David Simon, Chairman and CEO of Simon Property Group

Patrick T. Fallon | Bloomberg | Getty Images

David Simon, the CEO of the nation’s largest mall owner, wants to create a new kind of annual shopping extravaganza as consumers increasingly feel the pinch of inflation pretty much everywhere they go.

Think Amazon Prime Day, but for retail centers.

The event, dubbed “National Outlet Shopping Day” by Simon Property Group, is for people looking for deep discounts on everything from new clothes and sneakers to sunglasses and luggage, Simon told CNBC in a recent interview with Zoom.

The first iteration is taking place this weekend at the real estate owner’s 90 high-end outlets and Mills-branded properties across the United States. About 300 retailers from J.Crew to Banana Republic to Puma will participate by offering deals exclusively at those locations, according to Simon. Property. It’s a way for the mall owner to work with their tenants to attract cash-strapped shoppers to stores as budgets are tight and retailers are more competitive for shoppers’ dollars.

Retailers from Target to Gap have seen their inventory levels swell as backlogged goods arrive from overseas at the same time consumers divert spending from so-called pandemic categories such as sweatpants and office furniture.

CNBC spoke with Simon, along with Gary Duncan, President of Simon Property’s Premium Outlets and its Mills business, and Mikael Thygesen, Chief Marketing Officer, about this weekend’s event, the state of the retail sector and the American consumer.

The conversation below has been edited for clarity and brevity.

Simon Property Group’s Sawgrass Mills shopping center in Sunrise, Florida.

Source: Simon Real Estate Group

Why did Simon Property Group create this shopping holiday and decide to organize it this weekend?

Simon: The idea was in the works at the beginning of 2019. And then we didn’t quite manage to put everything in place. We were going to do it in 2020, and Covid killed our plan. So we always wanted to do that.

The genesis was really to give back to the consumer in terms of our promotions and special offers. But also to strengthen the Simon outlets have major brands. And we want them to be at the top of the list. We’re going to do it every year – and with some of the inflationary pressures, it couldn’t come at a better time.

Thygesen: We timed it between traditional promotional windows, so Memorial Day is over and back-to-school hasn’t started.

How has your retail tenants been received to participate with discounts and other incentives to entice people to get out and shop?

Simon: We have 300 retailers, but hopefully next year we will have 1,000. We plan to expand it every year. And obviously it’s our day, but we welcome participation from any outlet owner who wishes to participate.

How have your outlet centers performed compared to Simon Property Group’s shopping centers of the same name, particularly in this context of runaway inflation and more and more consumers looking for savings?

Simon: We were really very satisfied with our full price activity. Our point of sale business has been extremely stable and growing as well. We have outlets in major tourist markets – Desert Hills, Sawgrass Mills – and we’re starting to see them hit record highs [sales] again because we are seeing more than domestic tourism coming back. I’m starting to see international tourism coming back.

Frankly, I think the United States is where the action is. We have a lot of great things happening in this country. I think you’re going to see sourcing come back. Look at Intel, their commitment. You’re here. You go down the list, less reliance on China. And we see it with international retailers who want to expand into the United States and say that’s the best place to be.

We’re seeing a lot of retailers figure out how to handle extra inventory right now. Do you see any of them trying to unload these goods through their outlets?

Duke: What we saw earlier in the year and even most of 2021 is that tenants didn’t have enough product because they had supply chain issues from Asia – in the clothing and footwear categories, certainly. And that has largely been eliminated.

Now people are spending, but they are careful about where they are spending and they want their money to go further. The points of sale will continue to be a very valuable resource for them and for us. But we haven’t heard anything about retailers having a large glut of inventory. We do pop-up shops with some guys who have this problem, but I don’t think it’s widespread.

Simon: I’m going to reinforce what Gary is saying: it’s really selective here and there. And it’s more bets on what happens now. You see it at many mall retailers if you are [in the business of] costumes, jewelry and event outfits, you do very well. Remember when we thought the early 2020s would be all about hanging out with friends? It didn’t quite happen. It’s happening this year.

If retailers have a bit of excess inventory – because, as Gary said, the consumer is a bit more cautious – that’s actually good for the outlet trade. We’ll see if that really happens, but it hasn’t been rumored by any means.

What other changes in consumer behavior are you seeing?

Simon: We are very sensitive to what the consumer experiences, and so we want to find a way to optimize their money. There is also a change towards the dressing. We are seeing very good demand on that front.

Clearly, the high-income consumer has not changed his behavior. Low-income people are under pressure, and that’s what we’re focusing on. This consumer is worrying, and we are trying to find how to help him.