‘Tis the season for holiday shopping and Santa Claus visits and, at least so far, Macerich CFO and treasurer Scott Kingsmore said the Santa Monica, Calif.-based mall owner is seeing signs of the “most normal holiday season” in three years.
“In 2021, we saw things limping back to normal but people were still cautious,” he said in an interview with CFO Dive. “There is a return of families back to centers, with lines for Santa photos. Parking lots are full, and there are a lot of people shopping.”
Generally, people want to get back out, said Kingsmore, and there are a lot of different types of businesses that people can visit at their properties. “It's no longer just the traditional retail uses, there’s a lot of entertainment and social uses. Beyond a demand to get back out, people just now understand the importance of getting out is healthy,” he said.
Even before the holidays Macerich saw some encouraging signs. The company announced on Nov. 3 a 95% increase in foot traffic year-to-date for the third quarter, with levels back to those of pre-pandemic times driving tenant sales 5% above the same period in the year-earlier and 13% higher than the same span of 2019.
Despite the current macroeconomic headwinds — the November Consumer Price Index (CPI) rose 7.1% percent, not seasonally adjusted — Kingsmore said that they remain positive about the holiday season ahead.
Although Kingsmore said it is too early to tell how the 2022 holiday season will play out for Macerich and retailers in general, the company’s third quarter leasing volumes were higher than 2021 levels for the same period. The company executed 219 leases for 1.1 million square feet, according to their third quarter 2022 earnings call Nov. 3.
Kingsmore’s optimism comes as the mall sector has been challenged by changes in shopping habits driven by e-commerce and accelerated by the pandemic. But relying on e-commerce, however, is unsustainable and unprofitable, he asserted.
Today’s consumer
Kingsmore also cited rising levels of frustration and friction among consumers during the purchase process as a flaw of the e-commerce model. “We saw this during the pandemic, products come in that look different than the photos. It’s a two packages in-bound, one package out situation that winds up costing the consumer,” he said.
Although in store shopping was more in focus this year due to eased COVID-19 restrictions, experts described Black Friday foot traffic — a holiday known for its chaotic long lines and major deals that shoppers flock to — as “brisk”, CFO Dive sister publication Retail Dive previously reported.
But Kingsmore said a different type of retail csutomer is emerging. “Today’s consumer balances being time starved and wanting something very quickly,” said Kingsmore. “We are seeing that people are wanting to learn about a product in store and then maybe going back and ordering it online.”
The customer journey — the process of getting out and seeing a product and browsing a new store that recently opened is what creates a sense of brand loyalty for today’s consumer, Kingsmore explained.
Macerich also reported a two-year historic high in leasing volume. Although retailers are erring on the side of caution, the consumer is not really telling them to be super concerned, he said.
