GGP CEO expresses confidence in market as company seeks to build The SoNo Collection

An image of The SoNo Collection, shown in December on a television in GGP's office on Washington Street.

An image of The SoNo Collection, shown in December on a television in GGP’s office on Washington Street.

NORWALK, Conn. — GGP is looking to start construction on The SoNo collection this spring or summer, GGP Sandeep Mathrani said this week, describing the mall as having a strong “buy online pick-up in-store” component.

Mathrani made the comments Jan. 31 during a GGP’s Fourth Quarter 2016 Earnings Conference Call, according to SeekAlpha.com.

The SoNo Collection is about 50 percent pre-leased, Mathrani said, going on to explain that the mall’s retailers need to “have enough backroom to be a point of distribution,” that there is enough “pick-up areas.”

Mathrani said that’s “an omni-channel world” perspective.

Omni-channel  is a sales approach the “seeks to provide the customer with a seamless shopping experience whether the customer is shopping online from a desktop or mobile device, by telephone or in a bricks and mortar store,” Margaret Rouse writes on SearchCIO.com.

As an example, “the customer service representative in the store will be able to immediately reference the customer’s previous purchases and preferences just as easily as the customer service representative on the phone can or the customer service webchat representative can,” Rouse writes.

The GGP execs painted a positive picture of the company’s finances. Even though there’s been a national wave of bankruptcies since 2014, GGP investors didn’t feel a blip, Mathrani said.

GGP has installed traffic counters at most of its centers and has not seen a decline, Mathrani said, adding, “In fact, the high traffic causes serious parking issues.”

“Overall traffic to the centers is up, the number of stores visited during each visit may be lower,” he said. “The conversion rates are higher. The consumer — they begin their shopping journey on their mobile device, but they’re closing the purchase in the physical store.”

Asked about the enormous pressure from very competitive online marketers, Mathrani said there’s a “flight to quality.”

Retailers are seeing their biggest sales increases in better assets, he said.

“The consolidation of tenants into high quality retail assets is occurring across the country. Tenants are agnostic at the property type, but they have a strong desire to be in the retail real-estate,” Mathrani said.

There’s “a shift into fast fashion,” and 2016 was “a fantastic year for luxury,” he said.

“The term ‘fast fashion’ refers to a phenomenon in the fashion industry whereby production processes are expedited in order to get new trends to the market as quickly and cheaply as possible. As a result of this trend, the tradition of introducing new fashion lines on a seasonal basis is being challenged. Today, it is not uncommon for fast-fashion retailers to introduce new products multiple times in a single week,” Investopedia states.

“What I think is the most important part, which is completely overlooked, is the reach of regional shopping center is 5 miles to 10 miles, versus the community center, which is 2 miles,” Mathrani said. “They give them access to more clients that make the single visit. It’s evidenced by what we’ve accomplished. We’ve signed six supermarket leases in the last few months.”

Mathrani said, “Given there is essentially no new supplier of retail space in the horizon and the U.S. population is expected to grow at almost 1%, annually high quality assets would continue to take market share, reinforcing their position as the destination in their trade areas, this is where we had staked our strategy.”

Read the entire transcript here.


Betsy Bowen February 3, 2017 at 9:20 am

I spent a couple of hours at Bloomingdale’s White Plains last Sunday afternoon and the place was fairly empty. Stopped at Lord & Taylor Stamford on the way home, and wandered three floors of not-much-going-on. Between the two stores, the shopping experience was identical: The same over-priced merchandise, the same loud music pelting down. I felt bored and tired, and was reminded of why I prefer shopping online.

Dawn February 4, 2017 at 7:59 am

I saw a report after Christmas numbers were in. The CEO of GGP state profits were slow this season due to lackluster traffic in the malls. Did anyone see that coming.

Peter Franz February 4, 2017 at 10:09 am

Yes Dawn, the Q4 retail performance was expected. Market estimates had overall sales hit .07% increase, year-to-year, and the result was an .06% increase. So, no real surprise. Amazon of course hit 22% increase over Q4 2015. Also notable was that “Fulfillment by Amazon” a factor that shows how many sellers chose to have Amazon fulfill orders, was up 70%.

It should be noted that it’s estimated 50% – 70% of upscale american homes are Amazon Prime subscribers, and increasing rapidly.

Another notable new item is that Macy’s longtime CEO is to step down, his successor Gennette is a company guy, with no experience of turning a company around, and there are early talks between Canadian retailer Hudson’s Bay to possibly purchase Macy’s.

There’s little doubt the mall model, especially the upscale mall, is on life support. Our mall will be built. I’m sure it will look nice. I’m sure it will last a few years and provide jobs. Then it will fail. But that’s not the end of the world. I’m sure other good uses for the building will emerge.

Andrew February 4, 2017 at 11:04 am

Many malls are starting to rent space for classrooms and office space. Maybe this will become a new NCC campus. Close to the transportation and parking that they need.

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