WEBVTT - Holiday Retail Spending Outlook

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<v Speaker 1>This is Bloomberg Business Week. I'm Carol Masser and I'm

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<v Speaker 1>about Apple's cutting if it's iPhone production goal because of

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<v Speaker 1>a chip crunch. I'm curious about the crunches that we're

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<v Speaker 1>going to see in supply chains leading up to the

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<v Speaker 1>holiday shopping season. I mean, we've heard, we've kind of

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<v Speaker 1>we've kind of joked about it a little bit in

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<v Speaker 1>the sense of, you know, executives coming on our shows

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<v Speaker 1>and saying, hey, do your Christmas shopping now? Well, that's

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<v Speaker 1>kind of like we're saying, Okay, well, you gotta take

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<v Speaker 1>it with a grain of salter. They're talking their book

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<v Speaker 1>and telling you to go by bye bye right now. Uh,

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<v Speaker 1>but it's legit. No, it is legit. And you know,

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<v Speaker 1>I was talking to my family this past weekend and

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<v Speaker 1>they were talking about holiday merchandise, though in particular already

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<v Speaker 1>out in some of the big box stores. It's not

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<v Speaker 1>even Halloween anyway. Someone who's got a front row seat

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<v Speaker 1>to all of this, especially when it comes to shopping

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<v Speaker 1>centers around the US, is Tommyghee. He's President CEO of

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<v Speaker 1>the International Council of Shopping Centers. A guest that we

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<v Speaker 1>welcome back here on Bloomberg Business Week. Tom is on

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<v Speaker 1>the phone in basking Ridge, New Jersey. How are you hi, Carol.

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<v Speaker 1>It's good to be with you a long time. Least

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<v Speaker 1>talk look for to be in the studio sometimes soon. Well,

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<v Speaker 1>we look forward to having you back. I think it

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<v Speaker 1>was around the holiday season. So, um, what are the

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<v Speaker 1>expectations for the holiday shopping season? What are you hearing

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<v Speaker 1>from the retail and the shopping center community. Well, our

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<v Speaker 1>forecast is for a really strong holiday season. We were

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<v Speaker 1>forecasting nearly nine year over year growth in holiday sales

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<v Speaker 1>from from um. You know, I think all the conditions

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<v Speaker 1>that have led to strong retail sales during the course

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<v Speaker 1>of this year. Whether it's a lot of fiscal stimulus,

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<v Speaker 1>high personal savings rates, you know, a strong job market,

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<v Speaker 1>will all be the same factors that contribute to strong

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<v Speaker 1>holiday sales. I do think, you know, the conversation that

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<v Speaker 1>you were having prior to my coming on around supply

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<v Speaker 1>chain and the impact that could have, you know, more broadly,

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<v Speaker 1>including on holiday sales, is the big X factor. Um,

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<v Speaker 1>that would be really the only reason I would see

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<v Speaker 1>not meeting kind of our optimistic forecast. I think the

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<v Speaker 1>consumer is back, they're willing to spend, but supply chain issues,

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<v Speaker 1>you know, it could be the X factor that could

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<v Speaker 1>impact that. It's interest that you say about consumer back

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<v Speaker 1>because we've we've talked about some sentiment indicators being down.

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<v Speaker 1>When you say n growth and holiday sales year over year,

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<v Speaker 1>is that because there's going to be higher prices? Like,

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<v Speaker 1>what are we talking about? What does that metric really measure? Well, certainly,

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<v Speaker 1>there's certainly there's been inflation from one year to the next,

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<v Speaker 1>but it's really driven more based upon you know, volume growth,

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<v Speaker 1>you know, and it's and that was based upon a

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<v Speaker 1>fairly strong holiday season. Although retail sales were down, uh

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<v Speaker 1>with the coast and most of the year. Last year,

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<v Speaker 1>holiday sales actually increased you over year as a lot

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<v Speaker 1>of people leaned into holiday spending. You know. Overall, for one,

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<v Speaker 1>we were forecasting eleven and a half percent, you know,

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<v Speaker 1>retail sales growth again, a lot of was was way down. UM.

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<v Speaker 1>So you know, I think it's a it's it's broad based.

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<v Speaker 1>You know, we're expecting about five percent growth and physical

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<v Speaker 1>stories growth in e commerce, um, and a lot of

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<v Speaker 1>growth in and things like food and beverage as well

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<v Speaker 1>as people to eat out. I'm really glad you you

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<v Speaker 1>brought that up, Tom, because you know, if we were

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<v Speaker 1>doing this, if we're having this conversation two years ago,

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<v Speaker 1>in twenty nine, I think we'd be talking a lot

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<v Speaker 1>about experiences. Last year, the conversation was all about actual

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<v Speaker 1>physical things because people, you know, we're still there was

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<v Speaker 1>no vaccine, we were still kind of stuck inside to

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<v Speaker 1>a certain extent. What is the mix this year with

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<v Speaker 1>people buying people gift certificates to restaurants, gift certificates to

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<v Speaker 1>experiences versus buying physical things, especially if you can't get

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<v Speaker 1>your hands on some of those physical things. Well, yeah,

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<v Speaker 1>I think there's I mean, I think the the you

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<v Speaker 1>know or dominance as as people will be focused upon

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<v Speaker 1>buying fiscal things, um, you know, outside of the traditional

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<v Speaker 1>going out to eat and entertainment that you know upticks

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<v Speaker 1>in the holiday season, and we think this will up

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<v Speaker 1>to significantly this year. But I do think there'll be

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<v Speaker 1>an increase in gift certificates. Look, I think that there

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<v Speaker 1>is if we have the supply chain challenges that we

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<v Speaker 1>think we may experience, I think you will see people

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<v Speaker 1>continue to buy and spend that they might buy and

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<v Speaker 1>spend non gift certificates to allow the person that they're

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<v Speaker 1>buying the gift for to be able to choose what

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<v Speaker 1>they want. In two. So you may see a lingering

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<v Speaker 1>impact of kind of a positive spending um in in

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<v Speaker 1>in the holiday impact positively impact retailers in the early

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<v Speaker 1>part of two with people roteem gifts certificate tom um.

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<v Speaker 1>One of the things I've also wondered about. I know

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<v Speaker 1>we talked at bit about supply chains, but I have

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<v Speaker 1>been curious about the real estate market when it comes

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<v Speaker 1>to shopping centers and a new It's been a story

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<v Speaker 1>that's been around for a while. Um, what are you

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<v Speaker 1>seeing on that front when it comes to vacancies and stores, well,

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<v Speaker 1>you know, I think there's an increasing level of optimism. Obviously,

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<v Speaker 1>the industry was at the epicenter of you know, the

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<v Speaker 1>pandemic and and you know was significantly impacted by all

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<v Speaker 1>the health and safety measures that took place. But the

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<v Speaker 1>level of optimism in the industry, and honestly, the level

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<v Speaker 1>of leasing activity is really at its highest level in

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<v Speaker 1>my you know, in my tenure as the as the

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<v Speaker 1>head of o c S see the Lab. We had

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<v Speaker 1>a group of industry leaders together in Boston just a

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<v Speaker 1>few weeks ago, and there was a great deal of

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<v Speaker 1>optimism amongst the group. Um, a lot of new store openings.

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<v Speaker 1>Actually store openings exceed store closings this year by three

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<v Speaker 1>to one. A year today obviously was a different story.

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<v Speaker 1>But you're starting to see a real releasing of a

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<v Speaker 1>lot of that space take place. And you know, we

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<v Speaker 1>just did a study with Place to AI that looks

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<v Speaker 1>at you know, looks at analytics of consumer behavior and really, um,

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<v Speaker 1>you know, foot traffic is generally speaking, both in the

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<v Speaker 1>open air segment um and also in the mall segment

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<v Speaker 1>back to pre pandemic levels, to nineteen levels and so

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<v Speaker 1>you're starting to see a real emergence at this And

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<v Speaker 1>that's not to say that there aren't challenged properties. Um.

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<v Speaker 1>You know, the US is a big country, um. And

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<v Speaker 1>you know, the challenges in the mall sector in particular,

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<v Speaker 1>which gets a lot of attention, um is the most obvious.

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<v Speaker 1>But within the mall sector there are some exceptionally strong properties, um.

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<v Speaker 1>And then there's some others that you know, are will

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<v Speaker 1>continue to be challenged and and may eventually be repurposed

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<v Speaker 1>into other uses. But generally, at least in my tenure,

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<v Speaker 1>this is the This is the highest level of optimism

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<v Speaker 1>I've seen, which might run a little counterintuitive than what

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<v Speaker 1>to what a lot of people expect. Well, what is

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<v Speaker 1>that optimism based on? And in terms of the vision

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<v Speaker 1>for what a property likes, this property like this looks

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<v Speaker 1>like in the future. A mix of retail, a mix

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<v Speaker 1>of experiences, a mix of shopping even in some cases, right,

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<v Speaker 1>a mix of housing. Yeah, well that's right. I think

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<v Speaker 1>you know, again, I think that that the industry is

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<v Speaker 1>pretty big and diverse, and so the mall sector, the sector,

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<v Speaker 1>a large regional mall is going to have a lot

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<v Speaker 1>of what you just indicated. You know, you're clearly going

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<v Speaker 1>to see and move away from such a large percentage

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<v Speaker 1>of leasable area from traditional retail into other uses, and

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<v Speaker 1>you kind of we're seeing that happen pretty significantly pre

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<v Speaker 1>Pandemic I, and that's going to continue to happen towards

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<v Speaker 1>food and beverage experiences, but also utilizing other either pieces

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<v Speaker 1>of the existing property or for those that are more

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<v Speaker 1>successful adding on mixed juice components like residential and other

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<v Speaker 1>forms of hospitality like hotels, etcetera. When you look at

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<v Speaker 1>retail more broadly, you know, I actually think that again

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<v Speaker 1>perhaps counter in two it, but you look at those

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<v Speaker 1>retailers that have done exceptionally well during the pandemic, what

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<v Speaker 1>they really learned was that the the importance of the store, um,

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<v Speaker 1>you know, it was pretty key to their success because

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<v Speaker 1>you know, the story around convergence of the online addigital

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<v Speaker 1>world really took hold during the pandemic. And so you

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<v Speaker 1>look at retailers like Walmart, Target, Costco, many others that

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<v Speaker 1>have are really using their stores not only as a

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<v Speaker 1>traditional store of people browse for for merchandise, but there

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<v Speaker 1>are also many consumer fulfillment centers and so yes, people

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<v Speaker 1>come for curbs I pick up and quick and collect,

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<v Speaker 1>but they also ship from those stores as well, because

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<v Speaker 1>it's a much more efficient way to deal with the

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<v Speaker 1>last mile. And even things like restaurants, you see them,

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<v Speaker 1>you know, you see convergence in that regard. I think

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<v Speaker 1>of door dash and rebhub and so forth. They're they're

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<v Speaker 1>effectively delivering from those local restaurants to people's homes. So

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<v Speaker 1>it's kind of a you know, utilizational last mile. One

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<v Speaker 1>last question. For give me for a breaking I've only

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<v Speaker 1>got about We've only got about thirty seconds left here.

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<v Speaker 1>You're the International Council of Shopping Centers, Um, anything we

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<v Speaker 1>should know globally in terms of what's going and just

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<v Speaker 1>quickly if you could. Yeah, I think the same type

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<v Speaker 1>of trends that you know you're seeing in the US,

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<v Speaker 1>you're are are happening around the world. Obviously, you know

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<v Speaker 1>the mix of retail is different, but you know demand

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<v Speaker 1>is fairly strong everywhere. Supply chain issues, you know, we're cute, um,

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<v Speaker 1>not just in the US, but everywhere around the world. Yeah, well,

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<v Speaker 1>it's a global supply chain, right, we're all feeling the

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<v Speaker 1>pain from it. Hey, tom um, I'm sure we'll be

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<v Speaker 1>talking to as we get closer to those holidays. Stay safe. Tomcgee, President,

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<v Speaker 1>Chief Executive Officer the International Council of Shopping Centers, on

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<v Speaker 1>the phone from basking Ridge, New Jersey. Now you gotta

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<v Speaker 1>do that shopping Carrol. Yeah, I do too. My wife

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<v Speaker 1>and I were talking about it this week. Sorry, Shopping Centers.

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<v Speaker 1>Thanks for listening to Bloomberg Business Week. Download the podcast

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