Holiday Retail Spending Outlook

You can also listen to our radio show at two pm Eastern Time on Bloomberg Radio, or watch us on YouTube search Bloomberg Global News. You know, we just talked about Apple's cutting if it's iPhone production goal because of a chip crunch. I'm curious about the crunches that we're going to see in supply chains leading up to the holiday shopping season. I mean, we've heard, we've kind of we've kind of joked about it a little bit in the sense of, you know, executives coming on our shows

and saying, hey, do your Christmas shopping now? Well, that's kind of like we're saying, Okay, well, you gotta take it with a grain of salter. They're talking their book and telling you to go by bye bye right now. Uh, but it's legit. No, it is legit. And you know, I was talking to my family this past weekend and they were talking about holiday merchandise, though in particular already out in some of the big box stores. It's not

even Halloween anyway. Someone who's got a front row seat to all of this, especially when it comes to shopping centers around the US, is Tommyghee. He's President CEO of the International Council of Shopping Centers. A guest that we welcome back here on Bloomberg Business Week. Tom is on the phone in basking Ridge, New Jersey. How are you hi, Carol. It's good to be with you a long time. Least talk look for to be in the studio sometimes soon. Well, we look forward to having you back. I think it

was around the holiday season. So, um, what are the expectations for the holiday shopping season? What are you hearing from the retail and the shopping center community. Well, our forecast is for a really strong holiday season. We were forecasting nearly nine year over year growth in holiday sales from from um. You know, I think all the conditions that have led to strong retail sales during the course

of this year. Whether it's a lot of fiscal stimulus, high personal savings rates, you know, a strong job market, will all be the same factors that contribute to strong holiday sales. I do think, you know, the conversation that you were having prior to my coming on around supply chain and the impact that could have, you know, more broadly, including on holiday sales, is the big X factor. Um, that would be really the only reason I would see

not meeting kind of our optimistic forecast. I think the consumer is back, they're willing to spend, but supply chain issues, you know, it could be the X factor that could impact that. It's interest that you say about consumer back because we've we've talked about some sentiment indicators being down. When you say n growth and holiday sales year over year, is that because there's going to be higher prices? Like,

what are we talking about? What does that metric really measure? Well, certainly, there's certainly there's been inflation from one year to the next, but it's really driven more based upon you know, volume growth, you know, and it's and that was based upon a fairly strong holiday season. Although retail sales were down, uh with the coast and most of the year. Last year, holiday sales actually increased you over year as a lot

of people leaned into holiday spending. You know. Overall, for one, we were forecasting eleven and a half percent, you know, retail sales growth again, a lot of was was way down. UM. So you know, I think it's a it's it's broad based. You know, we're expecting about five percent growth and physical stories growth in e commerce, um, and a lot of growth in and things like food and beverage as well

as people to eat out. I'm really glad you you brought that up, Tom, because you know, if we were doing this, if we're having this conversation two years ago, in twenty nine, I think we'd be talking a lot about experiences. Last year, the conversation was all about actual physical things because people, you know, we're still there was no vaccine, we were still kind of stuck inside to

a certain extent. What is the mix this year with people buying people gift certificates to restaurants, gift certificates to experiences versus buying physical things, especially if you can't get

your hands on some of those physical things. Well, yeah, I think there's I mean, I think the the you know or dominance as as people will be focused upon buying fiscal things, um, you know, outside of the traditional going out to eat and entertainment that you know upticks in the holiday season, and we think this will up to significantly this year. But I do think there'll be

an increase in gift certificates. Look, I think that there is if we have the supply chain challenges that we think we may experience, I think you will see people continue to buy and spend that they might buy and spend non gift certificates to allow the person that they're buying the gift for to be able to choose what

they want. In two. So you may see a lingering impact of kind of a positive spending um in in in the holiday impact positively impact retailers in the early part of two with people roteem gifts certificate tom um. One of the things I've also wondered about. I know we talked at bit about supply chains, but I have been curious about the real estate market when it comes to shopping centers and a new It's been a story

that's been around for a while. Um, what are you seeing on that front when it comes to vacancies and stores, well, you know, I think there's an increasing level of optimism. Obviously, the industry was at the epicenter of you know, the pandemic and and you know was significantly impacted by all

the health and safety measures that took place. But the level of optimism in the industry, and honestly, the level of leasing activity is really at its highest level in my you know, in my tenure as the as the head of o c S see the Lab. We had a group of industry leaders together in Boston just a few weeks ago, and there was a great deal of optimism amongst the group. Um, a lot of new store openings. Actually store openings exceed store closings this year by three

to one. A year today obviously was a different story. But you're starting to see a real releasing of a lot of that space take place. And you know, we just did a study with Place to AI that looks at you know, looks at analytics of consumer behavior and really, um, you know, foot traffic is generally speaking, both in the open air segment um and also in the mall segment back to pre pandemic levels, to nineteen levels and so you're starting to see a real emergence at this And

that's not to say that there aren't challenged properties. Um. You know, the US is a big country, um. And you know, the challenges in the mall sector in particular, which gets a lot of attention, um is the most obvious. But within the mall sector there are some exceptionally strong properties, um. And then there's some others that you know, are will continue to be challenged and and may eventually be repurposed

into other uses. But generally, at least in my tenure, this is the This is the highest level of optimism I've seen, which might run a little counterintuitive than what to what a lot of people expect. Well, what is that optimism based on? And in terms of the vision for what a property likes, this property like this looks like in the future. A mix of retail, a mix of experiences, a mix of shopping even in some cases, right,

a mix of housing. Yeah, well that's right. I think you know, again, I think that that the industry is pretty big and diverse, and so the mall sector, the sector, a large regional mall is going to have a lot

of what you just indicated. You know, you're clearly going to see and move away from such a large percentage of leasable area from traditional retail into other uses, and you kind of we're seeing that happen pretty significantly pre Pandemic I, and that's going to continue to happen towards food and beverage experiences, but also utilizing other either pieces of the existing property or for those that are more successful adding on mixed juice components like residential and other

forms of hospitality like hotels, etcetera. When you look at retail more broadly, you know, I actually think that again perhaps counter in two it, but you look at those retailers that have done exceptionally well during the pandemic, what they really learned was that the the importance of the store, um, you know, it was pretty key to their success because you know, the story around convergence of the online addigital

world really took hold during the pandemic. And so you look at retailers like Walmart, Target, Costco, many others that have are really using their stores not only as a traditional store of people browse for for merchandise, but there are also many consumer fulfillment centers and so yes, people come for curbs I pick up and quick and collect, but they also ship from those stores as well, because it's a much more efficient way to deal with the

last mile. And even things like restaurants, you see them, you know, you see convergence in that regard. I think of door dash and rebhub and so forth. They're they're effectively delivering from those local restaurants to people's homes. So it's kind of a you know, utilizational last mile. One last question. For give me for a breaking I've only got about We've only got about thirty seconds left here.

You're the International Council of Shopping Centers, Um, anything we should know globally in terms of what's going and just quickly if you could. Yeah, I think the same type of trends that you know you're seeing in the US, you're are are happening around the world. Obviously, you know the mix of retail is different, but you know demand is fairly strong everywhere. Supply chain issues, you know, we're cute, um,

not just in the US, but everywhere around the world. Yeah, well, it's a global supply chain, right, we're all feeling the pain from it. Hey, tom um, I'm sure we'll be talking to as we get closer to those holidays. Stay safe. Tomcgee, President, Chief Executive Officer the International Council of Shopping Centers, on the phone from basking Ridge, New Jersey. Now you gotta do that shopping Carrol. Yeah, I do too. My wife and I were talking about it this week. Sorry, Shopping Centers.

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