Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanobek. We're here every day bringing
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Speaker 1: pm Eastern Time on Bloomberg Radio, or watch us on
Speaker 1: YouTube search Bloomberg Global News. You know, we just talked
Speaker 1: about Apple's cutting if it's iPhone production goal because of
Speaker 1: a chip crunch. I'm curious about the crunches that we're
Speaker 1: going to see in supply chains leading up to the
Speaker 1: holiday shopping season. I mean, we've heard, we've kind of
Speaker 1: we've kind of joked about it a little bit in
Speaker 1: the sense of, you know, executives coming on our shows
Speaker 1: and saying, hey, do your Christmas shopping now? Well, that's
Speaker 1: kind of like we're saying, Okay, well, you gotta take
Speaker 1: it with a grain of salter. They're talking their book
Speaker 1: and telling you to go by bye bye right now. Uh,
Speaker 1: but it's legit. No, it is legit. And you know,
Speaker 1: I was talking to my family this past weekend and
Speaker 1: they were talking about holiday merchandise, though in particular already
Speaker 1: out in some of the big box stores. It's not
Speaker 1: even Halloween anyway. Someone who's got a front row seat
Speaker 1: to all of this, especially when it comes to shopping
Speaker 1: centers around the US, is Tommyghee. He's President CEO of
Speaker 1: the International Council of Shopping Centers. A guest that we
Speaker 1: welcome back here on Bloomberg Business Week. Tom is on
Speaker 1: the phone in basking Ridge, New Jersey. How are you hi, Carol.
Speaker 1: It's good to be with you a long time. Least
Speaker 1: talk look for to be in the studio sometimes soon. Well,
Speaker 1: we look forward to having you back. I think it
Speaker 1: was around the holiday season. So, um, what are the
Speaker 1: expectations for the holiday shopping season? What are you hearing
Speaker 1: from the retail and the shopping center community. Well, our
Speaker 1: forecast is for a really strong holiday season. We were
Speaker 1: forecasting nearly nine year over year growth in holiday sales
Speaker 1: from from um. You know, I think all the conditions
Speaker 1: that have led to strong retail sales during the course
Speaker 1: of this year. Whether it's a lot of fiscal stimulus,
Speaker 1: high personal savings rates, you know, a strong job market,
Speaker 1: will all be the same factors that contribute to strong
Speaker 1: holiday sales. I do think, you know, the conversation that
Speaker 1: you were having prior to my coming on around supply
Speaker 1: chain and the impact that could have, you know, more broadly,
Speaker 1: including on holiday sales, is the big X factor. Um,
Speaker 1: that would be really the only reason I would see
Speaker 1: not meeting kind of our optimistic forecast. I think the
Speaker 1: consumer is back, they're willing to spend, but supply chain issues,
Speaker 1: you know, it could be the X factor that could
Speaker 1: impact that. It's interest that you say about consumer back
Speaker 1: because we've we've talked about some sentiment indicators being down.
Speaker 1: When you say n growth and holiday sales year over year,
Speaker 1: is that because there's going to be higher prices? Like,
Speaker 1: what are we talking about? What does that metric really measure? Well, certainly,
Speaker 1: there's certainly there's been inflation from one year to the next,
Speaker 1: but it's really driven more based upon you know, volume growth,
Speaker 1: you know, and it's and that was based upon a
Speaker 1: fairly strong holiday season. Although retail sales were down, uh
Speaker 1: with the coast and most of the year. Last year,
Speaker 1: holiday sales actually increased you over year as a lot
Speaker 1: of people leaned into holiday spending. You know. Overall, for one,
Speaker 1: we were forecasting eleven and a half percent, you know,
Speaker 1: retail sales growth again, a lot of was was way down. UM.
Speaker 1: So you know, I think it's a it's it's broad based.
Speaker 1: You know, we're expecting about five percent growth and physical
Speaker 1: stories growth in e commerce, um, and a lot of
Speaker 1: growth in and things like food and beverage as well
Speaker 1: as people to eat out. I'm really glad you you
Speaker 1: brought that up, Tom, because you know, if we were
Speaker 1: doing this, if we're having this conversation two years ago,
Speaker 1: in twenty nine, I think we'd be talking a lot
Speaker 1: about experiences. Last year, the conversation was all about actual
Speaker 1: physical things because people, you know, we're still there was
Speaker 1: no vaccine, we were still kind of stuck inside to
Speaker 1: a certain extent. What is the mix this year with
Speaker 1: people buying people gift certificates to restaurants, gift certificates to
Speaker 1: experiences versus buying physical things, especially if you can't get
Speaker 1: your hands on some of those physical things. Well, yeah,
Speaker 1: I think there's I mean, I think the the you
Speaker 1: know or dominance as as people will be focused upon
Speaker 1: buying fiscal things, um, you know, outside of the traditional
Speaker 1: going out to eat and entertainment that you know upticks
Speaker 1: in the holiday season, and we think this will up
Speaker 1: to significantly this year. But I do think there'll be
Speaker 1: an increase in gift certificates. Look, I think that there
Speaker 1: is if we have the supply chain challenges that we
Speaker 1: think we may experience, I think you will see people
Speaker 1: continue to buy and spend that they might buy and
Speaker 1: spend non gift certificates to allow the person that they're
Speaker 1: buying the gift for to be able to choose what
Speaker 1: they want. In two. So you may see a lingering
Speaker 1: impact of kind of a positive spending um in in
Speaker 1: in the holiday impact positively impact retailers in the early
Speaker 1: part of two with people roteem gifts certificate tom um.
Speaker 1: One of the things I've also wondered about. I know
Speaker 1: we talked at bit about supply chains, but I have
Speaker 1: been curious about the real estate market when it comes
Speaker 1: to shopping centers and a new It's been a story
Speaker 1: that's been around for a while. Um, what are you
Speaker 1: seeing on that front when it comes to vacancies and stores, well,
Speaker 1: you know, I think there's an increasing level of optimism. Obviously,
Speaker 1: the industry was at the epicenter of you know, the
Speaker 1: pandemic and and you know was significantly impacted by all
Speaker 1: the health and safety measures that took place. But the
Speaker 1: level of optimism in the industry, and honestly, the level
Speaker 1: of leasing activity is really at its highest level in
Speaker 1: my you know, in my tenure as the as the
Speaker 1: head of o c S see the Lab. We had
Speaker 1: a group of industry leaders together in Boston just a
Speaker 1: few weeks ago, and there was a great deal of
Speaker 1: optimism amongst the group. Um, a lot of new store openings.
Speaker 1: Actually store openings exceed store closings this year by three
Speaker 1: to one. A year today obviously was a different story.
Speaker 1: But you're starting to see a real releasing of a
Speaker 1: lot of that space take place. And you know, we
Speaker 1: just did a study with Place to AI that looks
Speaker 1: at you know, looks at analytics of consumer behavior and really, um,
Speaker 1: you know, foot traffic is generally speaking, both in the
Speaker 1: open air segment um and also in the mall segment
Speaker 1: back to pre pandemic levels, to nineteen levels and so
Speaker 1: you're starting to see a real emergence at this And
Speaker 1: that's not to say that there aren't challenged properties. Um.
Speaker 1: You know, the US is a big country, um. And
Speaker 1: you know, the challenges in the mall sector in particular,
Speaker 1: which gets a lot of attention, um is the most obvious.
Speaker 1: But within the mall sector there are some exceptionally strong properties, um.
Speaker 1: And then there's some others that you know, are will
Speaker 1: continue to be challenged and and may eventually be repurposed
Speaker 1: into other uses. But generally, at least in my tenure,
Speaker 1: this is the This is the highest level of optimism
Speaker 1: I've seen, which might run a little counterintuitive than what
Speaker 1: to what a lot of people expect. Well, what is
Speaker 1: that optimism based on? And in terms of the vision
Speaker 1: for what a property likes, this property like this looks
Speaker 1: like in the future. A mix of retail, a mix
Speaker 1: of experiences, a mix of shopping even in some cases, right,
Speaker 1: a mix of housing. Yeah, well that's right. I think
Speaker 1: you know, again, I think that that the industry is
Speaker 1: pretty big and diverse, and so the mall sector, the sector,
Speaker 1: a large regional mall is going to have a lot
Speaker 1: of what you just indicated. You know, you're clearly going
Speaker 1: to see and move away from such a large percentage
Speaker 1: of leasable area from traditional retail into other uses, and
Speaker 1: you kind of we're seeing that happen pretty significantly pre
Speaker 1: Pandemic I, and that's going to continue to happen towards
Speaker 1: food and beverage experiences, but also utilizing other either pieces
Speaker 1: of the existing property or for those that are more
Speaker 1: successful adding on mixed juice components like residential and other
Speaker 1: forms of hospitality like hotels, etcetera. When you look at
Speaker 1: retail more broadly, you know, I actually think that again
Speaker 1: perhaps counter in two it, but you look at those
Speaker 1: retailers that have done exceptionally well during the pandemic, what
Speaker 1: they really learned was that the the importance of the store, um,
Speaker 1: you know, it was pretty key to their success because
Speaker 1: you know, the story around convergence of the online addigital
Speaker 1: world really took hold during the pandemic. And so you
Speaker 1: look at retailers like Walmart, Target, Costco, many others that
Speaker 1: have are really using their stores not only as a
Speaker 1: traditional store of people browse for for merchandise, but there
Speaker 1: are also many consumer fulfillment centers and so yes, people
Speaker 1: come for curbs I pick up and quick and collect,
Speaker 1: but they also ship from those stores as well, because
Speaker 1: it's a much more efficient way to deal with the
Speaker 1: last mile. And even things like restaurants, you see them,
Speaker 1: you know, you see convergence in that regard. I think
Speaker 1: of door dash and rebhub and so forth. They're they're
Speaker 1: effectively delivering from those local restaurants to people's homes. So
Speaker 1: it's kind of a you know, utilizational last mile. One
Speaker 1: last question. For give me for a breaking I've only
Speaker 1: got about We've only got about thirty seconds left here.
Speaker 1: You're the International Council of Shopping Centers, Um, anything we
Speaker 1: should know globally in terms of what's going and just
Speaker 1: quickly if you could. Yeah, I think the same type
Speaker 1: of trends that you know you're seeing in the US,
Speaker 1: you're are are happening around the world. Obviously, you know
Speaker 1: the mix of retail is different, but you know demand
Speaker 1: is fairly strong everywhere. Supply chain issues, you know, we're cute, um,
Speaker 1: not just in the US, but everywhere around the world. Yeah, well,
Speaker 1: it's a global supply chain, right, we're all feeling the
Speaker 1: pain from it. Hey, tom um, I'm sure we'll be
Speaker 1: talking to as we get closer to those holidays. Stay safe. Tomcgee, President,
Speaker 1: Chief Executive Officer the International Council of Shopping Centers, on
Speaker 1: the phone from basking Ridge, New Jersey. Now you gotta
Speaker 1: do that shopping Carrol. Yeah, I do too. My wife
Speaker 1: and I were talking about it this week. Sorry, Shopping Centers.
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