May 2020. The COVID-19 lockdown was starting to ease, but it was in its second month. Consumers were flocking toward the dramatic digital shift that would eventually be the hallmark of the pandemic. At physical retail locations — like outlet centers — the outlook ranged from cautious optimism to downright grim.
“Liquidity and capital preservation are crucial in times of uncertainty,” former Tanger Inc. CEO Steven Tanger said in the company’s first-quarter earnings report at the time. “Due to our disciplined approach, we entered 2020 with one of the strongest balance sheets in our peer group. Our previously undrawn $600 million lines of credit provided an important source of liquidity that we believe will sustain our business until there is more clarity regarding the impact of the COVID-19 pandemic.”
Solid tenant management, that strong balance sheet, and effective digital transformation strategies got Tanger through the pandemic. Not that it was easy. Like other malls and outlet centers, it had to reckon with bankruptcies from high-profile tenants, including Lord & Taylor, Brooks Brothers and J. Crew.
The tentative posture it was forced to take has been replaced by a clear strategy that includes experiential retailing, a focus on value-based shopping, a remixed tenant profile and a loyalty program to tie it all together. As of the second quarter of 2024, Tanger manages 38 open-air shopping centers in 20 states and Canada, and its centers are leased to over 3,000 stores operated by more than 700 different brand-name companies.
“That’s the amazing thing about the current economic situation,” Justin Stein, executive vice president of leasing for Tanger, told PYMNTS in an interview. “We actually feel that we do some of our better work when things are a little bit more challenging, to get the creative juices flowing and feel that we have one of the best teams in the industry from our executives to operations to marketing. We think differently. We get creative.”
That attitude has manifested itself in a run of successful quarters. Tanger reported April 30 strong earnings results for Q1 2024, with occupancy at 96.5% and same center net operating income increasing 5.2% year over year to $87.9 million.
The company’s leasing activity remained strong, with 542 leases totaling over 2.3 million square feet executed during the 12 months ended March 31, a 38.9% increase compared to the same period in 2023. Average tenant sales per square foot for the total portfolio stood at $437 for the period, slightly lower than the $447 reported for the same period in 2023. The occupancy cost ratio remained stable at 9.3%, compared to 8.8% for the same period in 2023.
Tanger is bullish on the balance of 2024, with expansion plans on the books and a focus on attracting aspirational consumers who seek out value, especially during challenging economic times.
“We always say we operate at the intersection of brands and value,” Stein said. “When you shop our centers, you see a lot of name brands. And why is that? Well, the average person is looking to buy a brand at the best possible value. That’s another reason why when things get a little bit challenging, that’s where we accelerate.”
That acceleration, from Stein’s perspective, has a physical side and a digital side. On the physical side, Tanger is doubling down on the “experience” that goes along with buying “things.” It is attracting destinations like Planet Fitness to complement its anchors like Nike, Gap and Saks Off Fifth. Also, expect to see more offerings in the food and beverage category.
On the digital side, Tanger continues to expand its loyalty program, which was refreshed last August. The TangerClub app was retooled to offer what Stein said is a more intuitive and tailored shopping experience, providing users with personalized digital offers based on their interests and location.
The company has also streamlined its customer service by implementing a digital messaging platform, enabling shoppers to receive real-time information and responses to their inquiries.
Central to the revamped loyalty program is a new tiered structure, designed to incentivize spending and reward Tanger’s most dedicated customers. The entry-level “Blue” tier is free to join and allows members to earn points on every purchase at a Tanger center, requiring an email address to sign up. For a $20 annual fee, shoppers can upgrade to the “Gold” tier, unlocking access to premium retailer offers and doubling the points earned on each dollar spent. The top-tier “Platinum” status is reserved for exclusive retailer deals and triple points on purchases once a certain spending threshold is reached.
“Retailers love it because we’re connecting with the consumer,” Stein said. “We love it because we’re able to see cross-shopping patterns with us from a technology standpoint. So, the more information the better. It helps the retailer understand their consumer and provides us with data to enhance the customer experience.”
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