From Where I Sit: Episode 1 With Dana Telsey Transcript

Tom McGee:

Welcome to From Where I Sit, I’m your host, Tom McGee, President and CEO of ICSC, the preeminent membership organization serving the commercial real estate and retail industries. Each episode, I’ll be joined by top experts to explore the trends impacting communities and commerce and the spaces where people shop, dine, work, play and gather.

I'm thrilled to have a good friend and one of the top retail analysts in the nation, Dana Telsey, as my first guest on From Where I Sit. Dana is the CEO of Telsey Advisory Group, a leading equity research firm. This year, Dana was named for the fifth time in a row as one of Barron's 100 Most Influential Women in U.S. finance. Dana, welcome to the show. It's great to be with you.

Dana Telsey:

Thank you. I'm so honored to be your first guest on your new podcast. Great to be here and great to be with you.

Tom:

Well, there was no doubt who my first guest was going to be. I always learned so much when I listened to you. Obviously ICSC is heavily focused on the retail industry, but you are really an expert in all things retail and the consumer and so forth. So I look forward to the conversation. I know our listeners are going to appreciate hearing your perspective as well.

Dana:

Thank you so much.

Tom:

Well, we're sitting here in October and I know it may seem like a ways off, but really it's not. obviously retail so often is measured by how it does in the holiday season. And so let's just start with that. You know, we're, you what are your expectations for the holiday this year? And then, and then after we talk about that, we'll talk a little bit about the consumer.

Dana:

Sure. Can you believe how fast time flies that we're here again, sitting here right in front of just, just a little bit over a month away from Thanksgiving. And what you're seeing the retailers do is they're preparing earlier and with more intensity for holiday this year than they did last year or years before. When you think about Best Buy who had their first ad talking about holiday in September. We're now in October, but usually haven't had it start in September because in my calendar, Halloween always comes before the holiday season, but this year it is different. And it's very timely that we're talking today.

Given that today is the first day of Amazon Prime Day, you've got Target Circle Week and all the discounts coming from Walmart. But what does holiday mean this year? It's shorter, five fewer days between Thanksgiving and Christmas, given that Thanksgiving takes place on November 28th this year. You have a consumer, I would say, who's a little bit more measured in their spend, and you're seeing that up and down the flagpole of income levels. When Doug McMillan, the CEO of Walmart, talks about his biggest growth is coming from upper to middle income consumers, while the lower and middle income consumers are continuing to spend there and Walmart's a destination. So you've seen a moderation, more measurement across the board. When you think about holiday sales increases and the last time we had a compressed holiday season, it was up just under 3%. Feels like it could be similar this year. But when you think about the here and now, inventory levels overall, retailers are ordering goods that they know are key items and that will sell. They want to be in stock on goods that are in demand. I think they're watching those inventory levels carefully because we all know this year is going to be a more promotional holiday season than it was last year. Value matters. And so I think it'll be a decent holiday season. The tailwind of lower interest rates help. But as I was talking to Richard McPhail, the CFO of Home Depot a few weeks ago, it takes a couple of interest rate reductions in order to really show up in people's pocketbooks, but certainly the sentiment, consumer sentiment will be beneficial.

Tom:

There's a lot there that we're going to delve in deeper and ICSC, our retail forecast is very consistent with kind of what you were saying. We kind of expect a 3% to 3.5% growth in holiday sales this year. You mentioned one thing I want to delve a little deeper on that, that the expectation there'll be more promotions this holiday season. Talk a little bit about that and why you're expecting that and how will that manifest itself?

Dana:

I think there's a couple things. I think one of the things we're seeing since all consumers are more discerning in their spend, they're looking for value. When you think about the numbers, the off-price retailers and the discounters are part of the haves. We did a study basically taking a look at all the company's adjustments to earnings guidance after they reported the second quarter. So basically for the year, how did earnings guidance change?

You saw more companies in consumer retail increase their profit expectations while either staying the same or lowering their sales expectations. So there's more confidence in being able to deliver the margins, partially because of cleaner inventory levels, but I would also say smarter promotions. So what they're doing, they're targeting promotions to some of the loyalty members. They know what activates the consumer. You will always have Black Friday being a promotional day, the synonym for Black Friday is promotional day. But when you think about the off-price retailers like TJ Maxx, Ross Stores, and Burlington, each delivering same store sales gains most recently of at least 4% or higher, that's because the consumer is seeking value. And value does mean promotion. And when you have still, while inflation is moderated, the cost of daily living expenses and essentials is still higher.

So being able to get discretionary goods and giftables at competitive, compelling price points is what's going to matter. And I think the retailers are prepared for that.

Tom:

I want to delve a little deeper on the consumer. Before I leave the holiday, you mentioned Black Friday. And obviously, as we get closer to Black Friday and all the way through the holiday, you're going to be on television a lot. I'll end up doing a lot of interviews around that. What's foot traffic like on Black Friday, on Super Saturday, etc.? But we just talked about the holiday season being longer now, and even starting before Halloween. Are those days still as important as they once were? Is that kind of an old-fashioned notion that Black Friday is a super important day or Super Saturday is a super important day?

Dana:

I think that the Black Friday weekend has gotten a little bit less important because the Friday itself is more important than the Saturday and Sunday. The 10 days before Christmas is really when everything happens because consumers are procrastinators. I think they always will be, but it's the Black Friday that has taken on more importance and the Saturday and the Sunday have dwindled compared to years past. In the past, it used to be the Thanksgiving Day weekend accounted for up to 10% of the holiday season sales. I think it's coming in a little bit from what it had been in the past.

Tom:

That's where the phrase Black Friday comes, right?

Dana:

Yup, turns profitable.

Tom:

Well, you mentioned procrastinators, so my hand went right up at that point, because I'm definitely on the procrastination side of things. So let's talk, you mentioned the consumer a number of times. And so we are sitting here today, the Fed has just cut rates, obviously inflation, all signs are, you know, we're headed in the right direction, significant moderation of inflation. But the consumer is strained. There's no doubt about that. Talk just at a high level, and then we'll delve a little deeper. What's your perspective on the consumer right now and the health of the consumer?

Dana:

I think they're in decent shape, but I think when you look at the savings rate, which has come down significantly, when you look at credit card delinquencies, which have gone up, they don't have the stimulus dollar power that they did during the pandemic. They have more expenses than they had in the past. Watching gasoline prices is certainly very mindful. And you're continuing to see wage growth above inflation, but it needs to be in order for the consumer to be able to pay for their daily living expenses. What you're going to see with housing and the fact that it does take a couple of rate cuts, hopefully we see the housing market improve because it's been stagnant for a long time given the high levels of interest rates. So I think if anything, the consumer's measured. There's still good resiliency in terms of what we've seen in retail sales spend, but the positive surprises haven't really occurred. They've definitely been more measured in their spending and there's been a lot of news that's taken them away from discretionary spending, whether it's the upcoming election or whether it's geopolitical metrics that are out there. And we do a scorecard, an economic scorecard on the health of the consumer that has 10 factors. We have five that are positive and three that are neutral and two that are negative. We upticked our last positive with monetary policy just this past week, given that interest rates are coming down.

Overall, whether it's high income or lower middle income consumer, the feel good factor isn't there in the same way that it had been.

Tom:

I mean, the rise in the consumer debt delinquencies, credit card delinquencies, auto loan, etc., are concerning for sure, and the drop in personal savings rates. So we have a consumer that's been resilient, however, obviously retail sales have continued to grow. You mentioned, you know, Walmart and where it's getting its growth.

With a consumer that's stretched, a consumer that is concerned about prices and so forth, what does that mean for the retail sector? Which retailers are going to generally do better, which are going to be a little more challenged in regards to competing in that kind of environment?

Dana:

So a couple things have happened. We've seen the discounters only accelerate in importance and capturing a wider customer base. We've seen the off-pricers continue to gain share. We've seen what's taken on even more importance lately in order to capture dollars from the consumer's wallets. It is what's new and innovative. Abercrombie, Birkenstock, Skims, Deckers. There's a lot of newness there and that drives demand. Luxury has slowed down. Department stores have been slower. And even there's been some headwinds on the dollar stores as some of them have reduced their growth rates because of, I think, the share that's being taken by, frankly, the Walmarts and the Targets out there.

Frankly, the other thing where you have a have, experiences matter. What are you doing that's differentiated? And there isn't anyone who follows retail in any way that doesn't look at Dick's Sporting Goods and their House of Sport and says, I want to spend more time there. So the experience of being able to activate that consumer with an experience, memories come from experiences and that's what they're delivering.

Tom:

Talk a little bit more, you mentioned the word innovation, new things that are happening. You shared a couple of brands that you may surprise people in regards to opening up stores and so forth. Talk a little bit about the concept of innovation, new brands, opening up stores, and really looking at retail as a growth edge.

Dana:

I think innovation comes from a couple of different ways. How do brands innovate, so those who have a heritage and a past become new again? And we see companies like Coach doing that over and over again with leather goods.

We have innovation in terms of store format. And we have a lot of companies today with innovation, are they moving some of those stores? We all know how open-air with hybrid work environments is leading to big demand for some of those open-air spaces. But yet the best enclosed malls, we have waiting lists of tenants who want to go there. And when you think about new store formats, look at Abercrombie. Most retailers have now reduced the size of the box that they're operating in, yet the box still has to fulfill more functions, whether it's buy online, pick up from store, whether it's shipped from store. And how could you make that space appealing? Well, we all know that the teenagers and 20s love shopping in stores and why the experience matters and it's socialization. And so I'm seeing whether it's Victoria's Secret who just opened their new format in the Beverly Center, whether it's Abercrombie that I mentioned, the Skims that opened recently in Texas, we're seeing lines. And what's happening is that the social media buzz and frankly, how it goes viral creates long lines. This weekend, I'm from Manhattan, I was walking in the Village, there's a new bagel shop that opened called Apollo Bagel. I don't know if you've heard of it, Tom, but there's lines around the corner if you want to go to Apollo Bagel. And the way you heard about it is went viral on social media. So I think the innovation of new formats, of resurgence of brands and building brand identities matter. And it creates sales increases. Look what happened last week. You look at a brand like Levi's, which is hundreds of years old, and yet they have Beyonce in partnership with them. She put out the Levi's jeans song, and now you have four chapters of new things that's coming up. What is it doing? It's making Levi's young again and having wider appeal. You take a look at American Eagle Outfitters with Aerie, Simone Biles.

Everyone wants to be able to capture the dynamism of a U.S. Olympic athlete. And that's what is changing the landscape today that you didn't have in the past. So I think innovation comes from product, innovation comes from experience, and innovation comes from creating a memory that basically says, I remember. And it makes you want to go there over and over again.

Tom:

It's fascinating when you talk about social media and the use of technology and how that's really impacted the retail industry significantly. And as the father to Gen Z age daughters, I can attest. you know, I know that there is a, probably, a perception out there that young people all shop online, but in fact, they value going to a store and having that experience as you made reference to, don't they?

Dana:

Yes, they certainly do. Look at new concepts like Reformation and look why people go there. It basically is an experience, but also it's an explanation of what that store is and what their brand stands for that matters. And we all know mission-driven shopping in terms of being able to relate what the brand stands for only makes it more relevant because you got the moms and the daughters shopping together too.

Tom:

I also I appreciate the heads up on Apollo Bagel. So I think a fellow New Yorker, I'll be sure to visit that. I want to go back to the consumer just real quickly and the health of the consumer and because obviously retail is the ultimate consumer facing industry, right? I mean, the success of retail is dependent upon the health of the consumer for sure. And the Fed’s just cut rates. You mentioned that, you know, it'll take a few cycles for that to really start to be felt by the consumer. I know this is a hard question in a sense, but looking at your crystal ball, when do you think the impact of Fed policy, how much more easing needs to happen for consumers to feel perhaps a little less stretched than they do today.

Dana:

I mean, you think of what the Fed cut does and how it impacts spending. It supports the labor market with more rates to come. It sustains wage growth with strong growth in wages supporting consumption. It definitely drives sales of home, auto and durables because borrowing costs can come down. It definitely improves consumer credit with lower rates and it supports confidence. The timeframe, is it a year to a year and a half? That's the crystal ball of what we've seen in the past, be able to impact when you see it turn up in spend. And that would be certainly a positive for the retail real estate industry, positive for retailers, positive for their capital spending needs.

Tom:

The strength of the employment market right now, I think has been one of the things that's really allowed the consumer to be resilient. If people have a job, if wages continue to grow, even if there's some unease in their sense of confidence in the broader economy, they'll continue to spend if they have that paycheck coming in. You mentioned housing too, that has been, retail has continued to grow while there has been a headwind in the face of retail, which is the lack of transaction activity in the housing market because if people aren't buying homes and there isn't that level of activity, so much in retail happens as it relates to people buying their home and approving a new home that they purchase. So hopefully that will change.

Dana:

Exactly.

Tom:

So we talked a little bit about the impact of social media experience. ICSC has labeled 2024 as the Year of the Store. And the store has really made a comeback. There was this so-called retail apocalypse that was taking place in the retail industry, but that never really happened, did it? I mean, there never really was a retail apocalypse, was there?

Dana:

No, there wasn't. I mean, basically the conversation that you and I were having with everyone in all different constituencies pre-COVID, was Amazon's going to take over the world. Post-COVID, well, that did not happen. Second conversation we were having, my, there are so many crummy stores, they all need to close. But you know what? A lot of them did close during COVID. And what you have now is more productive fleets. The third conversation that we're always having is, my God, there are so many crummy brands and retailers out there. They should go bankrupt. We had nearly a hundred go bankrupt during COVID. And what do you have now? Look at what we just mentioned. A new generation of retailers and brands makes it exciting.

Tom:

Yeah, COVID really, the pandemic really did accelerate a number of things that were happening and needed to happen, but they would have happened in a much slower pace than what transpired because of the pandemic. And we obviously know that, we know the height of the size of market share e-commerce will have because we lived it during COVID.

Dana:

Exactly.

Tom:

And the industry not only survived, now it's thriving. Let's talk about the store. Why is the store such an important part of the retail environment beyond just the traditional shopping aspect, which is the logical thing. But what else does the store do for a retailer?

Dana:

Social activity. It is the windows to what your brands stand for. It's the best marketing that you can have. And what it does is when you think about, look at your Halo report, a store with e-commerce is much more powerful and more productive than just e-commerce alone. Because when you find that when companies do close stores, the e-commerce sales go down also. And so what we're seeing from the store today, 50% of retailers’ capital expenditures overall are being spent on the store. There's reinvestment going on.

Companies who had not remodeled their stores in years are now doing that. You look at a Steve Madden that's doing that. You look at an American Eagle Outfitters that's doing that. You look at the changes of how stores operate. I mean, grocers are frankly one of the most innovative in how they're operating. And what's happening? New brands are circling all around grocers because they get the benefit of that traffic. I think the service element is very important too. Sales associates matter.

And just to touch on one thing with the holiday season, we're seeing less holiday hiring this year than we did in years past because they're giving their existing sales associates more hours that they can earn more money from. And guess what? They're smarter and they can be more engaged. And that's encouraging. But I think the socialization of a store, the destination, the experience creates a memory. The fact that they've been remodeled, that new stores are coming alive again and let's see what it looks like.

Like all of a sudden there are these private companies. Yes, you have Skims, you have Addicted, there's new companies out there like Veronica Beard, all on the soft line side, that's driving excitement. Now you have Uniqlo coming with new lower price concepts like GU, you have Primark that's expanding. So across the pricing spectrum, I have awareness that can build.

Tom:

You know, there's, listening to you speak, one thing that just, you know, I constantly get reminded of, despite all the innovation, despite all the changes in the industry, that great customer service and great merchandising is still the key to success in retail, isn't it?

Dana:

It is. Well, why do you think one of my favorite times to go shopping and go to stores is on a Saturday afternoon an hour before the store closes? Because what would sales associates rather do, talk or go back to their job? They talk. I come from a family of retailers. When I was growing up in Manhattan, my family had a bookstore on Madison and 51st. My grandfather was cash register number one. My mom was number two and I was number three. So it's always about creating that relationship because that can't be replaced. It may be a little different today because that relationship can extend further. I don't know about you, but I have salespeople who'll text me on a Friday saying, you're coming in tomorrow? And you bet I am. It's just the fact of saying hello, it makes you feel wanted and nothing replaces that.

Tom:

Yeah, that's that's timeless. I did not know that about you. I did not know that you grew up in a retail family, that you your parents had a retail store. Is that is that what drove you to be in in this industry and to become the expert that you are?

Dana:

Yes. I loved it. And then I was very fortunate. I was in an apartment building in New York. I've met everyone in an apartment building that my mom introduced me to people. Basically, Ron Barron lived there, who's a very successful money manager and is my mentor. And he was focused on retail. So I got the ability to qualitatively see how retailers operate, quantitatively from the financial aspect and it blended together. And after my parents got rid of the bookstore, I still loved bookstores. So I was now, I'm dating myself, back in the day, I worked in B. Dalton and I was in charge of the microfiche department, helping people find where the different books are. So it's always about servicing the customer and seeing the sparkle and the surprise on the face when you satisfy them, it creates that relationship and it creates that experience that you remember.

Tom:

Well, I hope that the listeners get a sense of your enthusiasm and excitement. It is about retail and it's infectious. I mean, quite frankly, it's inspiring to be around somebody like you.

Dana:

Thank you. Well, I look forward to Black Friday because I'm always the first one in the store. I basically have a bet with myself when the store is open, I want to be the first one in the store because there's nothing like feeling the pulse of what is the mood of holiday 2023, ‘24, whatever year it may be.

Tom:

No wonder you love New York City too. You love that sense of excitement and intensity that comes.

Dana:

And you get your steps in.

Tom:

And you get your steps in. You know, then you mentioned also, grocery-anchored centers is kind of becoming a hub. It strikes me as that's somewhat of also a, while that's always been a popular and important part of the industry, it's become even more central, as it relates to the growth of foot traffic and so forth in grocery-anchored retail centers has been significant since the pandemic. Do you think some of that's the result of people not going in the office every day and they have more time at home and they have the ability to, you know, the convenience of being able to go shopping in the middle of the day when they may not have been able to do that in the past?

Dana:

Yup, look at the prepared foods that now grocers have. They fulfill multiple functions. You take a look at the different categories that are going in open-air centers. Meetings take place in some of these open-air centers. And I think grocers are also trying new things too. Look at Whole Foods that just opened a 9,000 square foot box on the Upper East Side in between two of their big locations. So the newness in grocers, the appeal of prepared, the fact that you get the most traffic because there's more repeat customers going there, led many retailers to basically locate right near the grocers. And I think they're some of the most innovative types of retailers around in terms of technologies. And take a look at what discount has become. When you look at Walmart, who's in excess of 50% grocers, everyone basically converged.

Tom:

You know, you and I, you know, share a love for Manhattan and live in Manhattan, but the suburbs have become quite a hot spot too, haven't they? Because of that, all the things that you just said, I mean, the, you know, the proximity to where people live.

Dana:

Look at retail rental growth. When you look at where retail rental growth will be the highest, first-ring suburbs. And that goes to show what the future of hybrid work is. It's not going away. It's staying here longer. Even if people may be going back to offices a few more days a week or going in for more meetings.

Tom:

So now let's shift gears a little bit and talk about technology. You touched upon the impact of social media upon retail. Obviously the topic that has been very central to many conversations is artificial intelligence, the impact of AI on every industry and retail clearly being one that there's a lot of conversation around. Give your perspective around, first of all, artificial intelligence and how disruptive that could be to retail.

Dana:

I think overall, let's not think of it as disruptive. Let's think of it as an enhancer. How is it going to help retailers be smarter? How is it going to help them, whether it's figure out how to merchandise better, how is it going to help them capture new customers. I've even seen some companies in the start of all this because I do think we're in the early innings of the implementation of AI, but some retailers, whether it's product descriptions on their website, all of a sudden they're having the product descriptions written by AI and having fewer copywriters that need to go over everything.

What it can never take the place of is human interaction and social engagement. Because look what we saw in self-checkout. Self-checkout works up until a point and then you need the human assistance too. So I think it's not just a cost enhancer, it's a sales driver too, if used correctly to help build your loyalty memberships and help your merchandise correctly. I haven't yet had a company who has been able to articulate holistically what the future opportunity is and how they see it impacting their whole business. That's why I say we're in the early stages. Technology spend is a percent of capital spend for retailers. It's next up right after the investment in the stores. And I think if anything, two years from now, we're going to even be able to have more activations of what AI can do. And not just for retail businesses, for the consumer also.

But the one thing it can't replace, it can't replace insight. I've had people in my company say to me, Dana, is AI going to replace what we do in terms of writing reports? I say no, it may be able to help accelerate the accuracy of some of the numbers and what you may be able to put together. But your insights in being able to feed off of what you learned in the past to inform you in the future, I don't think that goes away. And the dialogue between people, managements and investment bankers, real estate landlords, and also the tenants. That can't be replaced by AI. So that future vision is yours to develop. It's AI's to help assist.

Tom:

Yeah, very, very well said. I couldn't agree more. I mean, I, you know, there's been technological advancements since the dawn of man and, and throughout all, we've always evolved from a production standpoint, from an efficiency standpoint, new jobs are created, etc. I mean, the conversation we just had about the retail apocalypse, the expectation that that was going to kill physical retail. It didn't, it just actually made it better, right?

Dana:

Exactly.

Tom:

Just made it better. So I also agree we're in the early innings. It's almost like predicting what would the internet be like if we're in the mid-1990s and we're trying to predict what the internet's going to look like and how it's going to impact business. you know, 20 years later, it was a lot different than we would have thought or imagined back in the mid-1990s.

Dana:

And I think the other phrase that continues to remain relevant, adapt or die. I think you do always have to adapt and be willing to explore or else you won't be ready for next. And you always want to be ready for next.

Tom:

I was also struck when you said it, I was like, yeah, you're so right. You know, the self-checkout too. That was all the rage and they're still there, but there's a number of retailers that have pulled back on that because of the experience and the, you know, people enjoy customer service and you know, so.

Dana:

What about that person recommending, you bought this, don't you think if you got that soup, don't you want to try this soup also? Self-checkout can't do that for you.

Tom:

So I'm going to ask just kind of the two fairly obvious topics, but let's start with, with the challenge first. You're sitting here in October of 2024, what do you see as the biggest challenge facing the retail industry?

Dana:

I think the biggest challenge overall is, how do you continue to create an exciting brand or concept that's going to appeal to the consumer? There is so much competition out there. How do you differentiate yourself? And I think that's why in many companies, the CEOs of many of the retail companies, they can be merchants first, because merchants have the ability to drive the top line and top line can solve for a lot of problems. Expense cutting doesn't get you there. It's what are you offering that customer that is expanding the brand, enhancing the brand. And I don't care whether it's grocery, I don't care whether it's discount, what are you doing to be even more relevant? And that's why you're seeing that word lifestyle come more into vogue whether it's the discounters, whether it's the off-pricers, are selling more categories than they've sold in the past.

Tom:

Okay, so now the biggest opportunity. We're sitting here three years from now. What's the opportunity that's sitting in front of us that those retailers that are the most successful seized?

Dana:

I think some of it is going to be technology. How are you using the learnings from technology to enhance your top line and your channels, both physical and digital? I think the learnings and the teachings and the instruction of what technology can do for you can make you a smarter business in order to drive top line and also to drive bottom line growth at the same time. But it all stems from knowing your customer. So what's the data that you're learning and implementing? I always believe that there's three things that can make a brand and retailer successful. How are you innovating? How are you incorporating speed and convenience in your model? And how are you using data to inform you of the path ahead? So it's always about concept execution and management, but ask any management team. I don't care whether it's a real estate company, a landlord, a developer, or retailer.

Tell me what your innovation is today and what it's going to be tomorrow. What does seamless and speed mean to you today to help your employees but to aid your customers? And what data are you using that's transforming your business? If you ask those three, that shows that they have a vision for growth.

Tom:

Yeah, speed is so important, isn't it? I mean, it strikes me as just the need to react to things that are happening in the marketplaces and the competition today. Because of the access to data, the access to information, people expect reactions so much quicker than they would have even five years ago, don't they?

Dana:

And look in so many different ways, whether it's click times online, whether it's delivery of merchandise, whether it's retailers and apparel, seeing what's selling and having the ability to manufacture it and getting that supply chain, speed it up so you can react. So read and react and look at landlords. They want to have tenants that are contiguous, that can be complementary.

Tom:

Yeah, you know, it's fascinating just to the expectations upon business and people to react with a, with a level of speed and precision. And in our industry, I mean, retail, the consumer is just so much better informed today than they ever have been in the past because of the information that's built.

Dana:

Who would have thought years ago that TikTok and Instagram would be something that CEOs are watching closely, but they are, they themselves are.

Tom:

Well, you mentioned just the impact of social media on driving foot traffic in stores. It creates a level of awareness and excitement that didn't exist 10 years ago. We didn't delve on this particular challenge much, but I just want to circle back on one thing. And one of the things that I know many of our landlord members are concerned about, and many of the retailers are concerned about as well, is just the lack of available space. I mean, the demand for space is significant right now, particularly in the open-air space, know, that suburban first-ring suburb. And there just hasn't been a lot of new supply put on the market, any of that new supply across the country. I mean, I personally, I don't see that changing in the short term, that the demand for space is going to outpace the supply of space because even if you had a construction boom, it would take a number of years for that to come online.

Dana:

Exactly the right point, Tom. I think of that too. Even if you did have a construction boom because of lower rates, it's not going to happen overnight. And that's why you're seeing retail rental growth is going up. You're seeing even urban cities like here in Manhattan, look at whether it's Madison Avenue, whether it's Flatiron, whether it's SoHo, you even look at some of the other cities like Chicago and San Francisco, Manhattan's better and Chicago and San Francisco are getting less worse. You and I are going to be in San Francisco tomorrow, I think. I'm anxious to walk around and see exactly what's changed.

Tom:

Yeah, yeah, me too. It'll be interesting to see how things have evolved. It's been at least six months since I've been in San Francisco. And so I'll be interested to see how things have changed. Let's talk about 2025. I know we just talked about the holiday. Sounds like we're thinking a solid holiday season. know, 3%, 3.5%.

Dana:

 Positive, yeah.

Tom:

Yeah, positive. What are your thoughts around 2025 looking into the next year?

Dana:

Well, I think about next year overall, the fact of lower rates should be positive for the companies, should be positive, certainly for the financing environment. In the stock market, you're going to get some more IPOs, because we had a closed market for two years, you easily could, which facilitates growth of companies opening physical stores. I think you are seeing a little bit right now a narrowing of the store openings to store closings that you hadn't seen before. Some of that was the Big Lots and the Lumber Liquidators. But overall, the pace of store openings, I'm not seeing dramatic changes.

If anything, I'm seeing continued relocation, I'm seeing continued remodels there out there. And I think we're seeing more retailers from overseas come to open here in the US. And you have, as I talked about, the next generation of brands, you're having some of them accelerate this store opening activity.

Tom:

So you foresee a continued strong demand for physical space and store openings.

Dana:

Yeah, I think it's going away.

Tom:

Yeah, and you know, hopefully with the easing of rates, we'll see an increase in transaction activity as well and M&A activity really just across, you know, all industries for that matter, because it's been fairly muted.

So, well, Dana, we're at the end of our time together. I just want to thank you. I could talk to you for hours.

Dana:

I feel the same. Thank you.

Tom:

Your passion for the industry or your passion for, for sharing all the incredible knowledge you have, it just comes through and it's infectious. So I couldn't think of a better first guest for our podcast. So thank you for agreeing to be the first guest. And I just really, really appreciate you taking the time to be with me today.

Dana:

Thank you. A thrill to partner with you and look forward to continuing the conversation.

Tom:

Thank you, Dana.

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