Tanger flourishes despite economy

Jun 13, 2009 (Athens Banner-Herald - McClatchy-Tribune Information Services via COMTEX) -- SKT | Quote | Chart | News | PowerRating -- Joshua Duffy isn't what you'd call a regular shopper at the Tanger Outlet Center off Interstate 85 in Jackson County, but he's well familiar with the Banks Crossing locale straddling Banks and Jackson counties along Interstate 85.

The Tanger Outlet Center just north of Interstate 85 on Steven B. Tanger Boulevard and the Tanger Town Centre on U.S. Highway 441 comprise one of more than two dozen massive discount mall sites operated by the North Carolina-based Tanger Factory Outlet Centers Inc.

"I told my wife I'd bring her here," said Duffy, a resident of Phenix City, Ala., during a recent Saturday afternoon at Tanger outlet mall in Commerce. "I drive a tractor-trailer and come through here every week. I don't care too much about shopping, but my wife loves it, so I wanted her to see this place. And from what I can tell, they've got some pretty good deals here."

Lawrenceville resident Deborah Hoopspaugh doesn't come from quite as far away as Duffy, but she said she's always in search of competitive pricing and finds plenty of that at Tanger.

"I like it -- they've got good prices," she said. "There's a great selection on clothes and shoes, and I really enjoy visiting all the stores. I came here before with my daughter to go to Lane Bryant, and they charge a lot less out here than they do in Snellville, and there seems to be a better variety of clothes. It's definitely worth the drive."

Surviving and thriving

In a time when the country's recession flirts with depression, Tanger appears to be one of the retail industry's happy stories. The U.S. Census Bureau recently reported that food and retail sales were slightly down in April 2009 as compared to March 2009, but is some 10 percent behind in the numbers put up this time last year.

And with the beleaguered General Motors leading the pack with its recent announcement that it would shutter 1,100 dealerships in a first round of closing that will include a total of 2,600 dealerships by 2010, the roll call of struggling retail businesses closing stores in the face of the economy includes Chrysler, Circuit City, Starbucks, Goody's, Waldenbooks, Office Depot, Rite and even The Home Depot and Sears.

Yet Tanger, a publicly traded company, with 31 outlet centers in 21 states -- representing some 9 million square feet of gross leasable space -- is not only surviving, but it is thriving in Jackson County, where it opened for business in 1989. The company also manages Tanger Town Centre, a smaller mall found on U.S. Highway 441 in Banks County, a mile or two from the larger Tanger Outlet.

In April, the company announced an increase in the annual dividend on common shares, bumping from $1.52 to $1.53 per share, and an increase on quarterly dividends of $.3825 per share. Tanger has increased its dividend for 16 consecutive years and has paid dividends to investors every quarter since the company went public in 1993.

Perhaps more importantly, the Tanger center in Commerce is in a major expansion mode, adding a host of stores in the wake of the departure of Denny's last summer.

"We have a handful of vacancies," said Mark Valentine, general manager of the Tanger outpost at Banks Crossing. "Some of the vacancies were created intentionally because we're shifting merchants and trying to create space for new tenants coming in."

As an example, Tanger recently moved the retail shop Totes to give Route 21 the room it needed to expand, Valentine said. Route 21's vacancy combined with a vacant space next to it fit the needs of American Eagle Outfitters , which began construction in early June, he said.

The mall's expansion will include a relocation of Guess and the construction of a new building of some 30,000 square feet of leasable area where a Denny's used to be near the entrance of the Tanger Outlet Center.

That new commercial facility will include retailers such as Coach (open by the end of June), Guess (re-opening in July), Gymboree and Sketchers (both already open) and Anne Taylor Loft, Valentine added.

"From practically the day Denny's announced they were leaving, we sort of started formulating a plan to create some more shopping space," said Valentine, a veteran of the retail wars who worked in mall development for 20 years before coming to Tanger. "We have a handful of vacancies but they're all in the works. I think I have three spaces that aren't accounted for. There's also a small space in the expansion that's not leased yet."

Bargains galore

Although he can't quite put his finger on the popularity of the Tanger center in Commerce, Valentine said he's pleased with the way things are progressing.

"All things considered, in this climate, I don't know if we were just lucky or were in a good position, but there was plenty of demand for this market on the part of our national outlet chains," said Valentine, adding that Reebok also will be moving into the larger center from Tanger Town Center soon. "The timing was such that everything was still moving forward, even when the economy kind of tanked a bit last fall. Nobody backed out or pulled out -- everybody wanted to move forward and we were more than happy with that."

Valentine does, however, take into account an adage that helps explain the popularity of outlet or discount malls, which according to American Demographics generally are located in rural markets (and a respectable distance from competing malls) and attract some 500 million shoppers each year.

"In good times, people want a bargain and in tough times, they need a bargain and that's kind of the way we position ourselves," he said. "Our traffic has been flat through the first five months of this year, but it's going up very slightly. Sales are about the same, so in this climate that's a good thing. I think the front-line regular retail, not necessarily the big-box users but the regional malls, are probably seeing decreases through the last many months."

Providing visitors with one-stop shopping at a variety of stores (the Tanger outlet centers at Banks Crossing have more than 60 different stores) definitely strikes a chord with many consumers as ABC News reported that in 2006, some $12 billion was spent at the more than 220 outlet centers in the country.

"In general, I think the outlet segment of our industry has been faring pretty well over the past six months," Valentine said. "Our company has a very strong balance sheet. We're not tied down by a tremendous amount of debt. We have the capital to continue with expansions or new projects. I think there's a challenge getting new projects off the ground in new markets, because some retailers are sitting tight. And retailers drive the projects. If they don't want to be in a market, there's no point in us building a shopping center."

Besides low prices and high traffic, Tanger -- which opened its first outlet center in Burlington N.C., in 1981 -- brings other critical aspects to a community, including serving as a "welcome center" for Jackson and Banks counties and an employment center for the entire region, Jackson County business leaders said.

"There's no question Tanger Outlet Mall is one of the best assets we have in Jackson County, not only in terms of a sales tax perspective and all the businesses located there, but we consider that to be one of our premier tourist destinations as well," said Shane Short, president of the Jackson County Chamber of Commerce. "The way we sort of look at it is we've got Tanger Outlet anchoring the county on one end and we've got Ch teau lan in close proximity on the other end. We think (Tanger is) one of our best assets."

Valentine estimated that sales tax proceeds from the various Tanger stores is somewhere in the $15 million range, which Short said is divided locally between the Jackson County government, the Jackson County School System, the Jefferson City Schools, the Commerce City Schools and the City of Commerce.

All about location

"The mall is doing so well despite the downturn in the economy," Short said. "They're adding on out there. It's healthy and it's helpful."

Tanger benefits the area in many ways, drawing tourists, generating sales taxes, offering plenty of shopping options and providing jobs, Short added.

" No question, it's a big employment center," Short said. "If you think about it, every one of those stores employs at least a half-dozen people. It's a sizeable employment base."

"I think employment is pretty constant," said Valentine, who added that nearly 1,100 people work at Banks Crossing in a full-time or part-time capacity. "Most national chains run a pretty tight ship in terms of hours and ratio to sales. I think in certain instances, in some of the smaller stores, you can't really reduce (employment) because there's only one or two people working there, so there's not a lot of room to really cut down there. Some of the bigger stores have more employees, but it is seasonal. They'll ramp up for the heavy spring season or the back-to-school season or the holidays and then they probably have their base level, which isn't going to change regardless. So it probably doesn't fluctuate too terribly much."

Location might well be Tanger's best retail strategy, in Georgia at least. Besides the center at Banks Crossing, Tanger also has an outlet mall off Interstate 75 in the Henry County town of Locust Grove. Both areas have proven to be powder kegs in terms of population growth. According to CNN.com, Jackson County is ranked 26 among the country's fastest-growing counties and is sixth in the state in terms of growth.

"Jackson County is on the verge of exploding," he said. "They're in the top 20 or 25 of growing counties. We're kind of sitting on the front edge of what we hope and think will be a dramatic growth curve in our immediate market. When I came here 10 years ago, the local market was a small fraction of our shopper base and it has steadily grown to upwards of 10 percent or more in the last eight or nine years. And it's only going to get bigger, I believe."

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