The largest U.S. mall owner has a message for naysayers of brick-and-mortar retail: The mall, as we know it, is here to stay.
Speaking with analysts in a first-quarter conference call on Monday, chairman, president and CEO of Simon Property Group David Simon said that critics are too quick to write off physical retail as a dead.
“When I listen to the pundits, they’re throwing the baby out with the bathwater,” Simon said. “Read my lips, physical retail is here to stay and people really like to shop in the physical world. So don’t believe everything you hear on TV. We’ve got the evidence.”
Simon Property Group reported that sales at its malls across the country are returning to pre-pandemic levels. In a call with analysts, Simon said June sales in Q1 2021 were comparable to sales in June 2019, with some regions recording even higher sales than two years ago. Sales for June were up 80% year-over-year.
Simon is still looking to fill mall vacancies. The company’s occupancy rate was 91.8% in Q2, down from 94.4% in 2020 and 92.9% in 2019.
Meanwhile, as recent spread of the new Delta variant encourages certain retailers to reimplement their mask mandates and consider restricting access to vaccinated customers, Simon remains confident in the mall’s ability to pull through unscathed.
“The mall is safe,” Simon said. “And so even though we’re starting to see counties talk about indoors, there’s no science about the mall. I underlined that we’ve been mistreated in this whole 18-month ordeal, but it is what it is.”
Simon added that while he encourages people to get vaccinated, he will not mandate it for entry.
“I personally think that people are just going to deal with Delta,” Simon said. “I’m hopeful that people will get vaccinated. We’re not going to mandate vaccines. We’re going to encourage them. And I think we’ve got to keep being safe as possible, going on with our life. And where we need to mask up, we’re going to mask up.”
Simon added that he was pleased with the performance of the the formerly bankrupt JCPenney, which was sold to Simon Property Group and Brookfield Asset Management Inc. in October 2020. He said that the retailer’s liquidity position is growing and sits at $1.4 billion, with no outstanding credit balance and that the retailer will launch private national brands and a beauty initiative later this year.
“We’re most proud because we basically kept companies alive that otherwise would be dead, buried and liquidated,” Simon said. “These were companies that were frankly roadkill and we saved them. And for that, I’m very, very thankful.”