CBL's Stephen Lebovitz on retail's resilience
When I think back over the last several years, the word that comes to mind as it relates to our industry is resilience. Despite facing an increase in online shopping, economic headwinds, or a global pandemic, this industry has an uncanny ability to move forward no matter how many times it gets set back.
For years, newspapers and websites led with headlines predicting the death of brick-and-mortar retail, and during the COVID-19 pandemic, that drumbeat got louder and more frequent. But as it turns out, absence does make the heart grow fonder and when malls reopened, they reopened to crowds, and lots of them. In many ways, the pandemic accelerated closures that ultimately allowed the industry to emerge healthier than where it started. Strong retail centers and strong retailers got stronger.
The pandemic certainly wasn’t the only challenge the industry has faced in recent memory. Retailers and mall owners were evolving long before March 2020. As retailers have changed over time, CBL and other mall owners, reinvigorated our centers with new uses that attract new customers and keep traffic flowing for longer hours across every day of the week. Savvy traditional retail brands such as Target, Best Buy, and many others took advantage of their physical locations for BOPIS services and as last-mile distribution bases for their online business. In doing so, they demonstrated the value of a physical presence to direct-to-consumer retailers that are now expanding their own brick-and-mortar footprint.
Our top priority is to draw traffic to our centers, and doing so used to be much more formulaic. Now the approach is market-specific, based on the unique needs of the communities that our properties serve. In many respects, the business has become more creative and fun, and we find ourselves exploring uses that we would have never considered just five years ago.
As part of this shift, we filled two empty anchor spaces with casinos at Westmoreland Mall and York Galleria, both in Pennsylvania. It was a bold move, and one we had reservations about initially. Not anymore. Both malls have extended their market share and traffic has continued to increase double digits, far exceeding pre-pandemic numbers. Demand from other entertainment users such as Main Event, Dave & Busters, and Tilt has remained strong as these are complementary to the existing mix at our properties. Other uses that we are actively adding across our portfolio – uses that were previously unthinkable as part of the standard mall tenant mix – include hotels, multi-family, office, fitness, and medical.
Though many of our new uses have been non-retail, traditional retailers remain a critical part of the mix. In October, we opened a new Von Maur department store at West Towne Mall in Madison, Wis., to an overwhelming reception from the market. And we’ve continued to see demand from tenants like Dick’s Sporting Goods and Nordstrom Rack, as well as regional apparel retailers like Rose & Remington, Palmetto Moon, and Hollie Ray Boutique.
We’ve opened pop-up shops and eateries that allow small businesses to test the waters, while benefitting from co-locating with national brands like H&M, American Eagle, and Victoria’s Secret. This opportunity, coupled with guidance from our retail experts, allows business owners to realize their dreams of opening their own brick-and-mortar retail store.
It’s not just retail that’s been resilient, so have the communities in which we operate. The community is at the heart of our business, and we’ve worked hard to strengthen our partnerships to build a mall experience that’s inclusive, where every member of our community can feel a sense of belonging.
They say that the only constant in life is change, and that adage certainly applies to retail and commercial real estate. As we look to the future, and the possibility of an economic downturn, I am confident that our industry will dig deep, find the resolve that has served us so well in the past, and innovate to chart the course of our future.
Stephen Lebovitz is CEO of Chattanooga, Tenn.-based CBL Properties.