.

01:11So why not start this earlier?

01:13It's not that, is what you're saying.

01:14Well, you know, I would think in our space, things are on sale every day.

01:17I just think you're not going to stand out online in the cold waiting for your favorite

01:22store to open up unless you're getting some kind of door buster prize, two for one, buy

01:28one, get one free kind of programming.

01:30And that's really what Black Friday's evolved into.

01:32And that's what it's become.

01:34And, you know, I said this before to you, but unless you're on sale during Black Friday,

01:38you're not going to do the business.

01:40And by the way, I've heard recently economists talk about Tanger as representative of a trend

01:45to move towards experiential shopping, right?

01:47I've got two little kids now.

01:49I'm not going to the outlet mall unless there's something for them to do as well.

01:54What are you guys doing to get people in?

01:56Yeah.

01:57I mean, that's really been a big push for us from a strategic point of view.

02:00You know, the outlet shopping of 20 years ago is completely evolved.

02:04It used to be, you know, hit your favorite stores, get back in your car and go someplace for

02:09lunch.

02:09And, you know, what we're finding is not only is our customer traveling to come to our centers,

02:13but they're also coming from a far more local.

02:16We're getting seeing a lot more local customers.

02:18So we're doing a lot of local programming.

02:20Our tree lightings this year were unbelievable.

02:22In fact, they were the best attended that we've had in the history of our company.

02:27I think a lot of that has to do with the fact that they're the customers moving to a lot of

02:31these geographies where our centers are positioned, but we're also doing a lot more to keep them

02:35there longer.

02:36Better restaurants, better food and beverage, better entertainment.

02:39You know, we program these centers and bring things like High School Battle of the Marching

02:43Bands, which is a super cool event.

02:45You know, if you think about it, you get three high school marching bands on site and they

02:50bring their kids, they bring their sisters, they bring their grandparents, they bring

02:52their families.

02:53That's a lot of people on site to watch these bands play.

02:57And, you know, to me, I think that that's part of the pageantry and part of the celebration

03:01of the holiday season.

03:02These are things that we like to do and we're doing across our portfolio.

03:05In the latest University of Michigan Consumer Sentiment Survey, one of the interesting things

03:09was that the uptick was being led by millennials and Jed Zers.

03:13How are you seeing the younger generations, their behavior at the Tanger Outlets versus,

03:18you know, older generations?

03:19We're seeing a lot of younger shoppers and they shop together, which is really exciting.

03:23But, you know, if we don't have the brands the younger consumer wants, we're not going

03:27to be able to hold their attention very long and we're certainly not going to get them

03:29back.

03:30So our leasing team has done an amazing job of bringing in these brands that they're looking

03:34for, you know, brands like Lululemon, American Eagle, which is hot again.

03:38I thought Lululemon wasn't cool anymore.

03:39I thought it's all Viore and Aloe and whatever.

03:42Trust me.

03:43Lululemon is still very cool.

03:44And when you can get it at 30 and 40 percent off, it becomes even cooler.

03:48And, you know, Gap, Gap is really cool again.

03:51You know, I think Richard Dixon's done an unbelievable job with Zach Posen to make that brand really cool.

03:56The customers are seeking it out.

03:58And in our venues, it's available to them every day at a value price.

04:02So how are you doing in terms of getting new clients in your locations and also getting,

04:10you know, existing clients to sign up again, to re-sign?

04:13Sure.

04:14So when you say clients, you're talking about the retailers.

04:15Yes.

04:16Because, you know, what's unique in the outlet business here, we have both a shopper,

04:19that's our client, and we also have the retailer.

04:20I'm talking about Richard Dixon.

04:21Okay.

04:22Great.

04:22Great question.

04:23Well, you know, it's interesting.

04:24The outlet pitch is such a great one.

04:25You know, first of all, there's a lot of brands that have full-priced businesses.

04:30They have excess inventory, much like a Lululemon.

04:33And they're looking for a place to get rid of that excess inventory,

04:35for them to turn that excess inventory into cash.

04:38And they want to do it in a place where they can protect their product,

04:40they can protect the positioning of that product,

04:43and they want to do it in a lifestyle environment

04:45so that everything in the store is pretty much on brand and their product.

04:49So for us, that's an easy part of the sell.

04:52But the other side of that sell is simple.

04:54It's brands want to get in front of a consumer that they may not get in any other retail venue.

05:00So if there's a customer that just isn't shopping full price,

05:03and their first introduction to the product is through the outlet channel,

05:07well, then it's up to that brand to own that customer,

05:10trade them up through their ecosystem, and get them into their fuller-priced product.

05:13And we see a lot of brands doing that, too.

05:14And you are, again, capturing on this trend that we've seen within earnings

05:18that all of the discount retailers have done way better than ones that are not discount retailers.

05:22Given that and given that dynamic, are you seeing brands maybe look at you as more of a core strategy

05:28than a secondary strategy?

05:30Is there attitude around outlets shifting?

05:32Well, if you take a look at the quality of brands that are coming into the outlet centers,

05:36then you would say yes.

05:38And in fact, there are some brands that are coming into outlets in categories that are new to outlets.

05:42Like Sephora is a really good example of a brand that's never been in the outlets before.

05:46Now, they might not be every product on sale every day,

05:51but they do have a promotional cadence in the stores.

05:53But more importantly, I think they see the traffic that's coming to the outlets,

05:57they see the customer that we're bringing,

05:59and they want to get their products out in front of that customer.

06:01I'm just looking at your stock.

06:03The chart is incredible versus the Bloomberg REITs or Bloomberg Mall.

06:08You've outperformed all of them, and obviously you've trounced the S&P as well.

06:11Can you continue this kind of performance going forward?

06:15Because you're up 250% over the last five years.

06:18Well, I think that there's still upside in our portfolio.

06:20We're a growth company.

06:22We continue to buy new shopping centers.

06:24We continue to re-merchandise those shopping centers.

06:27And I think outlet especially is a specialty.

06:30There's a lot of barriers to entry to get into the outlet business,

06:32particularly on the marketing side,

06:34because it's really important for us as a company that we have a great marketing machine.

06:39A lot of brands are going to go and use their marketing capital

06:42to tell you to come to their full-price business.

06:44It's our job to get the customers to come into their off-price business.

06:47So it's incumbent on us.

06:48And I think that that muscle that we've built that's transferable,

06:52not only from outlet but into that full-price business,

06:55we've now since bought a handful of full-price centers.

06:58I think that that's something that gives us an advantage

07:00as operators and owners of shopping centers.

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