David Simon, President and CEO of Simon Property Group
Patrick T. Fallon | Bloomberg | Getty Images
David Simon, CEO of the owner of the nation’s largest shopping mall, wants to create a new type of annual shopping extravaganza as consumers increasingly realize pinch of inflation Almost everywhere they go.
think heroine Prime Day, but for retail outlet centers.
The event has been dubbed “National Outlet Shopping Day” by Simon Property GroupIt’s for people seeking deep discounts on everything from new clothing and sneakers to sunglasses and accessories, Simon told CNBC in a recent Zoom interview.
The first iteration runs this weekend at 90 of the real estate owner’s premium Outlet and Mills-branded outlet properties in the US. From J.Crew to nearly 300 retailers Banana Republic According to Simon Property, Puma will participate by offering deals exclusively at those locations. It’s one way mall owners are working with their tenants to attract cash-strapped consumers to shop as budgets are squeezed and retailers are more competitive for shoppers’ dollars.
retailer from target To gap They have seen their inventory levels balloon as backlog goods arrive from overseas, with consumers shifting their spending away from so-called pandemic categories such as sweatpants and office furniture.
CNBC spoke with Simon as well as Gary Duncan, president of Simon Property’s Premium Outlets and its Mills business, and Mikel Thiggeson, chief marketing officer, about this weekend’s event, the state of the retail industry and the American consumer.
The conversation below has been edited for clarity and brevity.
Simon Property Group’s Sawgrass Mills Outlet Center in Sunrise, Florida.
Source: Simon Property Group
Why did Simon Property Group create this shopping holiday and decide to run it this weekend?
Simon: The idea was in the works in early 2019. And then we couldn’t do it all at once. We were going to do it in 2020, and Covid ruined our plan. That’s why we’ve always wanted to do this.
Origin was really about giving back to the consumer in terms of our special promotions and deals. But also to strengthen Simon Outlet is great brand. And we want them to be top of mind. We’re going to do it annually – and with some inflationary pressures it couldn’t have come at a better time.
Thigesen: We’ve timed it between the traditional promotional window, so Memorial Day is over and school-to-school hasn’t started.
How has your retail tenants been welcoming to participate with discounts and other incentives to entice people to come out and shop?
Simon: We have 300 retailers, but I expect to have 1,000 next year. We look forward to building on it every year. And obviously it’s our day, but we welcome the participation of any outlet owner who wants to participate.
How are your outlet centers performing in comparison to the iconic shopping malls of Simon Property Group, especially against this backdrop of red-hot inflation and with more consumers seeking savings?
Simon: We’re really, really pleased with our full-value business. Our outlet business has been extremely stable and growing at the same time. We have outlets that are in major tourist markets – Desert Hills, Sawgrass Mills – and we’re starting to see them reach records [sales] Again because we see more than domestic tourism coming back. i’m starting to see international tourism return back.
To be honest, I think America is where there is action. We have a lot of good things going on in this country. I think you’ll see sourcing coming back. look at inteltheir commitment. Tesla. You go down the list, the less dependence on China. And we’re seeing it from international retailers who want to grow in the US saying it’s a better place.
We are seeing a lot of retailers figuring out how to manage excess inventory right now. Are you looking for any of them to offload those items through their outlet businesses?
Duncan: We saw earlier in the year and even for the better part of 2021 that tenants didn’t have enough products because they had supply chain issues that were coming from Asia – across the apparel and footwear categories , Definitely. And it has been largely eliminated.
Now, people are spending, but they are cautious about where they are spending and they want their money to go further. The outlet will continue to be a very valuable resource for them and for us. But we haven’t heard anything about retailers having large amounts of inventory. We’ve been storing some pop-ups with some people who have this problem, but I don’t see it widespread.
Simon: I’ll reinforce what Gary says: It’s really selective here and there. And it bets more on what’s happening now. You see this from a lot of mall retailers if you [in the business of] Dressing, jewelry, and event material, you’re doing really well. Remember when we thought 2020 would be the beginning of going out with friends? It didn’t happen at all. It is happening this year.
If retailers have a little bit more inventory — because as Gary said, the consumer is a little more cautious — that’s really good for the outlet business. We’ll see if this actually happens, but it hasn’t become widespread by any means.
What other changing consumer behavior are you seeing?
Simon: We are very sensitive to what the consumer is doing, and that’s why we want to figure out how to grow their dollar. There is also a shift towards dressing. We are seeing really good demand on that front.
Obviously, the high-income consumer has not changed his behavior. Low-income people are under pressure, and that is what we are focused on. That’s a consumer concern, and we’re trying to figure out how to help.