Macerich Co.'s CEO on Aug. 3 pushed back aggressively against the prevailing narrative around the retail sector that predicts an imminent "death of the mall" and the general demise of brick-and-mortar retailing.
"I have absolutely no empathy for the shorts and the social media that are motivated for their own reasons to ... create this fake news and this barrage of headlines that incorrectly states where the retail business is, and where the retail business is heading," Chairman and CEO Arthur Coppola said on an earnings call.
The executive went on to call the negative headlines circulating around the retail business "very painful" for both management and shareholders, and called the impact they have had on share valuations "dramatic."
Coppola in prepared remarks pivoted and spoke at length about the future of the brick-and-mortar retail business, which he said will continue to be anchored in the concept of the mall or shopping center as the "gathering space" or "town square" of any given community. He pointed to Amazon.com Inc.'s acquisition of Whole Foods Market Inc. as a vindication of this thesis.
The CEO cited as evidence of the health of the mall business today the fact that the company has, over the last 15 years, been able to consistently increase rents, achieve ever-increasing sales productivity and maintain "very high" occupancy, even as e-commerce sales have gained momentum.
Coppola called many of the recent retailer bankruptcies and store closings a "normal" part of the business. He said retailers close up shop because they are loaded with debt or because they have failed to modernize and shoppers succumb to brand "boredom."
"It doesn't take e-commerce to kill these brands," Coppola said of the downsizing retailers.
Demand today remains strong from restaurants and "experiential" retail. But the main source of demand for space at Macerich's centers going forward, Coppola said, will be "vertically integrated, digitally born" brands like Bonobos, Warby Parker and Blue Nile. E-commerce has hastened the demise of many brick-and-mortar-oriented brands, but it is also incubating new ones to fill their places, and in a more efficient way. Retailers no longer have to test their product in brick-and-mortar first. Those looking for space at the company's centers are already established and popular.
"While we are on a sea of tough headlines, our view of the future for great gathering places located in the last mile in dense demographic markets is very bright," he said. "Digital commerce is not a threat to our model. It is a great friend to our model."
Macerich shares were trading up more than 3% around midday Aug. 3.