Tanger Outlets’ CEO on the off-price consumer

Shopping at an outlet center is a bit like a treasure hunt—that’s the draw for many people, said Tanger Outlets CEO Stephen Yalof. It’s even more appealing amid inflation.

“I think the most important thing is that inflation favors value. So as prices go up, if you want to make your dollar stretch further, that value channel definitely lends itself,” Yalof told Retail Brew. “To get that full experience, to shop the brands that you want to get the product you want, the logos that you want, in an environment that is on sale every day—I think that it’s what an outlet center will give you, whether during inflationary times or not.”

• Tanger operates 36 outlet centers in the US, which include off-price retailers like Burlington, TJ Maxx, and Saks’s discount offshoot, Saks Off 5th.
• Tanger reported $112.09 million in Q4 earnings last week, roughly on par with the $111.15 million in revenue during the same period in 2020.

Bargain hunting: “Even in the best of times, there’s always going to be an aspirational customer who, in a value environment, would be willing to step into a store that they might not on a...high-end fashion street or a fashion mall, but actually have an opportunity to buy product at a price point that’s accessible to them,” Yalof said.

• Last year, Burlington announced a 2,000-store expansion, doubling down on its previous commitment to open 1,000 new locations.
• TJX Cos., which includes Marshalls and HomeGoods, missed earnings expectations in Q4, but comparable sales for open stores were up 17% from two years ago. “Consumers are under budgetary pressure, which is making them seek better value for money,” Neil Saunders, GlobalData Retail managing director, said in a statement.

The price is right: But the value play isn’t just high-end. Yalof noted that home, apparel, and footwear demonstrated a strong “resurgence” in Q4 after Tanger executed 337 leases in 2021, many from these categories. Much of the success can be attributed to retailers getting out ahead of inventory and staffing issues prior to the holidays, he said.

What also bodes well for off-price, in Yalof’s estimation, is increasing conversion rates—meaning they’re selling more products with the same amount of customers.

• Tanger’s Q4 tenant sales reached an all-time high of $468 per square foot.

“I like to keep the cars in the parking lot in our shopping centers as long as we can,” Yalof said. “Our mission is to add diversity in merchandising, bring in a brand-new customer, get the customer who comes to stay longer. And when they do, they ultimately will build a bigger basket. And we’ll have more dollars per customer. And that’s a metric we care a lot about.”—KM