Closing Malls?

 Been watching the closing of local malls, repurposing of space, seems contrary to the following: 

New stores are opening in malls, inflation or no  by Matthew Stern  in Retailwire   ....  

Some say a recession is on the way; others say it is already here, but according to the biggest owner of U.S. shopping malls, the threat of an economic downturn is not deterring retailers from opening new mall locations.

Simon Property Group (SPG) said on a conference call that they have not seen retailers backing out of deals to open up stores, according to CNBC. Its tenant occupancy rate is even up year-over-year, currently at 93.9 percent over 2021’s 91.8 percent.

Contributing to the ongoing opening of mall locations are factors such as the movement of online brands into brick-and-mortar retail, retailers following customers leaving U.S. cities for the suburbs and retailers that are traditionally known for their anchor stores testing smaller formats. In terms of customer spending, while lower-income mall shoppers appear to be pulling back on spending, those shopping luxury-focused retailers like SPG-owned Brooks Brothers have not.

Despite SPG’s reassurances about the well-being of its shopping malls, a recent study from Placer.ai shows results that are more mixed. Visits to indoor malls were down 9.5 percent in June compared to pre-pandemic numbers, even though visits were up 1.5 percent compared to June of the previous year.

If retailers are still signing up for space at the mall, however, a part of their incentive could be being able to lock down more favorable deals than what was on the table pre-pandemic. In 2021, shopping malls began offering more short-term leases to retail tenants that allow greater flexibility in case of a foot traffic downturn.

Outside of malls, some major retailers have continued to pursue aggressive footprint expansions despite inflation. Off-price grocer Aldi, for instance, announced in February that it would be opening 150 new stores throughout 2022 to make it the third largest grocer in the U.S.

Recent counts are consistent with the position that store openings are not slowing. So far this year there has been a net increase of 2,478 stores in the U.S., with 4,432 openings and only 1,945 closings, according to Coresight Research as reported by CNBC.  ... ' 

Navigating Inflation

From McKinsey, fairly obvious, but more detail:

How to navigate rising energy costs and inflation

Some consumers may consider pressing the brakes on their road trips this summer as gas prices continue to skyrocket. In the United States, gas prices jumped nearly 50 percent year-over-year, driving up energy prices 34.6 percent. The war in Ukraine and supply chain effects have only exacerbated price pressures. ... ' 

McKinsey Talks Inflation

Be ready for it.

Winning the race with inflation: The pricing opportunity for industrial companies

As inflation rises, industrial companies must take a new look at the pricing opportunity.

Many industrial companies face a complex new array of challenges today, including a global pandemic that has driven radical shifts in demand, buying patterns, cost to serve, and perceived value across sectors and value chains, which in turn have led to sharp spikes in commodity prices. Inflation in the cost of raw materials is forcing industrial companies to take swift action on pricing. The price increases required to offset inflation and maintain constant gross margin could greatly exceed the 2- to 3-percent hikes many industrial companies make at year-end. In our discussions with leaders across industries, many have voiced concern about this issue (see sidebar, “The response to inflation”). .... ' 

Sent from McKinsey Insights, available in the App Store and Play Store.

P&G Positions for Inflation

My former and longtime employer writes, on the threat of Inflation Challenges.  With innovation. 

P&G Is Positioned for Inflation Challenges

Procter & Gamble Vice Chairman and COO Jon Moeller tells investors it has winning products and strategies in post-Covid world.

Retail prices soared last month, lifting US inflation rates to a 13-month high, according to the Consumer Price Index. But Procter & Gamble COO Jon Moeller said the company is well-positioned to overcome this latest headwind, just as P&G thrived during the Covid-19 pandemic. Speaking at a Deutsche Bank investor conference, Moeller noted that P&G added 40 points to its global market share last year and e-commerce sales are up 50% year-to-date. He credited gains made pre-Covid, during Covid and now, post-Covid (in the US and China) to having the right strategy, the right portfolio and the right organizational structure.

"Despite near term challenges, we are not changing the strategy, We are doubling down and moving forward," said Moeller. "This has been working in driving maket growth. That is the most important mid- to longer term."

He acknowledged that a global recovery won't occur until 2023 or 2024, when enough vaccines can be made to cover the world's entire population. Virus spikes in India and Brazil will delay the global recovery and yet, P&G's market share remains strong in both countries. 

"Predicting year-on-year growth is difficult," he said, acknowledging that the company's two largest markets, US and China, accounted for nearly all P&G growth in the current fiscal year. "Now we have the headwind of rising material and transportation costs, but we will get through this rough patch."

Product innovations will help. New Tide and Ariel formulations provide more cleaning power at lower temperatures. The Oral-B iO Series electric toothbrush promises 100% healthier gums in one week and six times more plaque removal along the gumline. P&G is rolling out plastic-free Gillette razor packaging in France with plans to expand in the US this fall. In dish care, Dawn Powerwash sales reached $150 million in its first year. In hair care, Pantene is adding premium formulas like 3-Minute Miracle and Quench Intensive Shot Mask.

Retail partners like what they see. Procter & Gamble was ranked the No. 1 supplier in the US for the sixth consecutive year. 

"We are driving constructive disruption by acting with the speed and agility of a startup," Moeller insisted.

We'll have more from Moeller in The 2021 Top 50 article in the July issue of Happi.  ...."

Podcast: Forward Look into Inflation

Via Knowledge@Wharton:

Inflation: What Lies Ahead?

Subscribe on iTunes!

MIC LISTEN TO THE PODCAST (at the link) 

Wharton’s Itay Goldstein speaks with Wharton Business Daily on SiriusXM about how the Federal Reserve may respond to the recent rise in inflation.

Use Up/Down Arrow keys to increase or decrease volume.

The latest rise in the inflation rate to 4.2% for April 2021 has fueled expectations that the Federal Reserve could raise interest rates and tighten monetary policy. The rise in the consumer price index for all items is the largest 12-month increase since a 4.9% increase in September 2008, the U.S. Bureau of Labor Statistics (BLS) reported earlier this month.

In recent times, the Federal Reserve has been willing to accommodate higher inflation, but that stance could change with the unexpected pace of price increases in the latest data. “The Fed sent pretty clear and strong messages over the last year or so that it is not going to be deterred by signs of inflation, and that it’s going to keep a loose monetary policy and keep [interest] rates down,” said Wharton finance professor Itay Goldstein in an interview on the Wharton Business Daily radio show on SiriusXM. (Listen to the podcast at the top of this page.)

That position could now change as the inflation data for April “was quite alarming,” Goldstein continued. “No one really expected the number for inflation to be that high. So now we start seeing more expectation that maybe the Fed will eventually act and start raising rates and tighten monetary policy.” The federal funds target rate serves as the benchmark for bank interest rates and is currently in the range of 0% to 0.25%. The Federal Reserve has said it expects to keep its benchmark interest rate near zero through 2023.  ... "