Though Tanger didn’t skate through the pandemic unscathed — the REIT recaptured more than 1 million square feet of space across its 36 shopping centers from bankruptcies and brand restructurings — total occupancy across the portfolio had recovered to 94.3% as of Sept. 30. The company is optimistic about the upcoming shopping season, following a strong third-quarter performance in which tenant sales also reached an all-time high, exceeding 2019 rates by more than 13%. Commerce + Communities Today contributing editor Beth Mattson-Teig talked with Stephen Yalof, president and CEO of the outlet center company, about his expectations for the upcoming holiday season in the midst of lingering effects from the pandemic, supply chain issues and higher inflation.

Tanger recently announced strong third-quarter earnings results. What is driving that performance?

I have to give a lot of credit to the consumer, who has great spending power right now, and also to the retailers in the outlet channel who know exactly what the consumer wants, which is great brands at everyday value pricing. We can take credit for some of the initiatives that we’re doing to put the consumer in front of the retailer. We started our holiday shopping early with holiday decorations that went up Nov. 1. Starting early seems to be the new normal across all channels and formats, but particularly in our channel. We listened to the consumer, and we listened to the retailer. We paid attention to supply chain issues that were facing the country, and we wanted to make sure that we were ready when the consumer heard the rally cry of “shop early” if you want to get the things on your list.

How do you think the shop early theme is going to impact sales and traffic throughout the holiday season?

I think it’s going to be steady, and I think it’s going to build. Although the early narrative was shop early, the current rallying cry is that there are products on the shelves. I was at one of our shopping centers this week, National Harbor in Washington, D.C. I went into at least 50% of the stores, and there is inventory. It’s probably wise for people to get out early if they want to avoid crowds, and that is something that we are leaning heavily into this shopping season. Tree lighting has always been a great holiday draw, and we’re going to do multiple tree lightings at a number of our centers. The goal is to allow people who might be more crowd averse to experience the thrill of the tree lighting at a nonpeak time.

Is Tanger doing anything different in its marketing and promotions to help generate steady traffic flow this holiday season?

Yes, we have an exclusive partnership with Elf on the Shelf. Each of our shopping centers participates in a 12-elf scavenger hunt. It’s a great promotion for families with children, as well as couples and individuals. Customers can purchase a scavenger book at guest services. They can search the shopping center for all of the elves and receive a prize at the end. The scavenger hunt takes them in and out of stores, common areas and food vendors, so it really gives them an opportunity to circulate around the entire shopping center [and] shop while they’re doing it, and it really gamifies the shopping experience for people.

Last year, a lot of people did their holiday shopping online. Are shoppers ready to return to in-person holiday shopping, or do shopping centers have to work harder to drive traffic to properties?

We always work hard to drive traffic. The fourth quarter is obviously an extremely important one for us. We are in the variable rent business as well as the base rent business. A lot of the retailers contribute to those percentage rent line items in that fourth quarter, so we keep a lot of dry powder going into the fourth quarter from a marketing point of view so that we can do things to get the customer in front of our retailer base. Elf on the Shelf is an important initiative for us because it’s something that is unique, but I believe there is pent-up demand: not only excess dollars for spending, but just the thrill of being out. Inflation also definitely favors the value channel, so if you want your dollar to go farther, shopping at value-priced outlet centers is definitely an advantage. We promote the fact that we’re on sale every day in all of our messaging. Open-air shopping centers provide a great gathering place for people. We’ve also amenitized, adding food-and-beverage so that people have reasons other than just shopping to come to our centers. Or if they are coming to shop, we have reasons to keep them on-site longer.

Could labor and supply chain issues put a damper on the customer experience and perhaps bring out a bit of Scrooge in holiday shoppers?

Let’s go back a year where hours were truncated and local mandates limited capacity in stores. Yet, as I walked the shopping centers a year ago, there were lines out the door. What that said to me is that our customer wants to buy the products they want, when they want to buy them. That customer is resilient, so from a customer-experience point of view, a customer who is shopping in a value channel is probably less discerning than a customer who is shopping in a full-price flagship store. I also think we are providing a great customer experience when they are coming to our shopping centers. Part of our mission is to meet the customer where they are. Our customer service representatives were outside speaking with people and explaining TangerClub while those folks were in line. Customers also had the opportunity to go online and engage with our app to preview products that were in the store. So I think we were able to provide a little bit more of an omnichannel experience to customers before they got to a center or even while they were there.

Do you plan to continue that this holiday season?

Being part of that omnichannel ecosystem is critically important to us. A lot of that first shopping trip is now a window shop online. The more product that we can showcase online from our brands gives our customers the opportunity to window shop. This year, we engaged a fashion director who has done styling for a lot of the Tanger ads. When you see our ads, it’s typically product that you can buy at our stores. Our fashion director might go to four, five or 10 stores, pull product, rig models with that product and then take people to it through our social media channels — Instagram, TikTok, Facebook and other digital channels — and give the customer an opportunity to see this fully expressed look that, if they shop our centers, they can buy.

Despite the fact that Tanger recaptured more than 1 million square feet, your portfolio has returned to its pre-pandemic occupancy. How did you accomplish that?

First of all, there is a lot of retailer demand out there, and that demand started to pick up in fourth quarter last year. Retailers started to plan for stores they wanted to get open for 2021, 2022 and 2023. More importantly, when we got 1 million square feet back, we immediately empowered all of our general managers to become leasing professionals. This was a time when no one was getting on an airplane, retailers weren’t going out looking at new sites and a lot of shopping centers were slow to open. We became a destination of choice for a lot of local retail and a lot of other retail in the geographies that we serve.

We also brought in some uses that might not have been typical outlet space users. New tenants include folks that are in the experience and entertainment buckets, craft stores that offer DIY crafts as part of their format, local food businesses. For example, Byrd’s Famous Cookies is a staple in South Carolina. We were able to pull them out of a local strip center and put them in our shopping center, and we now have several of those stores across our portfolio. We have found that by opening up our centers to nonstandard uses, we were able to bring in a whole new cache of retailer, and with it came a new group of customers. We got them to shop more frequently, shop longer when they got there and also build bigger baskets while they were shopping.

Value has always been a big selling point for outlet centers. How is the merchandising mix evolving in the post-pandemic market?

There are a couple of dynamics at play. First, with flex work and more people working from home, we’re finding that a lot of people are shopping during the day. One of the issues with food-and-beverage in outlet centers has been that shopping centers were shopped far more heavily on the weekends than during the week. That made it less sustainable for a lot of those businesses. The outlet center of 20 years ago also was built 100 miles away from anything, so it required a real, planned trip. Now the permanent population has built around those centers, and the newer centers that we build are a lot closer to the core downtowns. Because of that, food-and-beverage is far more sustainable in our environments than in years past.

It seems as though the holiday boom is always followed by a bit of shakeout among weaker retailers. What’s ahead for tenancy in 2022?

Pre-pandemic, we had a pretty robust watch list. The pandemic accelerated a lot of those closures. One million square feet is a lot of space to get back. I’m pleased to share that our watch list is considerably smaller today. Although there may be a few tenants that may not survive this holiday season, we’re not really anticipating getting much space back in the foreseeable future.