Black Friday, Small business Saturday and Cyber Monday are huge opportunities to kick off the holiday shopping season. Business Correspondent Rhonda Schaffler talked to Tom McGee, president and CEO of the International Council of Shopping Centers, about early indicators that this holiday season will be positive for retailers.
McGee: I expect us to have a very strong holiday season this year. Our expectations are for 3.8 percent growth. You have a strong economy, rising consumer sentiment, a good job market. This is the ultimate consumer facing industry, so if you have a confident consumer, you’re going to have a good holiday season.
Schaffler: Tom, we have seen a big uptick in online sales. How is that changing the retail landscape in the traditional mall, like here in Short Hills?
McGee: So, first of all the vast majority of sales in the United States still happen in a physical stores with 90 percent of sales. But, I do think you are seeing this convergence taking place where the digital world is beating the physically world, and vice versa. Macro, you see Amazon buying Whole Foods, you see Walmart acquiring digital properties. But, you see it here, even in the mall. You see UNTUCKit, for example, which started online, opening up a physical store, so you really see this convergence. I think a lot of successful online retailers are going to start to validate their brand, look to develop customer loyalty by opening up stores. I think you’re going to see retailers really try to enhance your digital presence because the consumer, they just want to be served. They want a good price, they want great customer service, they want a consistent experience.
Schaffler: Tom, New Jersey’s an interesting place. Throughout the year, we’ve reported on retail store closings, but compared to the rest of the country, New Jersey seems to be holding up well. Why is that? What is it about this market?
McGee: Well, New Jersey’s a great market for retail. Obviously it’s between two major metropolitan centers, New York and Philadelphia. You have a highly educated workforce, a lot of disposable spending, so I think it does very well in almost all economic environments, but particularly when you have a strong retail environment like this. I would suspect that to continue. New Jersey will be a place where you see a lot of innovation in retail because it has a lot of great properties, such as this one in Short Hills Mall. So, I expect New Jersey to be in many ways a bellwether for what happens to the rest of the country.
Schaffler: We are going to see in New Jersey, at least they are making some head way on, the American Dream mall in Meadowlands. That’s something that’s been on the table for awhile. That mall will include things like entertainment facilities. Is that a necessity for malls these days to have entertainment facilities and restaurants?
McGee: Yeah, it really is, and I think it really speaks to consumer real estate. Malls are really meant to be a community center, they’re meant to serve the demographics in the community that they represent. And if you think about it from a macro perspective, you have an aging baby boomer population that’s transitioning out of their prime consumption years, they tend to be empty nesters. They eat out more, they like to entertain because they don’t have the kids at home. Millennials, kind of pre-kids, maybe pre-marriage, pre-home purchase, and they like to eat out, they like to be entertained. And so you see these two major demographic at two ages of the age spectrum, but they kind of like many of the same things — entertainment, food and beverage, etc. I think that’s going to continue for sure.
Schaffler: Tom, any sense yet of what area in retail will do very well this holiday season? Do you have any early numbers on the types of things people are buying?
McGee: Well, I mean electronics always do well on the holiday season, apparel always does well on the holiday season, gift cards do well on the holiday season. So, ultimately I think those retailers that do a good job of having the right product at the right price, but really focus on great customer service are going to continue to do well. And having a line presence in their digital space and physical space is really important. You are going to see a lot of things like click and collect where you buy online, you pick up at a store. We know when somebody walks into a store they tend to buy something else, so this speaks to that convergence that’s taking place.
Schaffler: It seems like the shopping season starts early and lasts longer. Everyday we have something going on, whether it’s Black Friday or Small Business Saturday, Cyber Monday. What happens to the retailers’ bottom lines if they have to keep discounting? Who wins?
McGee: Well, first of all I think that discount retailers are doing well, certainly consumers are price conscience. You are seeing more discipline on the part of the retailers. You’ve seen a lot of recent press where they’ve done fairly well at holding the line on promotions, so I think you’ll see that happen during the holiday season in a more formalized, consistent way. You know, Black Friday is an iconic part of the American culture. I think that certainly the holiday season, to your point, has lengthened, but this is still an important day. Maybe not as important as it once was from the aspect of percentage of sales for retailers. It’s still important, but it’s an important day emotionally, sentimentally, because it’s part of our American tradition.