Create a Customer Experience People Love with Stephen Yalof

What was genuine, what was so interesting to me was wow, these shopping centers have been more to people than just a place to go and get stuff. These were places where people wanted to go and be together, where they could hang out. And so you said, what makes you want to add activation? What makes you change a shopping center to community center? I think the people really, that's what they raised their hand and said, this is where we're going, this is what we're doing, this is what we want. And you could put blinders on and say, let's just get the stores open as soon as possible, but you can listen to what the people are saying and that is, bring us more things that we want, that we like, that we love, that can entertain us, that can feed us, you can sell stuff to us, but give us a place where we can feel a sense of community and that's where we want to go. And we took that, that fuse was lit and we ran with it.

Psyched to be here.

Well, first of all, thanks for having me on. This is a great opportunity, and you and I, like you said, we've known each other for a really long time. So, looking forward to having a genuine, natural conversation about the business. And I love the first question because it really teased the whole thing up. If you think about it, let's go back to the pandemic. I started at Tanger in April of 2020. So, if you can think about where you were during that month. It's about 6 years ago today. Can you imagine how quickly that time has gone by? My first day of work, I had a real estate investment trust, a publicly traded company. Our stock was trading down in the $4 range. We had 40 shopping centers, 15 million square feet, 3,000 stores, and every single one of them was closed. Because everybody was staying home. People hadn't really figured it out yet. So, what were the first things that opened up post-pandemic? Open-air outdoor environments. In fact, on day two at Tanger, I literally got in my car, drove out to Riverhead, Long Island, which is where one of our shopping centers was, just to see the center on a day when everything was closed. I was fascinated because there were 100 people walking the shopping center. Sergio Tacchini tracksuits, old pair of Reebok shoes, and the general manager of the shopping center kept the music on. And what I connected on that day, and it's easier to look back in retrospect, was the fact that people were going to these open-air shopping centers even though the stores were closed as a place to have a sense of community, a place to do the things that they were doing every day, which was walking outdoors in an environment where they felt safe, where the music was on, where they could park their car, where they could wear a mask, they could stand 6 feet apart from their friends in their walking group. Yet, they could still have a little bit of normalcy in their life. And what was genuine and so interesting to me was, wow, these shopping centers have become more to people than just a place to go and get stuff. These were places where people wanted to go and be together, where they could hang out. And so, you said, what makes you want to add activation? What makes you change a shopping center to a community center? I think the people really. That's what they raised their hand and said, this is where we're going. This is what we're doing. This is what we want. And you could put blinders on and say, let's just get the stores open as soon as possible. Or you can listen to what the people are saying, and that is, bring us more things that we want, that we like, that we love, that can entertain us, that can feed us, you can sell stuff to us, but give us a place where we can feel a sense of community, and that's where we want to go. And we took that. That fuse was lit, and we ran with that.

Totally. Let's fast forward a year or two. There's definitely going to be stores that are not going to reopen. The pandemic wiped a lot of those retail stores literally off the map. Gone overnight essentially. So, now you have a lot of vacancy in your centers that needs to be filled. And another dynamic that was happening. So, you would say, wow, that's a real challenge. But another dynamic that was happening were people were moving to plenty of places like Charleston. That center when it was originally built, it was built because there were a lot of tourists going to Charleston. And one of the things that tourists love to do when they were on vacation was go shopping. It just happens to be something that people always looked forward to doing. Well, now all of a sudden all these people are moving into that market, that North Charleston market. The population is growing, whether it's work from home or an opportunity to leave cities and live in mid-tier market communities, customers started to move much closer into the shopping centers that we had owned that were previously catering towards people who were driving 100 miles to get there. So, now what we found, we've got a vacancy issue, an occupancy issue, and we've got people moving in closer. What do those people want? And those people wanted those amenities you were talking about. They wanted restaurants and better food and beverage opportunity. They wanted more entertainment and more chances for things to do. So, where I thought I was going to be challenged to find outlet retailers to fill some of that vacated space, we pivoted and said, wow, look at the new populations that are moving in here. Look at the things that they want. Going back to your statement about having your head on a swivel. For us, we wrote a vision statement very early on in the evolution of this company and said, hey, what do we want to be when we grow up? And we decided that we wanted to be more of a customer experience company than just a shopping center company. And how were we going to get there? What was the mission? Well, we thought that we would get there by using customer insights as a way of informing what that future of shopping ultimately looked like, which is the same thing as saying, customer insights. What are customer insights? You stop, you ask a bunch of questions, you get a lot of information, you can say, hey, I'm hearing that a lot. Maybe that's something that people really want. So, we took that permanent population moving in, we took the vacancies that had left, came up with a bunch of non-traditional outlet uses to put in these centers to actually light the fuse and create some fire in these centers. Because to me, I was used to getting a car in my parking lot once a month from a customer or once every quarter from a customer. But now if I can get that same customer every week, every day, because there's something different that they're coming for each time, I'm going to build my traffic, I'm going to build my dwell time, and I'm going to get my customers to stay longer. When they stay longer, they ultimately spend more. When they spend more, that gives me the opportunity and the ability to bring in even better quality retailers that only serve the flywheel of helping that consumer in that local marketplace get more excited about the return trip.

I'm often asked where do I get my inspiration when I'm thinking about building a new shopping center, buying something and redeveloping it, and making it something that speaks to a lot more customers. Where do I get that inspiration? One of the places that I go to get inspiration are the football stadiums. Current football stadiums. Because you think about football as a game when we used to go there as kids, we used to go to Giants Stadium. But think about it today. First of all, I'm a Jets fan, so the product on the field isn't so great, but the food's never good. It's always cold. You're sitting in a crummy seat outside. The parking is bad. The access is really bad. The bathrooms aren't clean. Everything is overpriced. Yet every single week they sell out those stadiums week after week after week. And there's been an evolution because people have realized, you know what? Parking's a lot better if I stay home. The TV's a lot better and bigger if I stay home. The food's a lot better if I stay home. The bathroom's a lot cleaner if I stay home. How do they still get people up off the couch and into the environment? And they do exactly what you said. They've got great things for the kids to do. There's a Jets experience. There's meet the players. The food is the who's who of restaurants from New York City who've opened up small kiosks inside. There's a VIP parking experience. They've made the access so much better. The bathrooms are so much cleaner. The seats are a lot more comfortable. And oh, by the way, you can also watch a game when you're there. So they completely shifted the narrative. And for us, that's kind of how we're thinking about the shopping center business. Same thing. You used to go for an outlet experience which is power shopping. Go to store, store, store. Maybe you grab the pretzel or your Planters peanuts because there was nothing there. It was a snack food. It was grab and go. But now all of a sudden if I get you to come for the food but stay for the shopping. I get you to come for the movie theater, stay for the shopping. Get you to come because now I've got pickleball, I've got gyms, I've got SoulCycle and stay for the shopping. I'm doing a really good job of flipping the narrative much like these stadiums are doing today.

Wow. There was a lot there. Sorry, word salad. No, it's great because I really haven't had an opportunity to talk about this, and this is amazing. I don't think Mickey would mind if I told this story. I found myself in the car with Mickey, it must have been 15 or 20 years ago. He is at the height of J. Crew, reinventing the brand. At the time, I'm at Ralph Lauren, and the two of us, I think we went out and we saw a shopping center together, or there was an event, and he offered me a ride home. So, I sat next to him in his car, we're in the backseat, and Mickey's thing, he's got his assistant on speakerphone. He's like, all right, let's call everybody back. So, evidently, she's got a long call list of people that called him, and he's going to use the opportunity not to sit and talk to me, but he's going to use the opportunity to call everybody back. Now, to me, that's far more fascinating. I don't have to sit here and listen to myself speak, I get to listen to him on the phone talking to customers and business people and landlords and I'm going to learn a ton. So, as I'm sitting there, one of the calls was a woman picks up the phone and calls him or he calls her back and she goes, I can't believe you're calling me back. Very excited. She said, I'm calling you because I have to tell you that I went to the J. Crew women's store, and you have five or six different styles of dresses. They were all in the same shade of blue, and I used them for my bridesmaid dresses for my wedding, because all the women had different body types. I wanted them in a certain color, but I was able to fit everybody in my wedding party with a different style of dress and it was amazing and I'm just calling you to say thank you. That was great. And Mickey gets off the phone with her and says, that's unbelievable. I can't believe I just had that conversation. Literally picks up the phone and calls his head designer, his head of retail, his president of operations and says, I've got a genius idea. And that is let's do a wedding shop. Let's do a shop where we can dress all the bridesmaids, groomsmen. We've got the product. We've got the style. This is what this person said. And he said to me, I said, I can't believe you would take that one phone call and turn it into this big idea that now you've got your entire organization ready to invest in. And he said, it's just because I only got one phone call, doesn't mean another 50,000 people were thinking about it but just didn't call me. That's a great idea. And that's kind of how he thought about that. And the next thing you know, there was a store on Madison Avenue. That was the J. Crew bridal shop. It was born out of that call on that day and he just made it happen. And I apply that rule to a lot of things that I do, too. Going back to our vision statement, using customer information to inform the future of shopping. I mean, isn't that what he did? He took great customer info and turned it into the future of that brand which also elevated that brand and created a higher level, higher price point of some of those products that turned out to be a real success story for them for a long period of time.

It does. And even more richness. We bought the dress before I even asked her to marry me and we bought the dress before I even had a ring and all that. So, it was a non-linear process, right? Life is that, right?

Well, interesting. Let's go back 10 years. Let's go back to Amazon. People are shopping online and everybody talked 10 years ago, oh, Amazon, it's going to be the retail Armageddon. Who's going to ever shop in a store again if Amazon and e-commerce is going to own the world? And then the pandemic happens, right? And if ever there was going to be a dagger in the bricks-and-mortar business, it's when your and my mother are now shopping on Instacart and buying products from Amazon and getting things online. You've got a full world of age ranges that now have become incredibly computer savvy. So we were only worried about that younger generation that was going to grow up with e-commerce, but now we lost our core customer, too. And so, yeah, that was a huge risk. It's like, is there going to be a second wave of this bricks-and-mortar rebound or is Amazon and e-commerce going to really land that knockout punch that so many people were anticipating? So yeah, that was a really big risk, particularly I made my career out of being in the retail business, so it was one I was going to have to navigate regardless of where I landed. But I elected to take this job for a number of reasons and Mr. Tanger, who was the CEO at the time when he hired me, only the second CEO in the 50-year history of the company, I'm the third. I've known him for a long time. I've been in the business for a really long time. When we had our conversations about the business prior to my joining, that's one of the things that we talked about. And I said, how sacred is the notion of pure play outlet shopping? Because in my experience, the retailers have to be far more experiential. The stores have to be more of a physical place and just a place to grab a product and go. You really have to compete and the one thing that retailers have to do to win in this environment is customer service. That's the main difference between shopping online and shopping in the physical space. They're solving for speed to market. They're solving for a lot of things, but it's really that customer experience. Somebody with product knowledge telling you why you need to buy this over that or explaining how to use the 50 applications you wouldn't even think about for the fabulous diamond line pan that you're about to buy or all these different products that you thought were just one-trick ponies, but have 20 or 30 applications because customer service is going to help you make those decisions. And Mr. Tanger said to me, he goes, look, whatever you believe you need to do in order to improve the on-center shopping experience, there are no sacred cows. Let's go figure that out. So, that was my launching pad. Here's a platform that is ripe to pivot, willing to pivot, and we're going to lean really heavily into the thing that you can't get in a non-bricks-and-mortar environment and we're going to make ourselves famous for that. We're going to make sure that all the retailers we do business with, the restaurants, all the different experiential uses we put in these centers, that is going to be part of our ethos, what differentiates bricks-and-mortar from the rest of the field, and I think we were front-runners with regard to working with our retailers, partnering with them, making sure that we were there from a merchandising point of view. What real estate company is a merchandiser? We do. What real estate company has a marketing team of 50 people that is there in support of the brands to make sure that they get their messaging out? That's amazing. And at the time, it's risky, right? Not only are you interviewing, but you're interviewing them.

Yeah, I never discount luck. Honestly, you can't discount luck and have any shred of humility whatsoever. And I also agree with you, you have to create the luck, too. You've got to put yourself out there. You've got to be willing to take some chances. Chance and luck definitely survive on the same continuum, right? Because if you don't take a chance, you never know how lucky you could get. One foot in the other. I think here's a great example of us taking some luck and using it to our advantage. Were we lucky that the government was writing stimulus checks and people were taking that money and going out and shopping? Yeah. Were we lucky when a million and a half square feet of tenants went out of business? No. But, were we lucky that enclosed shopping centers wouldn't open at a time that open-air shopping centers could, and a lot of those businesses and brands and restaurants moved into our center? Yeah, I guess that was pretty lucky. Were we lucky that there was no international travel, so everybody was stuck domestically, and if they wanted to do something, they needed to stay close to home or at least someplace that you could drive a car? And are we lucky that we are drive-to tourist destinations in places like Charleston, Savannah, Sevierville, Tennessee, home of Dollywood? If people wanted to be visiting these domestic tourists. So, yeah, I guess there's a lot of luck there, but we figured out how to turn that into a business model that really worked for us.

Yeah, I think some of the greatest lessons I've learned along the journey, I think those are the things that I definitely want to share. Things like write things down. You ever hear the rule of notes? The first one is, you take note. The second one is you keep notes, and the third one is you write notes. Take note means when you walk into a room, you take note. You read the room. You don't know if it's your turn to talk or your turn to listen, but whatever it is, take note. Pay attention. Be aware. Be present. Number two, you want to keep notes. You want to make sure that when somebody says something really interesting, you want to write that down. You want to make sure you remember that. If somebody gives you a to-do list, you better write those to-dos down because you don't want to forget to do anything. It's incumbent on you to deliver the things that people are expecting of you and asking you to do, and it becomes part of who you are when you're the guy that's constantly delivering. Writing things down has always been a really important part of my getting things done. The most therapeutic thing you can do in business is check something off your to-do list and say, I did that. Such a great sense of accomplishment. And for those of us who are long-range plan focused, there's others that are short-term wins that might be, hey, make your bed. Bam, did that. Those are the kind of things that are short-term focused. And then the last one is write notes, and I think this is probably the most important. Writing notes means saying thank you. This is you giving me this great opportunity to not only share with your viewers and listeners the Tanger story and give them an opportunity to understand my business a little bit better. But you also created an opportunity for me to think about things that I might not have thought about before, which oh by the way, I'm taking notes because there's a number of things that you and I have discussed today that I'm like, hey, that's something I'm going to follow up on and pursue. So I owe you a thank you note for that. I had dinner at a friend's house the other night. I owe them a thank you note. You want to make sure that people are recognized for the things that they do. I received an amazing presentation from somebody in my company today. I immediately read it. I said, the content was excellent. The direction was great and I think there's a lot of actionable items that are in there that's only going to make our business better, but I made sure that person knew that I understood how hard it was to deliver what they delivered and I've already sent them their note. So, you want to take note, you want to keep notes and you want to write notes and I think if you stay really keen on those three things, you're setting yourself up for great success.

Both very interesting people. Leslie was my babysitter and drove me to the US Open in 1980 with your sister Susie and we had Planters Peanuts. So, there you go. And the visor was a Planters Peanut visor.

Thanks Seth. It's great. Appreciate the opportunity to tell the story.