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Despite the rise of Shein, Amazon, and all the other online-only retailers, 97% of Gen Z shop at brick-and-mortar stores, according to the International Council of Shopping Centers. And Tanger is seeing that reflected in its second quarter earnings report. To discuss what the report says about the state of the consumer, we've got Steven Yalof, who is the Tanger CEO, joining us here in studio. Great to see you once again.

Thanks for having me back.

Absolutely. Okay, so what are we seeing in the, in the pulse of the consumer right now? We've got continued economic data readings that are showing that there is a, a battle-weary consumer right now, as the Conference Board chief economist, Dana Peterson told us. So where are you seeing strength versus some pockets of weakness that the consumer is weathering through?

Well, first of all, that, that middle pocket of price point Yeah. is really attractive to the consumer right now. So, uh, embedded in that category, we see a lot of the, the family apparel. Mhm. So we're, you were talking about, uh, the Gen Z consumer. That consumer is buying, they're going back to the Gap. They're buying Banana Republic, Old Navy, J.Crew, uh, brands like that. And those are the brands that we see popping in our space. Higher price point items right now, um, yeah, they're not having the same sort of day that these particular brands are. And we talked about Nike and, you know, Nike, you know, they had a, a few consecutive quarters of, of struggle. Coming back in our space now in a big way. So it's interesting to see the evolution of the brands, you know, in, in a very inflationary time. Right. Price deflation, particularly in the outlets, where prices, you know, you get great value all day, is very attractive to that consumer.

This is a time of mass digital investment for these brands. How do you go to these brands and say you still need to be in brick and mortar, and what's the response from them?

You know, I think that the consumer likes the idea of window shopping online, but actually buy, making their purchases in the store, particularly in the apparel categories and the footwear categories. Now, there's commodity that you can buy online, for sure, and reorder. But um, a lot of that, you know, when you make a decision to, to buy a suit, you're wearing a great suit today, I try. I'm sure I keep up with you. but I'm sure you tried it on before you, you know, so you want to go to the store, you want to feel the material, you want to try it on. And I think a lot of the consumer really feels that way, particularly in the categories that we serve.

When you think about the shopping experience and, and how that's changed because the consumer is having that discovery moment that's online, but then having the tangible, let me feel the material, let me see how it fits. They're having that moment in brick and mortar and IRL. How do then you look at the success rate for these companies? What are they gauging that experience or at least using as their barometer to say whether or not it was actually a success for those consumers?

Right. Well, well, first of all, just if I took one quick step back, part of what we're doing as the, the developer, the owner of the shopping center in order to um make our facilities that much more attractive for the consumer, is you know, we've recognized that the shopper's not just coming for the shopping experience. They're looking for other things to do when they're there. They're looking for better places to eat. Is a great People, that's the number one request we get is, wow, we, you know, it would be great if we had better, better restaurants. Our more restaurants and we're delivering better restaurants. So from Shake Shack to, um, you know, Dallas BBQ, all these different brands that are coming in whether they're sit-down, they're quick serve, the restaurants really finding the outlet space now, because we're, we're catering more to a local uh, customer than we ever did before. We used to be so remote 20 years ago because of the, the competition, the sensitivity, different wholesale channels. Then now what we're finding is we're, we're able to build our centers a little bit closer in Right. and we have that benefit of a local consumer. The local consumer's looking for more amenities, more food, more entertainment, and that's what we're delivering in our centers. How is it reflecting? The retailers are really responding, because they understand, you're not just a place where people are gonna come and gather and shop. This is a place that people can do other things there as well and may come and visit us far more frequently, stay longer when they get there and ultimately the combination of those two, uh, we, we see them spending more money.

Because of my own experiences, um, going into Tanger Outlets over the years, I'm always fascinated and we typically are able to get an update from you on just what's the most attractive real estate looks like for Tanger in this environment. Where you would like to build more out. What, what does that pipeline look like?

Well, so we just built a shopping center in Nashville, which we opened up in October of last year. And, you know, if you take a look at the Nashville market, that is the perfect location. It's under-retailed from a full price point of view. Um, we are 12 miles outside of the city. We're on a major interstate that connects a couple of major cities together. So there's that tourist traffic that's coming into Nashville. We're accessible to downtown, but more importantly, a lot of the population growth that you see happening in Nashville right now is happening in that southeast corner where our shopping center is. So the combination of great local catchment as well as a great tourist population with not a tremendous amount of competition in the marketplace for shopping, um, we find that we're seeing a lot of that customer come to our center.

Just lastly here, you mentioned more and better food options. I mean, is, what is going to keep the customer within that premises for a longer period of time? Do you, do you need to bring in more gyms or, or more grocery stores to make sure that people, while they've already driven the car there or taken the Uber ride there, that they're making the overall payoff for the trip makes sense?

Well, that for sure. And, and that's what we're seeing is our customer is really looking for a number of reasons to come. For us, the best thing they can do is park their car once and then be able to service all of those different categories that you mentioned. Give you a great example, Sephora and Ulta. You know, here's a category, uh, health and beauty wellness, that has not had a lot of traction or a lot of opportunity in, in the outlet space. But now it's something that's, that's critically important. Um, Sephora, the, the Sephora stores that we have five of them currently under construction. We've got a number of Ultas in our portfolio. The customers coming, they come far more frequently, they, and they, um, and once I get the, the Ulta consumers car in my parking lot. That's a great business. Business the business also brings other brands, Yeah. but it also brings a lot of consumers. And those, those customers, oh, by the way, they've got a whole bunch of other places to shop, eat, and be entertained while they're there.

All right. I know the value of beauty, especially as a person who puts on makeup every day for the show. Thank you so much for joining. It's always great to see you. Stephen Yalof, who is the Tanger CEO, joining us here on Yahoo Finance.