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Americans are flocking to outdoor shopping experiences, a trend experts say will continue post-pandemic as consumers favor local outlets and strip malls

Published by Business Insider on Tue, 23 Feb 2021


<p><img src="https://static2.businessinsider.com/image/602e842942b84000192f42d8-1834/Tanger Outlets Riverhead New York.jpg" border="0" alt="Tanger Outlets Riverhead New York" data-mce-source="John Paraskevas/Newsday via Getty Images" data-link="https://www.gettyimages.com/detail/news-photo/shoppers-wearing-face-masks-due-to-the-covid-19-pandemic-news-photo/1293489964'adppopup=true"></p><p></p><bi-shortcode id="summary-shortcode" data-type="summary-shortcode" class="mceNonEditable" contenteditable="false">Summary List Placement</bi-shortcode><p>As <a href="https://www.businessinsider.com/retail-store-closures-could-hit-10000-in-2021-amid-coronavirus-2021-1">traditional malls continue to struggle</a> in the face of the pandemic, outlet malls are experiencing major gains and solidifying themselves as beacons of resilience in the retail industry.&nbsp;</p><p>Tanger Factory Outlet Centersone of the largest outlet mall chains in North America, with 37 locations across the US and Canadareported on Thursday that foot traffic has returned to pre-pandemic levels. According to the company, its outlet malls reached 90% of last year's foot traffic in the fourth quarter, before ultimately hitting 99% in January.</p><p>Though performance continue to be impacted by the ongoing effects of COVID-19, Tanger's total revenue of $111.2 million for the fourth quarter of 2020 outpaced analyst expectations.</p><p>Speaking on a call with investors, Executive Chairman Steven Tanger said outlet malls are faring particularly well thanks to their open-air design, which many consumers view as conducive to a safer, more socially distant shopping experience compared to traditional indoor malls.</p><p>"Our open-air centers provided an excellent value proposition for both retailers and shoppers that cannot be duplicated by e-commerce or other brick-and-mortar formats," Tanger said. "These desirable characteristics are demonstrated in our recent results, including the rapid pace that stores reopened after mandates were lifted and the positive trends in our traffic and rent collection metrics."</p><p>The company also made significant progress in collecting rent payments from tenants that had fallen behind due to pandemic hardships, reporting that it gathered 95% of rent fees due in January. Still, thanks to the uptick in retail bankruptcies, Tanger said the company is seeing <a href="https://www.businessinsider.com/clothing-brands-stores-youll-see-less-of-in-the-future-2020-7">a rise in vacancies and turnover rates</a> and anticipates leasing will be the company's most significant difficulty in the coming months.&nbsp;</p><p>Meanwhile, <a href="https://www.businessinsider.com/why-simon-property-group-acquiring-bankrupt-brands-jcpenney-2020-11">competitors like Simon Property Group</a>which owns a chain of international premium outlet stores in addition to its traditional mall venuesare also seeing positive growth in the outlet category. In a call with investors earlier this month, the company announced the openings of new outlet malls in Bangkok and Spain, as well as development of a new location in England.&nbsp;</p><p>Though Simon was transparent about the challenges afflicting its traditional mall business, Tom WardSimon Property Group's senior vice president of investor relationstold investors that "the premium outlook is positive," in regards to the outlet mall business.&nbsp;</p><p><img src="https://static3.businessinsider.com/image/602eacef42b84000192f43a4-1777/Premium Outlets.jpg" border="0" alt="Premium Outlets" data-mce-source="Jeffrey Greenberg/Education Images/Universal Images Group via Getty Images" data-link="https://www.gettyimages.com/detail/news-photo/florida-orlando-international-premium-outlets-face-masks-news-photo/1268664621'adppopup=true"></p><h2>A bright future ahead for outlet malls</h2><p>According to Jonathan Treiber, CEO of offer management platform RevTraxwhich offers marketing tools and strategies to clientsoutlet malls will "likely benefit disproportionately before indoor malls or department stores." Treiber said this is thanks not just to their open-air architecture, but also heightened demand for bargains in light of pandemic-driven unemployment and salary cuts.&nbsp;</p><p>"Outlet malls have several things going for them during the pandemic," Treiber wrote in an email to Insider. "First and foremost is their pricing and positioning in the market, which caters well to deal-hungry shoppers who are more price sensitive for a range of product categories."</p><p>Though Tanger CEO Stephen Yalof said the company has seen a return on investment from its 2020 "digital transformation"which involved rolling out offerings like buy-online-pickup-in-store and virtual shopping servicesthe company and its outlet mall competitors still have a ways to go to catch up with the broader e-commerce industry.&nbsp;</p><p>"Outlets still have major head winds and are largely behind the e-commerce eight ball," Yalof said. "The tidal wave of online shopping is largely bypassing outlet malls, which largely rely on in-person foot traffic."<u></u></p><p>While Tanger ultimately may have its work cut out for itself on the digital front, Yalof said to expect expansion into new category areas like food and grocery for the company in 2021, building upon the success of recent ventures like opening a Nantucket Meat &amp; Fish market in Hilton Head, South Carolina.</p><p>Tanger will also continue to rollout new brands across its locations, following the recent additions of stores including Tory Burch, Lululemon, Victoria's Secret, and Hugo Boss.&nbsp; Yalof said they also expect to see growth in the coming months from the forthcoming opening of its first ever Dick's Sporting Goods outlet store, which is slated to open next month.&nbsp;</p><p>Looking more broadly across the retail industry, Shelly Socol, co-founder of e-commerce agency 1R, said to expect a rise in open-air concepts to meet demand for safer perceived shopping experiences.&nbsp;</p><p>"The trend for open air markets at outlets, neighborhood strip malls, and local malls will grow exponentially as consumers are more comfortable staying local and shopping within their neighborhoods," Socol told Insider. "Consumers have become more committed to buying online or staying close to home and shopping within their neighborhoods which have the ability to offer outdoor plaza setups and easy drive in pickups."</p><p><strong>SEE ALSO:&nbsp;<a href="https://www.businessinsider.com/jcpenney-bankruptcy-judge-predicts-retail-reits-struggle-2021-1" >The judge who presided over JCPenney's and Neiman Marcus' bankruptcies predicts more trouble for retail in 2021. Here's who he thinks is most vulnerable.</a></strong></p><p><a href="https://www.businessinsider.com/americans-flock-to-tanger-factory-outlet-malls-during-the-pandemic-2021-2#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="https://www.businessinsider.com/worlds-most-expensive-liquid-thoroughbred-horse-semen-2020-3">Why thoroughbred horse semen is the world's most expensive liquid</a></p>
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