The Daily Signal - Retail and America’s Road to Economic Recovery

Episode Date: September 8, 2020

Retail plays a significant role within the nation’s economic health. About 17 million Americans work for brick and mortar stores, according to Abby Jagoda, vice president of government affairs at Unibail-Rodamco-Westfield, which specializes in owning, developing, and managing retail assets. And despite the narrative that retail is dying to e-commerce, she says, sales at physical stores have climbed in recent years. Jagoda joins the podcast to explain the important role retail plays on the road to economic recovery.  We also read your letters to the editor and share a good news story about how a classic American company is stepping up to help Hurricane Laura victims.  Enjoy the show! Hosted on Acast. See acast.com/privacy for more information. Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Daily Signal podcast for Tuesday, September 8th. I'm Robert Blewey. And I'm Virginia Allen. We hope that you all had a wonderful Labor Day weekend. It's good to be back with you all today. On today's show, Rob talks with Abby Jagoda from Westfield about the important role retail plays in the road to economic recovery. We also read your letters to the editor and share a good news story about how a classic American company is stepping up to help Hurricane Laura victims. Before we get to today's show, we want to tell you all about another great way to keep up with the news right now.

The Morning Bell is a daily weekday newsletter that delivers the top news in commentary directly to your inbox for free. Every morning, the Daily Signal will send you the latest news on COVID-19 analysis from heritage experts and keep you up to date on the top news stories conservatives need to know. It's easy to sign up. Just visit DailySignal.com and click. on the connect button in the top right corner of the page. We'll start sending you the morning bell tomorrow. Now stay tuned for today's show. Coming up next. We are joined on the Daily Signal podcast today by Abby Jagoda, Vice President of Government Affairs at the shopping center operator, Unibai Redomco

Westfield. Abby, thanks so much for joining us. Happy to be here. Well, your company is one of the largest commercial real estate companies in the world with well-known retail shopping centers in the United States and Europe. And I'd like to begin our interview today by sharing a little bit more about Westfield. Obviously, some of our listeners are familiar with those properties and some of the places they might recognize here in the United States. Yeah, absolutely. Westfield maintains a network of 31 shopping centers plus retail and restaurant operations at five leading international airports across America. And we're not really just a landlord. We're a network of centers that provides over 100,000 American jobs across the country. That's amazing. Thank you for sharing that. Well,

we know that COVID-19 has obviously had a big impact on a number of businesses, not just here in America, but also worldwide. How are your shopping centers adapting from the point of time in March when everything largely shut down to today? So across our national portfolio, as our centers have been able and permitted to reopening, we're seeing amazing enthusiasm among our guests and visitors to come back and enjoy themselves while also abiding by health and safety guidelines. And at many locations, our customers have been so excited to be out in their favorite malls again that they've even been cheering when the doors are open. It's so cute. It's adorable. And we've definitely been doing some innovative work around our apps. We have a Westfield Rewards

program that we recently partnered with Nordstrom to do double rewards during the Nordstrom sale along with our double rewards on the Westfield app. We've cribbed a program from Disney. You might be familiar with their fast-pass system at their theme parks. We're calling it line pass so that if a store is too crowded, you can make an appointment to come back, similar to what you would see at a Disney World Ride. And that's all sort of in the way of social distancing and providing that healthy and safe atmosphere for our customers. Well, that's really great to hear. One of the things that we worked on with our colleagues at the Heritage Foundation was the National

Coronavirus Recovery Commission. And I know how important it is to establish and restore that confidence with Americans so that they do feel comfortable going out and shopping again. And let me tell you, as somebody who grew up going to the shopping mall as a child, and it was a big part of our community, I know that they certainly have a big impact. But I want to ask you because even before COVID-19, retail was obviously facing increased competition from e-commerce. What does the future hold for shopping malls in America? Well, as you know, about 85% of adults still shop at or visit malls on a regular basis.

And 81% of Gen Z, that's younger than me as a millennial, still prefer to shop in stores. 17 million people are employed in shopping centers throughout the U.S., and it generates 400 billion of state and local taxes. And as Westfield sort of starts to pivot into the new COVID era, we're definitely continuing down a path that we had begun prior to COVID, which is leaning into mixed-use developments. Mixed use means a live-work play environment where we're setting up residential, office, and hotel units in boxes that were formerly occupied by retail. And what we're seeing, Smart Growth America

actually conducted a study that said that mixed-use developments generate 10 times the tax revenue as that of a standalone retail. So for cities and towns, this is vital. And for us, it's a built-in customer environment that we can continue to invest in the Westfield brand and provide that flagship offering that Westfield is really famous for in this country. Well, yeah, certainly in metropolitan areas, we've seen that concept become quite popularized. I know in Washington, D.C. and its suburbs, you see a lot more of that, and it makes sense, certainly for the convenience standpoint and for the attractiveness, I think, of what it means for somebody who'd be living in that neighborhood.

Now, you gave some data and some facts there. I wanted to ask about sales. How do e-commerce sales today compared to brick-and-mortar sales in America? So in 2018, $513 billion were spent in e-commerce sales, which is very impressive. But when compared to the $3.8 trillion in brick-and-mortar, it sort of pales in comparison. Now, of course, we're seeing a spike in e-commerce sales, given that more people are shopping from home. But don't count out them all. We are continuing to see record sales in many of our convenience and entertainment industries. And Westfield itself is also investing in many digitally native brands.

Some that you might know include bonobos or Warby Parker, who realized quickly that customers are really interested in touching and feeling and seeing what they're about to buy in a brick-and-mortar environment. Well, I can certainly testify to that. I mean, I know that I've had many occasions just over the course of the past six months where, you know, there is, there's nothing like trying on a pair of sneakers or actually going to the store and seeing the goods right there in front of you and be able to have that tangible experience as opposed to going through multiple layers of returns through e-commerce. So definitely from a convenience standpoint, I understand that e-commerce, you know, in the COVID period, has allowed people to get goods and services delivered directly to their homes. But to me, anyways, nothing like going to the mall. And we love returns, by the way. Yes.

Returns are a huge generation of sales. But I feel like as you gave those numbers, I mean, that's quite striking to me because there seems to be a myth out there that brick and mortar is collapsing and being to, destroyed by e-commerce when in fact, at least based on those 2018 numbers, it seems that you're still actually doing quite well. Absolutely. I mean, retail sales grew 3.5% in 2019. So once we're back on track after the coronavirus and the pandemic era is behind us, I absolutely think that those numbers will continue.

And we're really seeing some growth now in the back-to-school shopping area, even though children or not returning to brick-and-mortar schools on many occasions, parents are still very interested in making purchases to coincide with the beginning of school. Well, you know, we just had another strong jobs report for the month of August, and obviously retail is going to play an important role in the road to economic recovery in the United States. What are some of the steps that you're taking at Westfield or you like to see others take when it comes to making sure that we do have success and we're getting people back. back to work and we're returning to as normal as possible we would since, you know, pre-COVID.

It's, it, what's really vital for us right now is that businesses continue to remain open. Westfield's been working since day one to make sure that we're providing our tenants with the education and the tools necessary, the security, the, the, the infrastructure to make opening and remaining open a safe experience for the communities that we serve. So we, we're very proud of the steps that we make. and would definitely encourage others to follow our lead. And in those cases, I mean, is it largely working with the local government officials to make those decisions?

I know, again, going back to one of the main recommendations that we had is it really should be determined on a state or local level, as opposed to a federal level, in terms of those decisions in terms of what's safe to reopen and where those restrictions are. But for the most part, I mean, given where you do have locations, You mentioned airports as well. What is it like in the current environment? Do you feel that you have a good working relationship with those local officials to make those decisions, or are there still barriers to getting those stores reopened again?

Absolutely. And we've been working hand in hand with local law enforcement. And you're right. I mean, the more local we can get to this point, the better. Even certain states are seeing spikes in some places and not in others. We're seeing a spike in Buffalo, New York right now, but not in New York City. where it was recently announced that malls could reopen on September 9th, so we're excited about our World Trade Center being able to finally reopen.

And in terms of customer behavior, our shoppers have been quite good about abiding by the health and safety guidelines that we have in place. We're seeing very few instances of somebody with a lack of face covering. And 98% of the time, they're very compliant and almost always have one on hand. And with respect to social distancing guidelines, for queuing in line, our visitors have also been very cooperative when being asked to spread out. And as operating restrictions at shopping centers are relaxed progressively over time, we expect to transition through a series of clearly defined operational phases. And there's no set duration for any of those phases.

Of course, it depends on the center and it depends on the locality. But we're preparing for transitional learning and planning periods and establishing how improved conditions might determine. determine the suitability to progress to each subsequent phase. Abby, I want to go back to a couple of things you mentioned earlier. First of all, the impact on state and local revenue, you know, something like $400 billion of state and local taxes that obviously support everything from public safety to schools and infrastructure.

What does that mean for the future? And how have those relationships developed, particularly as you've seen the rise of e-commerce? Absolutely. So what we're seeing in Trumbull, Connecticut right now, our mall there, Westfield, Trumbull, constitutes for 5% of that town's budget. So without the mall, being able to remain open and those retailers, unable to generate sales tax, we're really sort of caught in this vice alongside the town. We've always had wonderful working relationships with the towns in which we operate and invest in those communities quite heavily. And when it comes to another thing that really kind of struck me is the large number of the Gen Z who are going to shopping malls, what do you attribute this to?

I mean, obviously for, you know, a large number of baby boomers and even Gen Xers or millennials, you know, you increasingly see, obviously, the role that e-commerce can play. But as we talked about earlier, you know, there's nothing like being there in person. What do you attribute, though, to Gen Z preferring to shop in stores? Well, I'll say America's first job is always in a mall. My first three jobs were in malls, a children's shoe store, a department store, and as a hostess at the Cheesecake Factory in the early 2000s, when the Cheesecake Factory was seeing its heyday in terms of line control, positive memories there.

So, you know, I think that this has always been a huge draw. for teenagers as the home of their first job, but also as that place to socialize and gather alongside their friends. And on the other side of the spectrum, as soon as our doors reopened, we found our mall walkers returning. Certainly not in the teenage years of their lives, to put it mildly. But we are, we're pleased to see that our activity and our enthusiasm for shopping malls really spans generations. That's great to hear. When it comes to public policy, obviously, we've seen a lot already come out of Congress and the White House when it comes to trying to address the economic impact of COVID-19. Are there steps that Westfield thinks should still be done,

or do you feel that there were things that were done previously that really worked effectively? way. Well, you know, there's there's definitely a lack of clarity when it comes to policy. And landlords are really caught in the middle between some tenants who can't afford to pay rent. And we've been providing rent abatement and deferrals to some to many of those tenants who were unable to afford their rent during the shutdown during, during the spring of this year. And we're caught in the middle between the banks, to whom, we owe mortgages. And for for some banks, they've been definitely willing to work with us. And others, including our commercial mortgage-backed securities lenders, have been unable to do so.

And to be clear, it's not that they're bad people. These loans are so heavily securitized and those loan coverants so strict that it at times can prohibit us from making those flexible arrangements for tenants. So when we're thinking about future economic stimulus, we've We've encouraged regulators and stakeholders and members of Congress to consider that dilemma for commercial real estate. And so far, it has not really been acknowledged through the CARES Act or through any sort of subsequent legislation in any meaningful way. It's interesting to hear you say that. Now, you know, we've heard about these stories of places like Lord and Taylor liquidating. obviously, you know, others like Neiman Marcus, Steinmart being hit hard, you know, when it comes to the future here, obviously you do have big competition with the Amazons of the world.

Do you think that there's an opportunity maybe coming out of COVID that there will be entrepreneurs who see an opportunity here to maybe go into a shopping center like Westfield and maybe create new businesses? Absolutely. And I point back to our mixed use examples. We've, we, we, we, in the shopping center business, oftentimes we're, when we see a department store that has, unfortunately, uh, gone through bankruptcy and, and, you know, come out on the other side unsuccessful, we've been, we've been able to repurpose those spaces, um, with, with other uses. Um, brick and mortar online universities, fitness centers, and oftentimes hotel or residential spaces, if approved by local zoning, can happen in those spaces. And we're really excited to see what those possibilities bring for those spaces coming into the future. Well, Abby, it's great to talk to you

about this. I'm glad to hear that things are getting restarted. It's so important for our economic recovery. And I think as Americans become more confident in going out and reentering the world and the shopping centers that Westfield owns, it's encouraging to hear those stories. Any final words you want to share with our listeners today? Absolutely. As we're heading into the fall into a possible new stimulus bill or some other measure of recovery, Congress and the administration should really consider adopting incentives which support the continued and safe reopening of retail destinations. Again, it's the home of America's first job. It's the heart of communities, and we're excited to see what the future brings. Thanks, Abby. It's great to have you join us on The Daily Signal. Thanks for

having me. Are you looking for quick conservative policy solutions to current issues? Sign up for Heritage's weekly newsletter, The Agenda. In the agenda, you will learn what issues Heritage Scholars on Capitol Hill are working on. what position conservatives are taking, and links to our in-depth research. The agenda also provides information on important events happening here at Heritage that you can watch online, as well as media interviews from our experts. Sign up for the agenda on heritage.org today. Thanks for sending us your letters to the editor.

Each Monday, we feature our favorites on this show. Virginia, who's up first? In response to last week's podcast interview with Gabe Johnson titled, he went to the scene of the fatal shooting in Portland. Here's what he saw. William Selner writes, Gabe, thank you for a conversation that put a bit of wind in my sales this morning.

Your wisdom is appreciated. Your service to our country, both past and present, is admired and valued. Thank you for seeking solutions. And in response to that same podcast, Reggie Dixon of Battle Creek, Michigan, writes, that was a very informative interview.

Gabe Johnson, a veteran, does not deserve to have this conflict in his life. The longer this violence is allowed to continue, the property and home values will only go in one way. Restrictions to a certain area or jail time must happen, or this is going to continue. Thanks for a very informative interview. Your letter could be featured on next week's show,

so send us an email at letters at daily signal.com. Virginia, you have a good news story to share with us today. Over to you. Thanks so much, Rob. Hurricane Laura swept through the Gulf Coast of Texas and Louisiana at the end of August, with winds hitting as high as 150 miles per hour. About 900,000 people lost power, and many homes were completely destroyed. Relief organizations are stepping up to help, and so is one high-end stake company.

In partnership with the Salvation Army, Omaha Steaks has donated over 60,000 pounds of steak to those affected by the hurricane. Todd Simon, the owner of Omaha Steaks, recently joined Fox News to explain why his company wanted to give the gift of a good meal to hurricane victims. You know, one of the things we've seen during the pandemic is that people are enjoying

meals at home and rediscovering eating meals at home with family and friends. And our mission is to deliver exceptional experiences that bring people together. So when something comes up like this disaster that makes it so hundreds of thousands, of people can't do that, that spurs our team into action. And that's why we teamed up with the Salvation Army to make the largest stake donation in our company's history. 60,000 pounds, 200,000 portions.

Yesterday, we sent two truckloads on their way to the affected areas in Louisiana and Texas. The Salvation Army has set up 25 different feeding stations in the affected areas and plans to serve 10,000 hot meals a day. And of course, as the Omaha Steaks owner told Fox, steak is now on the menu for many of those meals. And these are going to be meals that, of course, will fill people's stomachs, but they're also going to help lift their spirits at probably one of the lowest times in their lives. So we're really happy to be there to help and happy to team up with the Salvation Army. I think it is just especially powerful when we see private companies go out of their way

to meet the needs of American citizens in crisis. And of course, it's nice to hear some good news amid all of the hardship brought on by Hurricane Laura. It certainly is, Virginia. Thanks for bringing us that story today. We're going to leave it there for the Daily Signal podcast. You can find us on the Rurkissue Audio Network and all of our shows are available at daily signal.com slash podcasts. You can also listen on IHeartRadio or subscribe on Apple Podcast, Google Play, or your favorite podcast app. And be sure to listen every weekday by adding the Daily Signal podcast.

is part of your Alexa Flash briefing. If you like what you hear, please leave us a review and a five-star rating. It means a lot and helps us spread the word to other listeners. Be sure to follow us on Twitter at DailySignal and Facebook.com

slash the DailySignal News. Have a great week. The Daily Signal podcast is brought to you by more than half a million members of the Heritage Foundation. It is executive produced by Rob Blewey and Virginia Allen,

sound designed by Lauren Evans, Mark Geinney, and John Pop. For more information, visit daily signal.com.