Open Air Shopping Innovations: Reimagining Retail with Steve Yalof, President & CEO of Tanger, Inc. | The Retail Pilot

Description

In this episode of The Retail Pilot, Ken Pilot welcomes back Stephen Yalof, President and CEO of Tanger, Inc.

With over 25 years of experience in the commercial real estate industry, Stephen shares insights into Tanger's growth strategies, the evolution of retail spaces, and how the company is adapting to changing consumer behaviors. From expanding into full-price lifestyle centers to enhancing customer experiences through digital innovation and loyalty programs, Stephen provides a comprehensive look at Tanger's journey and future direction.

Key Topics Discussed

1. Tanger’s Recent Successes Performance Highlights: Tanger achieved a 4.3% increase in net operating income (NOI) and a 97.4% occupancy rate. The company executed 543 leases covering 2.6 million square feet over the past year. Expansion Efforts: Recent acquisitions include The Promenade at Chenal in Little Rock, Arkansas, which features the only Apple Store in the state.

2. Growth Strategy Diversification: While maintaining its core outlet business, Tanger is expanding into full-price open-air lifestyle centers that include specialty stores, grocery anchors, and other amenities. Acquisition Focus: Stephen emphasized the importance of acquiring high-quality properties in strategic markets to leverage existing regional management teams.

3. Enhancing Customer Experience Tanger Club Loyalty Program: A tiered membership program offering discounts and perks for shoppers. Members can choose between free or paid memberships ($20 annually) for additional benefits. Digital Integration: Introduction of QR codes for real-time offers and digital savings passports, replacing outdated coupon books. Amenities and Entertainment: Investments in food offerings, gathering spaces, and entertainment options like pickleball courts to create a more engaging shopping experience.

4. Industry Trends Blending Physical and Digital Retail: Tanger is exploring e-commerce integration as part of its long-term strategy while using digital tools to enhance in-store experiences. Health & Beauty Brands: Increased presence of brands like Sephora and Ulta in outlet environments, offering regular-priced products alongside experiential services.

5. Leadership and Team Building Talent Development: Stephen emphasizes hiring complementary skill sets to address organizational blind spots and promoting from within to keep employees motivated. Communication Practices: Regular town halls, employee resource groups (ERGs), and an intranet ensure transparency and engagement across the organization.

6. Reflections on Leadership Lessons Learned: Stephen highlights the importance of "failing fast" to pivot quickly when strategies don’t work. He also stresses the value of building a strong team aligned with company goals.

Notable Quotes "Fail fast—if something doesn’t work, pivot quickly and move on." – Stephen Yalof "We’re lifestyle-izing our portfolio by adding food, beverage, amenities, and entertainment to enhance the customer experience." – Stephen Yalof "Our loyalty program is about understanding our customers better and providing them with personalized value." – Stephen Yalof

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Transcription

Speaker #0
Welcome to this flight of the Retail Pilot. I'm your host, Ken Pilot, former CEO and current brand advisor, retail tech investor, and board member. I'm thrilled to share with you the insights from some of retail's legends and leaders, as well as my perspective on retail today. This podcast is sponsored by the following. PredictSpring is a global point of sale platform live in 22 countries. The platform includes mobile POS, endless aisle, fulfillment, inventory management, and clienteling, creating a true omni-experience for customers and associates. BrickSpring Powers, Suit Supply, Converse, Lovesac, Decium, Janie & Jack, and Bouclair. I am excited to welcome back to the Retail Pilot, Steve Yaloff. Steve is the President and CEO of Tanger Stores, a leading operator of upscale open-air outlet centers with more than 37 locations across the U.S. and Canada. Steve joined Tanger in April of 2020 as president and COO before succeeding Stephen Tanger as CEO in January of 2021. Steve has over 25 years of experience in the commercial real estate industry with a primary focus on retail space. Before joining Tanger, Steve served as the CEO of Simon Premium Outlets and previously served as senior vice president of real estate for Ralph Lauren and senior director of real estate for Gap Inc. In both places, Stephen and I had the pleasure of working together. Steve, welcome back to the flight.
Speaker #1
Thanks for having me on. Great to see you, Kenny.
Speaker #0
Got to congratulate you on another great quarter, which you reported almost a month ago, like hitting it hard on the key indicators. And I'll just call them out because it makes me feel really proud to know you. Your comp NOI, and that's net operating income from those of you that are out there, was up 4.3%. That's a key number in the outlet space or really the real estate. retail space, the occupancy rate was 97.4%. You experienced your 11th consecutive quarter of rent growth. And over the trailing 12 months, Tanger executed 543 leases, covering 2.6 million square feet, focusing on attracting new and sought-after brands. In conclusion, this has been a great podcast. Thank you, Steve. Steve, wow. That's amazing.
Speaker #1
That's grabbed me on. It's been great.
Speaker #0
That's it. You got to do the George Costanza. That's it. I'm out of here.
Speaker #1
Well, look, you're only as good as your last quarter. So as far as anybody paying attention is concerned, it's what have you done for me lately? So my guess is we'll spend some time talking about that.
Speaker #0
Yeah. I mean, listen, retail, it's been an interesting year to say the least, but it feels as though the current environment is somewhat buoyant. How are you seeing things to the degree that you can comment on them as we're between earnings calls, but how are you seeing the customer today in the centers as we're heading into the holiday season? Well,
Speaker #1
as you said in the beginning in your introduction, and thank you for that great introduction, we're pivoting into new businesses as part of our growth strategy. So in addition to the value channel, which is our legacy portfolio that we've been known for, And we continue to expand that. We added Nashville about a year ago and we'll continue to grow the outlet business because we think it's not only is a core to who we are, but it's really important channel for both retailers and for customers. We're also getting into the full price shopping center business, open air lifestyle centers that are primarily dominated by specialty stores, in some instances anchored by grocery. And for us, we think that that's a really important, very transferable. business. And last week we closed on our second. We just purchased the Promenade of Chanel, which is in Little Rock, Arkansas. So as I think about the customer, I have to think about those two particular verticals. Obviously the value-oriented customer is there and is there in a big way. And what's interesting is a lot of people are moving into that space from a consumer point of view. Because it's a great place to get great products at everyday value pricing. But it's also a great opportunity for aspirational customer to be able to shop a brand maybe weren't able to shop at full price. And then similarly, you know, there's a customer that's looking for quality that would typically spend on a higher end. But, you know, is satisfied by the value and the quality that they can find in those outlet centers. You know. The full price business, what makes that unique is there are retailers that are very unique to that channel. I think of Apple as one of those brands.
Speaker #0
What I read, Stephen, your purchase, your promenade, the Chanel promenade in Arkansas. It has the only Apple store in Arkansas.
Speaker #1
Yeah. I mean, you know, which was part of our investment thesis, right? We're looking for real prominent locations in geographies that are, you know, close to where our core portfolio lies so that we can leverage our existing regional field management teams.
Speaker #0
Well, I want to talk a little bit about the Tanger Club because last time we were together, you're really beginning to roll out your loyalty program. And now thinking about the Tanger Club, will this include some of your open lifestyle centers as well, or is that going to remain exclusive to the outlet environment?
Speaker #1
Well, the Tanger Club is an inclusive club for anybody who shops any of our centers. But the loyalty program that rewards customers for shopping with us, you know, shopping center developers don't typically own a product. But what we do own. is the ability in concert with our retailers to share with our customers additional savings. And that's primarily in the value channel. So where those retailers are more inclined to share with us incentives to induce customers to come and shop that channel, that's where the loyalty portion of that Tanger Club primarily lives right now.
Speaker #0
And similar to what some retailers are doing, You can either be a free member, which I think is the blue level, or you can actually pay. Maybe it's, what is it, $20 a year to be an old member?
Speaker #1
Yes.
Speaker #0
And then if you shop a certain amount, you're at the premium level and you'll get added perks and discounts and benefits throughout the center.
Speaker #1
That's right. And, you know, look, the free program is for us where a majority of the customers are, is an important. you know, sort of top of the funnel opportunity for us to engage with new shoppers as they come and shop with us. You know, it gives us an opportunity to learn a little bit more about them with the information that they're willing to share with us. And more importantly, gives us an opportunity to communicate with them about things that are interesting to them. You know, it's really important if we inundate you with emails from Tanger, we're going to train you not to open them. But if you know that they're going to be specific and reflective of brands or offers that you're genuinely interested in going after, then we might be able to train the opposite and get you to open those emails and engage. And that's the program as far as top of the funnel. And we offer discounts just by being part of that membership, the $20 membership, which gives you that. that gold and platinum status. We have additional value that we're able to share with those customers. And look, the price value relationship of spending $20 when you go and shop at an outlet, you know, if you think you're going to go spend some money at the Gap and there's a 20% off, just spending $100 at the Gap pays for that membership. And then off you go to Ralph Lauren. And if you spend $200 at Ralph Lauren with $20 off the savings. stack on top of the savings. And it turns out to be a really good trade, particularly for our customers who are inclined to shop multiple stores during a visit.
Speaker #0
It's great too, because then you're also working for your customer in concert with your retailers to provide additional value. And look, it's a bit of gamification, right? It's fun to go to the outlet center. And let's talk about some of the things you're doing in the centers to differentiate your Tanger properties from others. How are you adding... to the experience? What are you doing around the shopping experience that may not have been there when you took on the business?
Speaker #1
Let's go back to when you and I first met, when you were running the outlet division of Gap and I was leasing outlet shopping centers for New Plan Realty Trust. I'm not going to give a year, but it was a while ago.
Speaker #0
Yeah, it was a while ago.
Speaker #1
And the outlet experience way back then was really about shopping stores, shopping stores, and maybe stopping and getting a grab and go at Annie Annie's Pretzel and moving on to the next thing. Also, let's talk about the geography. The shopping centers were much further away from full-priced and big cities, far further than they are the outlet centers of today. A lot of manufacturers didn't want to be in conflict with a lot of their other full-priced channels, primarily their department store business. So the business was a much different business and it really shopped. dropped far more on the weekends than it did during the week. And as you know, being from the restaurant business. It's hard to have a sit-down restaurant that only really operates two or three days a week. So what we're finding as we get closer and closer and there's more vertical retailers finding the outlet channel is an important place to bring their products to consumers. The closer in we've been able to come, the shopper is actually coming from a much closer area and that customer is demanding more service, better amenities, and more importantly, a better food offering. And so as we've been... re-merchandising our shopping centres. We've been placing a very heavy weight on making sure we put in the appropriate food, places for people to gather, amenities where people can have, you know, services are not far into our outlet schemes now. And, you know, lastly, entertainment uses so that when that carload of people comes, there's plenty of things for everybody in the car to do. Some can shop, some can eat, some can watch a game, some can go to Topgolf and hit golf balls. Some can go to Pop Stroke and play miniature golf. There are things for everybody across our portfolio and on the adjacent land proximate to our portfolio.
Speaker #0
So I get you hit on a key point, which is the proximity to the customer. And I think that that would have a lot of influence on how you quote unquote merchandise the center. But certainly one of the movements that I've seen over the past years really is the shift more towards amenity. and away from such a reliance on just stores. So today's regular price center, the mix of amenity to store is much higher. There are more restaurants. There's more things to do than just shop. It sounds like you're incorporating that formula, if you will, into the way you're approaching your centers or even new centers.
Speaker #1
Well, as we talk about the new centers, yeah, there's obviously most of the full price that you're looking for. town center type product that we're looking at or have recently added to our portfolio has just that. I mean, they're as important for the services they have as they are for the retailers that they have. And restaurants are very much a critical part of that. And in fact, as we continue to grow that part of our portfolio, we're now meeting a lot of new retailers and restaurants and services that we haven't had in our portfolio. They now understand what it's like being in a center operated by our Tanger management team, our leasing team, and our marketing team. And we're hoping to use those entrees as an opportunity to cascade a lot of those uses throughout the rest of our portfolio, full price and value price.
Speaker #0
Let's talk a little bit about just some of the industry trends that you see happening and how you're incorporating those trends into Tanger centers or some of the newer properties that you mentioned. But there's... a lot of discussion around digital retail, the combination of physical and digital, and how it comes together. How are you bringing the digital aspect of retail into a Tanger Center?
Speaker #1
Well, look, we talked about loyalty. And, you know, loyalty was sort of that first touch point, the Tanger Club and loyalty digitizing, you know, back in those days when, you know, you and I were doing deals together. It was all about the coupon buck. It was all about... You stop at customer service, you get your coupon book, and then you shop with coupons. Well, thankfully, we've evolved. And our first digital touchpoint is one's ability to, and we've got QR scan codes all around our center where, you know, sign up to our loyalty program. And, you know, we will share with you our digital savings passport. And what's so unique or effective about it, digitizing, as you probably recall, those. Old coupon books were printed once, maybe twice a year. Some of the retailers might have moved on. Some of the retailers might have been new and just didn't meet the cutoff date. So now, at least when it's digital, you can be to the minute. And as you recall, having run an outlet business, you know that the general managers in those stores have the opportunity almost on a daily basis to put items on sale that they're trying to move through their inventory. In our full price venues, digital manifests itself slightly differently. We're able to get people to scan the leasing plan so you can walk the shopping center. You can have that on your phone. You can see product on your phone while you're there in real time. We're working to enhance some of those digital strategies. Maybe one of the things that people always do when they park their car is forget where they park their car. I know. But simple things like that. that provide convenience and amenity to the customer, they remember things like that. And those little things are certainly, you know, sort of help us. be top of mind when a customer is thinking about going shopping and who they want to go shop with.
Speaker #0
You know, you hit on an interesting point. Probably the greater ability for outlet store managers, the retail managers, to make certain pricing decisions real-time and actually convert that to or pass that on to the customer real-time. Generally, for regular price, those decisions are made well above that pay grade. And here it sounds as though you're really working with the teams in the stores to bring the best possible pricing to the customer at any given point at any given day. And I think that's super exciting. And I think if you can get the managers to motivate the managers in the brands, and that's a whole other thing. But, you know, you can really change the way they do business in the day. You can provide that lift that they're not going to get by making important price changes just on a QR code. connected with a QR code.
Speaker #1
You all remember the red light specials in the Kmart stores, and then somebody would come over the speaker and say, special on aisle nine. Well, you know, that's now translated and manifested itself into the digital world where if you've opted into our program, we could push messages to you in real time when you're at our shopping center and alert you to the fact that a particular retailer may have some inventory that they're looking to push. And in partnership with that retailer, we can alert those folks that have signed up to want to hear messaging from those retailers. Again, going back to my thesis, making sure that we only send information out. And look, it's an evolution. We're going to get there. We're only going to get better. But we think we know what the North Star is, and we're certainly heading in that direction.
Speaker #0
Stephen, what brands do you see within your portfolio or retailers within the portfolio? would you say have really done a good job around digital, whether it's digital display or adding digital to their playbook, just as you have?
Speaker #1
Well, you know, it's interesting. We see a lot more retailers understand that it's as important to work with the customer on the sales floor as it is to get them to the cash wrap. And now we're seeing more retailers with handheld... POS technology so that they can have the sales help on the floor and they can also cash them out. And so, you know, Apple definitely pioneered that technology. Brands like American Eagle are pivoting towards it. And I just think that that's vital. You know, for me, sales help is the major differentiator between shopping on online channels and in-store channels. It's the ability to ask a question. It's the ability to try things on. It's the ability to touch and feel the product. but you know it's great when there's sales help in a store that actually knows how to sell the product and when that happens that really makes for a real successful opportunity for that so if you can get people out from behind the sales desk and put them on the floor to actually engage and work with shoppers there's plenty of evidence that those stores that do that well move a lot more product when
Speaker #0
we were together last time we talked a little bit about enabling e-commerce similar to what Simon has done with now. I think they've renamed Simon property or it was called Simon premium outlets online is now shop Simon. Where is that in the evolution of Tanger? Is that something that we'll see in the next couple of years? Is that on your radar?
Speaker #1
You know, I think that, you know, that online selling, I think that's here to stay. So, you know, for us, you have to figure out how to embrace that and make that part of your suite of services that you can offer the customer. We've sent loyalty up with a three-year plan with e-commerce sort of out there a few years. If you go back to COVID, the first thing that we stood up when people couldn't actually get out of their homes and shop was our ability to shop for them, where we had a group of people, whether they were our interns or general managers, that would go out and literally shop stores, box and package and send. If you're going to be a full-service shopping center owner, manager, you need to provide that suite of services to your customers. So we continue to provide that when called upon to do so. But we've set up our loyalty program and our customer communication to have the bandwidth to ultimately facilitate e-commerce downstream.
Speaker #0
Got it. Sounds like film at 11 on that. Well, I'm very curious about this. adding the open air regular price centers as we, again, look out over time, probably a real opportunity to make acquisitions. I don't know how much you can really talk about. future acquisitions, but at a more broad level. Sure. It sounds like regular price will be very much a part of your approach to business going forward.
Speaker #1
Well, look, as we continue to add food and beverage, amenities, services, grocery, bigger box on some of the peripheral land that we have in our value channel, we have learned that we're pretty good at it. We've got great relationships. We're talking to the same people, the same tenants. We understand, you know, we're set up to make those deals. And, you know, you could say that over the past three or four years, we've really been, you know, for lack of a better expression, but sort of lifestyle-izing a lot of our existing portfolio. Adding these uses that one typically never saw in, you know, older generation of outlet centers and bringing them into our four walls. By virtue of those relationships, by virtue of that experience, we. you know, sought to engage in that full price business because we think our team is perfectly aligned to go after it. And the one thing that we have that's very important in Outlet is our marketing department. You know, going back a few years, if you think about Outlet, Outlet retailers are not going to use their marketing dollars to tell the customer, go shop value. They're going to use their marketing dollars to get that customer to spend in a full price venue first. So for us, It's really incumbent on us as developers to make sure that we do a really good job of marketing our brands, marketing our shopping centers to both the local and tourist population in that particular area. We think that marketing muscle that we built will have a great resonance in that full price business as well. So we think we're probably better positioned than most to go after this inventory of. lifestyle product that's out there that's far in excess of the outlet product that's available out there. And, you know, I think the reverse isn't true. I don't know that a developer of lifestyle or owner of lifestyle can really translate into outlet because of that marketing is so critically important to have, you know, that team built functioning and operating. So in today's environment, when the cost of construction is so high, when building new shopping centers far exceeds the cost at which one can buy an existing property. We think we can buy the best property in the markets that we're targeting and use the value of our team, marketing, leasing operations to really be a best-in-class owner in that space. So that's why we're focused on that. We're a growth company looking to go after. I think our investors have recognized that we're a growth company and They're looking for us to continue to grow our portfolio. And we see that as real fertile ground for us going forward.
Speaker #0
And to do that, you've done a lot around building your team. And you've mentioned your marketing team, but it goes beyond marketing. You've added a number of key positions and continue to focus on adding talent. What do you look for in people to bring them onto the Tanger team?
Speaker #1
Well, you know, my senior leaders, I'm looking for people that do things that I told you. that I don't do as well. You know, I like a team that completely compliments one another. You know, my chief operating officer, I've said many times, you know, she's the eyes behind my head. She sees things that I would never see. And if you think about it, to me, building a team means hiring into your blind spots, identifying what you do well and staying in your lane, and then finding best-in-class people who know their business better than anybody. who form this great complementary team and also can go out and build their teams so that they can achieve more things. Synergy is the sum of the parts achieving more than the individuals. And I think that's one of our hiring thesis is what does this individual bring to the table that we don't do currently? And how is that an important quality that we can go after makes us better, makes us earn more? makes us more efficient. And that's how we're thinking about hiring people as we bring them into this organization.
Speaker #0
And I would say this too, I'm sure you would agree, but actually now pursuing lifestyle centers that are not outlet brings them a new opportunity and something else to focus on and learn. I mean, everybody wants to feel like they continue to learn. So new opportunity is not only good for the shareholders, but also great for the team. And kudos to you and the team. because without the success that you've experienced over the past five years and the money that you're putting in the bank, you wouldn't be able to go out and buy these centers. And you are going out and you're writing checks. I think I read it was somewhere close to a $75 million transaction for the most recent center. It's great that you can continue to do that. And it really, from what I can see and the way the company has really grown in the past five years, just wish I'd bought the stock. What else can I say, Yalov? You're killing it, man.
Speaker #1
Thanks. High praise coming from you. You're somebody I've always held in extremely high regard. Obviously honored to be sitting here talking to you today and really enjoying it.
Speaker #0
It's been just so fun to watch. And I got to ask you, having been at this for five years, just significant learnings, things that, you know. I'd love to hear a couple of mistakes. I mean, you may have made a couple. I make them every day, but just a couple of key learnings and mistakes. And we learn from our mistakes and then we jump on them as opportunities, but share that with us.
Speaker #1
Well, look, let's just say one of the great rules of thumb is fail fast. You know, if failing fast is something that you're comfortable doing, then it allows you to take more risk because it allows you to try things.
Speaker #0
And, you know, if they don't work, you know, pivot quickly and on to the next thing. You know, there were shopping centers that we've bid on and perhaps didn't give ourselves enough credit for the value that we could add and wound up losing those acquisitions. I would say those are mistakes. And I think the way we underwrite and look at opportunity and gauge value is a lot different because of it. You know, I think we identified a deficiency in our org. and brought somebody in who really thinks about that differently than we do. So even going back to your question about people, if you make a mistake because you don't have the appropriate talent on the team, that's an easy one to rectify. Bring in the right talent. And if I can add that one thought to the talent thing, because I didn't mention this and I think it's critically important. We love hiring from within. We love elevating people from inside of our organization, giving them opportunities to take on more responsibility and learn. Because for us, I think that that's what keeps people engaged, excited, and wanting to work for the company. When they feel like there's a path, there's somewhere for them to go, they'll stick with you. And, you know, I'm very proud of the leadership team that we've developed over the years that I've been here. You know, we've really been able to build on those strengths. And a lot of that comes from this failing fast and realizing what we do well, what we don't do well. and then putting the resources in the appropriate place.
Speaker #1
What is your methodology for messaging your people, for communicating with teams? How do you, Steven Yalov, get the word out to the organization?
Speaker #0
You know, in song, Kenny.
Speaker #1
Wes, you want to sing?
Speaker #0
You know, look, we're primarily, by virtue of having 40, now 41 shopping centers across the country, we're a remote organization. You know, I have a Greensboro, North Carolina corporate office. Well, you know, our hiring thesis has always been best athlete, regardless of geography. And that's how we've built our team. You know, it's mandatory that you're in the corporate office, but I think people like to come and visit us in Greensboro every now and then. Today, I'm sitting in our satellite New York office, which is small but mighty. And we have some real important people that sit here and that places for people to come and visit us. You know, we're in New York where a lot of our retailers reside. So it gives us a great place and a great opportunity to meet people there. So with that remote organization comes the requirement to get out in front of our team and communicate to them as regularly as possible. We have no fewer than four town halls a year following our earnings calls. We give a financial update, let everybody know where we stand. We overshare with our team because we think it's important for people to know what we're doing, what our strategy is, and how their particular role plays a big part. in the direction that we're going. You know, I remember one of the things that Ralph Lauren did extremely well when we were there was they made sure their team saw the new marketing, the new ads. So Friday at 1.38, now I got my head of leasing call, but usually when he calls me on a Friday, it's to give me some good news. So I'm anxious to see what it is he has to talk about. But we do these town halls quarterly. We think that's really important. We've got ERGs, you know, employee resource groups that, you know, for a lot of affinity groups around the company. You know, when we do a monthly, depending on what affinity or what national holiday it is, we like to celebrate that because we've got an extremely diverse organization. So we'll do monthly learning sessions where people who are members of those particular groups or clubs will lead a discussion with maybe an outside person will come in and give a lecture. So that's a monthly sort of during lunchtime. So it gives us an opportunity to bring our people together. We have an intranet. So whenever you log on in the morning. There's a screen there that shows you some of the things that are going on. Obviously, Chanel's big news that we just bought that shopping center. Everybody is in the loop. So we try to do our best to make sure that everybody knows what's happening before it happens. And it just makes them feel more connected. And then when they see one of our new advertisements or hear about a new store opening, they knew about it first before they actually went to the center or one of their friends come back and say, hey, do you know that Lululemon just opened up this beautiful store in Fort Worth? Well, for me, you know, when somebody can answer, not only did I know that, but I know when we took them out on the site visit, because we're very transparent with our teams. We want to make sure everybody knows what's going on.
Speaker #1
Who are some of the latest entrees or some of the newest tenants that you have in that organization, Tanger Outlet Stores?
Speaker #0
Yeah. You know, I mean, across the portfolio, I would say the health and beauty business has been such a resilient business, yet it has never been well represented. in the value channel. And what we're finding is as we sort of, you know, pivot, and I use the word lifestyling, our value shopping centers, we're finding that there are not necessarily discounters in that channel, but brands like Ulta and Sephora that want to put their brand in front of a consumer that they may not be seeing any other way. And so in our centers where we're generating tons of traffic, particularly in the markets that we're in, these brands want to have access to that traffic. So we're seeing Sephora and Ulta open up more stores across that channel.
Speaker #1
And are they providing discounts or are they trying to operate a regular price business in an outlet environment?
Speaker #0
Well, I think they're regular price stores in an outlet environment. But as you remember, you know, back in the gap days, you know, we had consolidation and, you know, consolidation when you had a network of 10 stores and, you know, you wanted to put the markdowns in one location so they wouldn't hurt your margins and your full price business. So we see a lot of consolidation as well. And I think that the mix of those things are, you know, make it a very shoppable experience. I also think, you know, as we talk about excitement, energy and experience and, you know, amenity, I think that these stores also offer the personal services. So not only can the consumer go in and shop and buy products, they can try things on, they have professionals that'll help them test. So, you know, that kind of experience is, you can't get that sitting on your couch at home. You actually have to get up, get out and do that. So, you know, when we can draw those cars into our parking lots because those stores are there. We see a lot of cross-shopping with the other brands while they're there.
Speaker #1
Any sports like pickleball or anything like that, that you've looked to add to any of the centers where it might make sense?
Speaker #0
Yeah. You know, fortunately for us, some of the peripheral land or, you know, when Mr. Tanger selected a lot of the locations where we currently have shopping centers, he took about 10 to 20% of a larger mixed use development area. And as those centers. And those mixed use developments have evolved. A number of them, Nashville is a great example, have added a lot of those uses. So we get the benefit of seeing that traffic coming to our, we call that shadow anchors. When, you know, there are great draws to our property, but don't necessarily reside on our footprint. And so we see a lot of that happening. In the case of Riverhead, just as an example. We took a large store and we put pickleball courts in there. So, you know, these kinds of uses are really important because it draws the customer in and keeps them there. But not only that, it brings the cars back far more frequently. And again, those frequent customers, particularly in a Riverhead and as an Adidas and a Puma and a Nike store, you know, we find that they're cross-shopping a lot of our sports brands.
Speaker #1
Very cool. Well, it sounds like a lot of good stuff going on at Tanger stores. Another good year, almost in the books. I mean, you're really... Well beyond the back nine as far as 2024 goes. Let's end this flight with rapid fire. You ready?
Speaker #0
Yes, let's go.
Speaker #1
All right. What is your new current favorite streamed TV show?
Speaker #0
Diplomat.
Speaker #1
Favorite holiday tradition?
Speaker #0
The senior team shopping center tour. My entire senior team and I, we grab a bunch of people from all the different parts of our organization. Accounting, marketing, finance. development, store line, and bring them on the road with us and visit a number of shopping centers. This year, we saw nine in the last week.
Speaker #1
Love that. If you could fast forward to December 2025, what achievement or milestones for Tanger would make you feel most proud?
Speaker #0
I'm pretty proud of the acquisition strategy that we've developed here. I'd love to see us acquire a number more of those shopping centers. and use our balance sheet to help us grow this company.
Speaker #1
Who would you say was the brand or retailer that caught your attention in 2024?
Speaker #0
I have to say The Gap. I think they're doing some great things. I think that the magic is back. We see customers in all four of their divisions, and it's exciting. They're the largest retailer across our portfolio, and it's really exciting to see the success that they've experienced, particularly over this holiday selling season.
Speaker #1
I'm going to throw you a layup because I think I know the answer. Best store experience or best customer experience.
Speaker #0
We're going to go with Ralph Lauren here. You know, look, I don't miss a Ralph Lauren store when I walk in. And, you know, look, their customer service is second to none. And I think a lot of other retailers, the customer service has gotten great. But every time you walk in a store, you're greeted. Every time you walk to the store, you're asked if you're looking for something particular. They're going to help you cut to the chase. They'll offer you whatever additional value is available to them on that particular day. And they're not just dialing it in. They're there to make that shopping center experience. tick for you. And I enjoy it. I love how they build the store. I love how they layer the store. And most importantly, I love how they merchandise.
Speaker #1
Well, it sounds like they extended the friends and family discount to you, not to me. And now I know why. I mean, they can't get a better commercial than that. Mr. Yaloff, thank you so much for joining us on today's flight. It is always a pleasure.
Speaker #0
Thanks, Kenny. It was great to visit with you.
Speaker #1
Thanks for tuning in to this week's Flight of the Retail Pilot, and please give us a review on your favorite podcast platform.

Description

In this episode of The Retail Pilot, Ken Pilot welcomes back Stephen Yalof, President and CEO of Tanger, Inc.

Key Topics Discussed

Hosted on Ausha. See ausha.co/privacy-policy for more information.

Transcription

Speaker #0
Welcome to this flight of the Retail Pilot. I'm your host, Ken Pilot, former CEO and current brand advisor, retail tech investor, and board member. I'm thrilled to share with you the insights from some of retail's legends and leaders, as well as my perspective on retail today. This podcast is sponsored by the following. PredictSpring is a global point of sale platform live in 22 countries. The platform includes mobile POS, endless aisle, fulfillment, inventory management, and clienteling, creating a true omni-experience for customers and associates. BrickSpring Powers, Suit Supply, Converse, Lovesac, Decium, Janie & Jack, and Bouclair. I am excited to welcome back to the Retail Pilot, Steve Yaloff. Steve is the President and CEO of Tanger Stores, a leading operator of upscale open-air outlet centers with more than 37 locations across the U.S. and Canada. Steve joined Tanger in April of 2020 as president and COO before succeeding Stephen Tanger as CEO in January of 2021. Steve has over 25 years of experience in the commercial real estate industry with a primary focus on retail space. Before joining Tanger, Steve served as the CEO of Simon Premium Outlets and previously served as senior vice president of real estate for Ralph Lauren and senior director of real estate for Gap Inc. In both places, Stephen and I had the pleasure of working together. Steve, welcome back to the flight.
Speaker #1
Thanks for having me on. Great to see you, Kenny.
Speaker #0
Got to congratulate you on another great quarter, which you reported almost a month ago, like hitting it hard on the key indicators. And I'll just call them out because it makes me feel really proud to know you. Your comp NOI, and that's net operating income from those of you that are out there, was up 4.3%. That's a key number in the outlet space or really the real estate. retail space, the occupancy rate was 97.4%. You experienced your 11th consecutive quarter of rent growth. And over the trailing 12 months, Tanger executed 543 leases, covering 2.6 million square feet, focusing on attracting new and sought-after brands. In conclusion, this has been a great podcast. Thank you, Steve. Steve, wow. That's amazing.
Speaker #1
That's grabbed me on. It's been great.
Speaker #0
That's it. You got to do the George Costanza. That's it. I'm out of here.
Speaker #1
Well, look, you're only as good as your last quarter. So as far as anybody paying attention is concerned, it's what have you done for me lately? So my guess is we'll spend some time talking about that.
Speaker #0
Yeah. I mean, listen, retail, it's been an interesting year to say the least, but it feels as though the current environment is somewhat buoyant. How are you seeing things to the degree that you can comment on them as we're between earnings calls, but how are you seeing the customer today in the centers as we're heading into the holiday season? Well,
Speaker #1
as you said in the beginning in your introduction, and thank you for that great introduction, we're pivoting into new businesses as part of our growth strategy. So in addition to the value channel, which is our legacy portfolio that we've been known for, And we continue to expand that. We added Nashville about a year ago and we'll continue to grow the outlet business because we think it's not only is a core to who we are, but it's really important channel for both retailers and for customers. We're also getting into the full price shopping center business, open air lifestyle centers that are primarily dominated by specialty stores, in some instances anchored by grocery. And for us, we think that that's a really important, very transferable. business. And last week we closed on our second. We just purchased the Promenade of Chanel, which is in Little Rock, Arkansas. So as I think about the customer, I have to think about those two particular verticals. Obviously the value-oriented customer is there and is there in a big way. And what's interesting is a lot of people are moving into that space from a consumer point of view. Because it's a great place to get great products at everyday value pricing. But it's also a great opportunity for aspirational customer to be able to shop a brand maybe weren't able to shop at full price. And then similarly, you know, there's a customer that's looking for quality that would typically spend on a higher end. But, you know, is satisfied by the value and the quality that they can find in those outlet centers. You know. The full price business, what makes that unique is there are retailers that are very unique to that channel. I think of Apple as one of those brands.
Speaker #0
What I read, Stephen, your purchase, your promenade, the Chanel promenade in Arkansas. It has the only Apple store in Arkansas.
Speaker #1
Yeah. I mean, you know, which was part of our investment thesis, right? We're looking for real prominent locations in geographies that are, you know, close to where our core portfolio lies so that we can leverage our existing regional field management teams.
Speaker #0
Well, I want to talk a little bit about the Tanger Club because last time we were together, you're really beginning to roll out your loyalty program. And now thinking about the Tanger Club, will this include some of your open lifestyle centers as well, or is that going to remain exclusive to the outlet environment?
Speaker #1
Well, the Tanger Club is an inclusive club for anybody who shops any of our centers. But the loyalty program that rewards customers for shopping with us, you know, shopping center developers don't typically own a product. But what we do own. is the ability in concert with our retailers to share with our customers additional savings. And that's primarily in the value channel. So where those retailers are more inclined to share with us incentives to induce customers to come and shop that channel, that's where the loyalty portion of that Tanger Club primarily lives right now.
Speaker #0
And similar to what some retailers are doing, You can either be a free member, which I think is the blue level, or you can actually pay. Maybe it's, what is it, $20 a year to be an old member?
Speaker #1
Yes.
Speaker #0
And then if you shop a certain amount, you're at the premium level and you'll get added perks and discounts and benefits throughout the center.
Speaker #1
That's right. And, you know, look, the free program is for us where a majority of the customers are, is an important. you know, sort of top of the funnel opportunity for us to engage with new shoppers as they come and shop with us. You know, it gives us an opportunity to learn a little bit more about them with the information that they're willing to share with us. And more importantly, gives us an opportunity to communicate with them about things that are interesting to them. You know, it's really important if we inundate you with emails from Tanger, we're going to train you not to open them. But if you know that they're going to be specific and reflective of brands or offers that you're genuinely interested in going after, then we might be able to train the opposite and get you to open those emails and engage. And that's the program as far as top of the funnel. And we offer discounts just by being part of that membership, the $20 membership, which gives you that. that gold and platinum status. We have additional value that we're able to share with those customers. And look, the price value relationship of spending $20 when you go and shop at an outlet, you know, if you think you're going to go spend some money at the Gap and there's a 20% off, just spending $100 at the Gap pays for that membership. And then off you go to Ralph Lauren. And if you spend $200 at Ralph Lauren with $20 off the savings. stack on top of the savings. And it turns out to be a really good trade, particularly for our customers who are inclined to shop multiple stores during a visit.
Speaker #0
It's great too, because then you're also working for your customer in concert with your retailers to provide additional value. And look, it's a bit of gamification, right? It's fun to go to the outlet center. And let's talk about some of the things you're doing in the centers to differentiate your Tanger properties from others. How are you adding... to the experience? What are you doing around the shopping experience that may not have been there when you took on the business?
Speaker #1
Let's go back to when you and I first met, when you were running the outlet division of Gap and I was leasing outlet shopping centers for New Plan Realty Trust. I'm not going to give a year, but it was a while ago.
Speaker #0
Yeah, it was a while ago.
Speaker #1
And the outlet experience way back then was really about shopping stores, shopping stores, and maybe stopping and getting a grab and go at Annie Annie's Pretzel and moving on to the next thing. Also, let's talk about the geography. The shopping centers were much further away from full-priced and big cities, far further than they are the outlet centers of today. A lot of manufacturers didn't want to be in conflict with a lot of their other full-priced channels, primarily their department store business. So the business was a much different business and it really shopped. dropped far more on the weekends than it did during the week. And as you know, being from the restaurant business. It's hard to have a sit-down restaurant that only really operates two or three days a week. So what we're finding as we get closer and closer and there's more vertical retailers finding the outlet channel is an important place to bring their products to consumers. The closer in we've been able to come, the shopper is actually coming from a much closer area and that customer is demanding more service, better amenities, and more importantly, a better food offering. And so as we've been... re-merchandising our shopping centres. We've been placing a very heavy weight on making sure we put in the appropriate food, places for people to gather, amenities where people can have, you know, services are not far into our outlet schemes now. And, you know, lastly, entertainment uses so that when that carload of people comes, there's plenty of things for everybody in the car to do. Some can shop, some can eat, some can watch a game, some can go to Topgolf and hit golf balls. Some can go to Pop Stroke and play miniature golf. There are things for everybody across our portfolio and on the adjacent land proximate to our portfolio.
Speaker #0
So I get you hit on a key point, which is the proximity to the customer. And I think that that would have a lot of influence on how you quote unquote merchandise the center. But certainly one of the movements that I've seen over the past years really is the shift more towards amenity. and away from such a reliance on just stores. So today's regular price center, the mix of amenity to store is much higher. There are more restaurants. There's more things to do than just shop. It sounds like you're incorporating that formula, if you will, into the way you're approaching your centers or even new centers.
Speaker #1
Well, as we talk about the new centers, yeah, there's obviously most of the full price that you're looking for. town center type product that we're looking at or have recently added to our portfolio has just that. I mean, they're as important for the services they have as they are for the retailers that they have. And restaurants are very much a critical part of that. And in fact, as we continue to grow that part of our portfolio, we're now meeting a lot of new retailers and restaurants and services that we haven't had in our portfolio. They now understand what it's like being in a center operated by our Tanger management team, our leasing team, and our marketing team. And we're hoping to use those entrees as an opportunity to cascade a lot of those uses throughout the rest of our portfolio, full price and value price.
Speaker #0
Let's talk a little bit about just some of the industry trends that you see happening and how you're incorporating those trends into Tanger centers or some of the newer properties that you mentioned. But there's... a lot of discussion around digital retail, the combination of physical and digital, and how it comes together. How are you bringing the digital aspect of retail into a Tanger Center?
Speaker #1
Well, look, we talked about loyalty. And, you know, loyalty was sort of that first touch point, the Tanger Club and loyalty digitizing, you know, back in those days when, you know, you and I were doing deals together. It was all about the coupon buck. It was all about... You stop at customer service, you get your coupon book, and then you shop with coupons. Well, thankfully, we've evolved. And our first digital touchpoint is one's ability to, and we've got QR scan codes all around our center where, you know, sign up to our loyalty program. And, you know, we will share with you our digital savings passport. And what's so unique or effective about it, digitizing, as you probably recall, those. Old coupon books were printed once, maybe twice a year. Some of the retailers might have moved on. Some of the retailers might have been new and just didn't meet the cutoff date. So now, at least when it's digital, you can be to the minute. And as you recall, having run an outlet business, you know that the general managers in those stores have the opportunity almost on a daily basis to put items on sale that they're trying to move through their inventory. In our full price venues, digital manifests itself slightly differently. We're able to get people to scan the leasing plan so you can walk the shopping center. You can have that on your phone. You can see product on your phone while you're there in real time. We're working to enhance some of those digital strategies. Maybe one of the things that people always do when they park their car is forget where they park their car. I know. But simple things like that. that provide convenience and amenity to the customer, they remember things like that. And those little things are certainly, you know, sort of help us. be top of mind when a customer is thinking about going shopping and who they want to go shop with.
Speaker #0
You know, you hit on an interesting point. Probably the greater ability for outlet store managers, the retail managers, to make certain pricing decisions real-time and actually convert that to or pass that on to the customer real-time. Generally, for regular price, those decisions are made well above that pay grade. And here it sounds as though you're really working with the teams in the stores to bring the best possible pricing to the customer at any given point at any given day. And I think that's super exciting. And I think if you can get the managers to motivate the managers in the brands, and that's a whole other thing. But, you know, you can really change the way they do business in the day. You can provide that lift that they're not going to get by making important price changes just on a QR code. connected with a QR code.
Speaker #1
You all remember the red light specials in the Kmart stores, and then somebody would come over the speaker and say, special on aisle nine. Well, you know, that's now translated and manifested itself into the digital world where if you've opted into our program, we could push messages to you in real time when you're at our shopping center and alert you to the fact that a particular retailer may have some inventory that they're looking to push. And in partnership with that retailer, we can alert those folks that have signed up to want to hear messaging from those retailers. Again, going back to my thesis, making sure that we only send information out. And look, it's an evolution. We're going to get there. We're only going to get better. But we think we know what the North Star is, and we're certainly heading in that direction.
Speaker #0
Stephen, what brands do you see within your portfolio or retailers within the portfolio? would you say have really done a good job around digital, whether it's digital display or adding digital to their playbook, just as you have?
Speaker #1
Well, you know, it's interesting. We see a lot more retailers understand that it's as important to work with the customer on the sales floor as it is to get them to the cash wrap. And now we're seeing more retailers with handheld... POS technology so that they can have the sales help on the floor and they can also cash them out. And so, you know, Apple definitely pioneered that technology. Brands like American Eagle are pivoting towards it. And I just think that that's vital. You know, for me, sales help is the major differentiator between shopping on online channels and in-store channels. It's the ability to ask a question. It's the ability to try things on. It's the ability to touch and feel the product. but you know it's great when there's sales help in a store that actually knows how to sell the product and when that happens that really makes for a real successful opportunity for that so if you can get people out from behind the sales desk and put them on the floor to actually engage and work with shoppers there's plenty of evidence that those stores that do that well move a lot more product when
Speaker #0
we were together last time we talked a little bit about enabling e-commerce similar to what Simon has done with now. I think they've renamed Simon property or it was called Simon premium outlets online is now shop Simon. Where is that in the evolution of Tanger? Is that something that we'll see in the next couple of years? Is that on your radar?
Speaker #1
You know, I think that, you know, that online selling, I think that's here to stay. So, you know, for us, you have to figure out how to embrace that and make that part of your suite of services that you can offer the customer. We've sent loyalty up with a three-year plan with e-commerce sort of out there a few years. If you go back to COVID, the first thing that we stood up when people couldn't actually get out of their homes and shop was our ability to shop for them, where we had a group of people, whether they were our interns or general managers, that would go out and literally shop stores, box and package and send. If you're going to be a full-service shopping center owner, manager, you need to provide that suite of services to your customers. So we continue to provide that when called upon to do so. But we've set up our loyalty program and our customer communication to have the bandwidth to ultimately facilitate e-commerce downstream.
Speaker #0
Got it. Sounds like film at 11 on that. Well, I'm very curious about this. adding the open air regular price centers as we, again, look out over time, probably a real opportunity to make acquisitions. I don't know how much you can really talk about. future acquisitions, but at a more broad level. Sure. It sounds like regular price will be very much a part of your approach to business going forward.
Speaker #1
Well, look, as we continue to add food and beverage, amenities, services, grocery, bigger box on some of the peripheral land that we have in our value channel, we have learned that we're pretty good at it. We've got great relationships. We're talking to the same people, the same tenants. We understand, you know, we're set up to make those deals. And, you know, you could say that over the past three or four years, we've really been, you know, for lack of a better expression, but sort of lifestyle-izing a lot of our existing portfolio. Adding these uses that one typically never saw in, you know, older generation of outlet centers and bringing them into our four walls. By virtue of those relationships, by virtue of that experience, we. you know, sought to engage in that full price business because we think our team is perfectly aligned to go after it. And the one thing that we have that's very important in Outlet is our marketing department. You know, going back a few years, if you think about Outlet, Outlet retailers are not going to use their marketing dollars to tell the customer, go shop value. They're going to use their marketing dollars to get that customer to spend in a full price venue first. So for us, It's really incumbent on us as developers to make sure that we do a really good job of marketing our brands, marketing our shopping centers to both the local and tourist population in that particular area. We think that marketing muscle that we built will have a great resonance in that full price business as well. So we think we're probably better positioned than most to go after this inventory of. lifestyle product that's out there that's far in excess of the outlet product that's available out there. And, you know, I think the reverse isn't true. I don't know that a developer of lifestyle or owner of lifestyle can really translate into outlet because of that marketing is so critically important to have, you know, that team built functioning and operating. So in today's environment, when the cost of construction is so high, when building new shopping centers far exceeds the cost at which one can buy an existing property. We think we can buy the best property in the markets that we're targeting and use the value of our team, marketing, leasing operations to really be a best-in-class owner in that space. So that's why we're focused on that. We're a growth company looking to go after. I think our investors have recognized that we're a growth company and They're looking for us to continue to grow our portfolio. And we see that as real fertile ground for us going forward.
Speaker #0
And to do that, you've done a lot around building your team. And you've mentioned your marketing team, but it goes beyond marketing. You've added a number of key positions and continue to focus on adding talent. What do you look for in people to bring them onto the Tanger team?
Speaker #1
Well, you know, my senior leaders, I'm looking for people that do things that I told you. that I don't do as well. You know, I like a team that completely compliments one another. You know, my chief operating officer, I've said many times, you know, she's the eyes behind my head. She sees things that I would never see. And if you think about it, to me, building a team means hiring into your blind spots, identifying what you do well and staying in your lane, and then finding best-in-class people who know their business better than anybody. who form this great complementary team and also can go out and build their teams so that they can achieve more things. Synergy is the sum of the parts achieving more than the individuals. And I think that's one of our hiring thesis is what does this individual bring to the table that we don't do currently? And how is that an important quality that we can go after makes us better, makes us earn more? makes us more efficient. And that's how we're thinking about hiring people as we bring them into this organization.
Speaker #0
And I would say this too, I'm sure you would agree, but actually now pursuing lifestyle centers that are not outlet brings them a new opportunity and something else to focus on and learn. I mean, everybody wants to feel like they continue to learn. So new opportunity is not only good for the shareholders, but also great for the team. And kudos to you and the team. because without the success that you've experienced over the past five years and the money that you're putting in the bank, you wouldn't be able to go out and buy these centers. And you are going out and you're writing checks. I think I read it was somewhere close to a $75 million transaction for the most recent center. It's great that you can continue to do that. And it really, from what I can see and the way the company has really grown in the past five years, just wish I'd bought the stock. What else can I say, Yalov? You're killing it, man.
Speaker #1
Thanks. High praise coming from you. You're somebody I've always held in extremely high regard. Obviously honored to be sitting here talking to you today and really enjoying it.
Speaker #0
It's been just so fun to watch. And I got to ask you, having been at this for five years, just significant learnings, things that, you know. I'd love to hear a couple of mistakes. I mean, you may have made a couple. I make them every day, but just a couple of key learnings and mistakes. And we learn from our mistakes and then we jump on them as opportunities, but share that with us.
Speaker #1
Well, look, let's just say one of the great rules of thumb is fail fast. You know, if failing fast is something that you're comfortable doing, then it allows you to take more risk because it allows you to try things.
Speaker #0
And, you know, if they don't work, you know, pivot quickly and on to the next thing. You know, there were shopping centers that we've bid on and perhaps didn't give ourselves enough credit for the value that we could add and wound up losing those acquisitions. I would say those are mistakes. And I think the way we underwrite and look at opportunity and gauge value is a lot different because of it. You know, I think we identified a deficiency in our org. and brought somebody in who really thinks about that differently than we do. So even going back to your question about people, if you make a mistake because you don't have the appropriate talent on the team, that's an easy one to rectify. Bring in the right talent. And if I can add that one thought to the talent thing, because I didn't mention this and I think it's critically important. We love hiring from within. We love elevating people from inside of our organization, giving them opportunities to take on more responsibility and learn. Because for us, I think that that's what keeps people engaged, excited, and wanting to work for the company. When they feel like there's a path, there's somewhere for them to go, they'll stick with you. And, you know, I'm very proud of the leadership team that we've developed over the years that I've been here. You know, we've really been able to build on those strengths. And a lot of that comes from this failing fast and realizing what we do well, what we don't do well. and then putting the resources in the appropriate place.
Speaker #1
What is your methodology for messaging your people, for communicating with teams? How do you, Steven Yalov, get the word out to the organization?
Speaker #0
You know, in song, Kenny.
Speaker #1
Wes, you want to sing?
Speaker #0
You know, look, we're primarily, by virtue of having 40, now 41 shopping centers across the country, we're a remote organization. You know, I have a Greensboro, North Carolina corporate office. Well, you know, our hiring thesis has always been best athlete, regardless of geography. And that's how we've built our team. You know, it's mandatory that you're in the corporate office, but I think people like to come and visit us in Greensboro every now and then. Today, I'm sitting in our satellite New York office, which is small but mighty. And we have some real important people that sit here and that places for people to come and visit us. You know, we're in New York where a lot of our retailers reside. So it gives us a great place and a great opportunity to meet people there. So with that remote organization comes the requirement to get out in front of our team and communicate to them as regularly as possible. We have no fewer than four town halls a year following our earnings calls. We give a financial update, let everybody know where we stand. We overshare with our team because we think it's important for people to know what we're doing, what our strategy is, and how their particular role plays a big part. in the direction that we're going. You know, I remember one of the things that Ralph Lauren did extremely well when we were there was they made sure their team saw the new marketing, the new ads. So Friday at 1.38, now I got my head of leasing call, but usually when he calls me on a Friday, it's to give me some good news. So I'm anxious to see what it is he has to talk about. But we do these town halls quarterly. We think that's really important. We've got ERGs, you know, employee resource groups that, you know, for a lot of affinity groups around the company. You know, when we do a monthly, depending on what affinity or what national holiday it is, we like to celebrate that because we've got an extremely diverse organization. So we'll do monthly learning sessions where people who are members of those particular groups or clubs will lead a discussion with maybe an outside person will come in and give a lecture. So that's a monthly sort of during lunchtime. So it gives us an opportunity to bring our people together. We have an intranet. So whenever you log on in the morning. There's a screen there that shows you some of the things that are going on. Obviously, Chanel's big news that we just bought that shopping center. Everybody is in the loop. So we try to do our best to make sure that everybody knows what's happening before it happens. And it just makes them feel more connected. And then when they see one of our new advertisements or hear about a new store opening, they knew about it first before they actually went to the center or one of their friends come back and say, hey, do you know that Lululemon just opened up this beautiful store in Fort Worth? Well, for me, you know, when somebody can answer, not only did I know that, but I know when we took them out on the site visit, because we're very transparent with our teams. We want to make sure everybody knows what's going on.
Speaker #1
Who are some of the latest entrees or some of the newest tenants that you have in that organization, Tanger Outlet Stores?
Speaker #0
Yeah. You know, I mean, across the portfolio, I would say the health and beauty business has been such a resilient business, yet it has never been well represented. in the value channel. And what we're finding is as we sort of, you know, pivot, and I use the word lifestyling, our value shopping centers, we're finding that there are not necessarily discounters in that channel, but brands like Ulta and Sephora that want to put their brand in front of a consumer that they may not be seeing any other way. And so in our centers where we're generating tons of traffic, particularly in the markets that we're in, these brands want to have access to that traffic. So we're seeing Sephora and Ulta open up more stores across that channel.
Speaker #1
And are they providing discounts or are they trying to operate a regular price business in an outlet environment?
Speaker #0
Well, I think they're regular price stores in an outlet environment. But as you remember, you know, back in the gap days, you know, we had consolidation and, you know, consolidation when you had a network of 10 stores and, you know, you wanted to put the markdowns in one location so they wouldn't hurt your margins and your full price business. So we see a lot of consolidation as well. And I think that the mix of those things are, you know, make it a very shoppable experience. I also think, you know, as we talk about excitement, energy and experience and, you know, amenity, I think that these stores also offer the personal services. So not only can the consumer go in and shop and buy products, they can try things on, they have professionals that'll help them test. So, you know, that kind of experience is, you can't get that sitting on your couch at home. You actually have to get up, get out and do that. So, you know, when we can draw those cars into our parking lots because those stores are there. We see a lot of cross-shopping with the other brands while they're there.
Speaker #1
Any sports like pickleball or anything like that, that you've looked to add to any of the centers where it might make sense?
Speaker #0
Yeah. You know, fortunately for us, some of the peripheral land or, you know, when Mr. Tanger selected a lot of the locations where we currently have shopping centers, he took about 10 to 20% of a larger mixed use development area. And as those centers. And those mixed use developments have evolved. A number of them, Nashville is a great example, have added a lot of those uses. So we get the benefit of seeing that traffic coming to our, we call that shadow anchors. When, you know, there are great draws to our property, but don't necessarily reside on our footprint. And so we see a lot of that happening. In the case of Riverhead, just as an example. We took a large store and we put pickleball courts in there. So, you know, these kinds of uses are really important because it draws the customer in and keeps them there. But not only that, it brings the cars back far more frequently. And again, those frequent customers, particularly in a Riverhead and as an Adidas and a Puma and a Nike store, you know, we find that they're cross-shopping a lot of our sports brands.
Speaker #1
Very cool. Well, it sounds like a lot of good stuff going on at Tanger stores. Another good year, almost in the books. I mean, you're really... Well beyond the back nine as far as 2024 goes. Let's end this flight with rapid fire. You ready?
Speaker #0
Yes, let's go.
Speaker #1
All right. What is your new current favorite streamed TV show?
Speaker #0
Diplomat.
Speaker #1
Favorite holiday tradition?
Speaker #0
The senior team shopping center tour. My entire senior team and I, we grab a bunch of people from all the different parts of our organization. Accounting, marketing, finance. development, store line, and bring them on the road with us and visit a number of shopping centers. This year, we saw nine in the last week.
Speaker #1
Love that. If you could fast forward to December 2025, what achievement or milestones for Tanger would make you feel most proud?
Speaker #0
I'm pretty proud of the acquisition strategy that we've developed here. I'd love to see us acquire a number more of those shopping centers. and use our balance sheet to help us grow this company.
Speaker #1
Who would you say was the brand or retailer that caught your attention in 2024?
Speaker #0
I have to say The Gap. I think they're doing some great things. I think that the magic is back. We see customers in all four of their divisions, and it's exciting. They're the largest retailer across our portfolio, and it's really exciting to see the success that they've experienced, particularly over this holiday selling season.
Speaker #1
I'm going to throw you a layup because I think I know the answer. Best store experience or best customer experience.
Speaker #0
We're going to go with Ralph Lauren here. You know, look, I don't miss a Ralph Lauren store when I walk in. And, you know, look, their customer service is second to none. And I think a lot of other retailers, the customer service has gotten great. But every time you walk in a store, you're greeted. Every time you walk to the store, you're asked if you're looking for something particular. They're going to help you cut to the chase. They'll offer you whatever additional value is available to them on that particular day. And they're not just dialing it in. They're there to make that shopping center experience. tick for you. And I enjoy it. I love how they build the store. I love how they layer the store. And most importantly, I love how they merchandise.
Speaker #1
Well, it sounds like they extended the friends and family discount to you, not to me. And now I know why. I mean, they can't get a better commercial than that. Mr. Yaloff, thank you so much for joining us on today's flight. It is always a pleasure.
Speaker #0
Thanks, Kenny. It was great to visit with you.
Speaker #1
Thanks for tuning in to this week's Flight of the Retail Pilot, and please give us a review on your favorite podcast platform.

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