Retail has experienced ‘a rebirth and a renaissance’ throughout the pandemic: ICSC CEO

ICSC CEO Tom McGee examines consumer spending forecasts ahead of the 2022 holiday shopping season, dining expenses amid inflation, Black Friday sales, and the state of retail.

Video Transcript

SEANA SMITH: The holidays will be here before we know it, and shoppers are already getting a head start. A new survey out from ICSC found that 3/4 are planning to buy gifts far in advance, capitalizing on the trend of early season deals. Here for more on that, we want to bring in Tom McGee.

He's the CEO of ICSC. Tom, it's great to see you again. Let's start with this survey, because you were tracking how much people are looking to spend, when they are planning to spend it, and on what. Let's start with that when part. 75% are looking to shop early. Does that mean that we're already in the middle of this holiday shopping season?

TOM MCGEE: Yeah. It does. First of all, good afternoon. It's good to be with you again also.

SEANA SMITH: Tom, it looks like you might be muted. Oh.

DAVE BRIGGS: We got you. We got you.

TOM MCGEE: Oh, you got me? OK, OK. First of all, good afternoon. And it does mean we're in the middle of the holiday season. Holiday season starts earlier. That trend really began pre-pandemic, but has accelerated now post-pandemic in an inflationary environment with a price-conscious consumer looking for deals and being very selective in their shopping habits.

I think it kind of makes sense that people would start shopping earlier. We do expect it to be a solid holiday season. We're cautiously optimistic that despite the uncertainty and concerns around inflation, which are real, that consumers will shop this season. Our expectations are for 6.7% retail sales growth and almost 10% growth with people going out dining over the holiday season.

DAVE BRIGGS: Wow-- almost 10% increase on dining. We talked about that early shopping, Amazon Prime at their October day, Target and Walmart both had competing events-- is Black Friday dead?

TOM MCGEE: It was an iconic day, for sure. But I think that Black Friday's importance in the holiday shopping season isn't what it once was-- with the longer holiday season, Black Friday is one of many important days during the holiday shopping season.

SEANA SMITH: And, Tom, when it comes to promotional activity, we've heard from a number of CEOs on recent earnings calls-- anyone from Target to Nordstrom-- that they're planning heavy discounts. I guess from your perspective, how does this year's promotional activity compare to what we've seen in the past?

TOM MCGEE: I would expect there to be more promotional activity this year than what we saw last year. The environment is different than what we were experiencing last year. There was certainly a lot of enthusiasm and pent-up demand as we got back into live shopping and a lot of our holiday traditions.

We still have a lot of enthusiasm, but certainly more concern around pricing. And so I think one way that retailers will differentiate themselves is a focus upon promotions and being selective in how they price things. This is a price-conscious consumer right now.

They're continuing to spend, and we continue to see retail sales growth. But certainly, the level of consumer confidence and concern around pricing and inflation is at a very heightened level.

DAVE BRIGGS: Tom, for years, we've heard about the death of brick and mortar stores, and then some surprising numbers this year-- retail vacancies 6.1%, lowest since 2015, more stores open than closed in '21, first time in 27 years. Is there a shift away from online shopping? Or how do you explain this trend?

TOM MCGEE: Yeah. Retail, real estate-- if you would have closed your eyes going into the pandemic, a lot of people would have assumed that this was going to be the demise of retail real estate, and the opposite has really happened. It's been a rebirth and a Renaissance-- four times as many store openings as closings this year. And really, it's a combination of factors-- certainly, the convergence between online and physical is upon and real.

Stores are being utilized in a whole host of ways, for traditional shopping, but also for fulfillment-- whether that's shipping from stores or consumers coming and doing click and collect and curbside pickup. And retailers have really understood the importance of having a physical store to build their brand and their relationship with consumers. Online acquisition costs are significant.

And online-only retail is not very profitable. And certainly, a focus on profitability is also helping the physical retail space. So there's a whole confluence of things that have come together. But the store is here to stay. And its prominence in retail is back where it belongs.

SEANA SMITH: Tom, I know you just said the store is here to stay, but I want to ask you about this online trend. In the "Journal" today, they were talking about the big bet that brands are making on livestream shopping. When you take a look at the success, at least, that we've seen in this space in China, and compare it to what we've seen here in the US, I guess, do you think we could have a similar type of success here in the US? And how critical do you see this being for the future of brands?

TOM MCGEE: Well, you know, I think the whole use of media and technology in shopping has continued to evolve and mature over, really, the last 20-plus years. So I do think there's a role for live streaming. And there's a role for a whole host of media in shopping.

So I think, ultimately, it will just enhance and adjust the shopping experience. But I don't think what we've seen over the course of the last 20 years is that, really, these things come together and consumers find the right balance. I don't think livestream shopping is going to, in some way, diminish online or physical retail. I just think it'll be part of a complement of things that are in a tool chest a retailer will provide.

DAVE BRIGGS: Very interesting retail season ahead-- ICSC CEO Tom McGee, good to see you, sir. Thank you.