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Tanger Outlets is Fighting Back Against E-Commerce

Jul 02, 2020 by Matt Frankel, CFP

Tanger Factory Outlet Centers (NYSE: SKT) is getting back to business. The outlet shopping real estate investment trust (REIT) recently announced that all 39 of its outlet centers are open, and nearly three-fourths of the occupied stores at the properties had reopened as of June 14 -- and that number has likely grown since then.

Not only that, but the early results look strong. Tanger reports weekly traffic is above 85% of 2019 levels and is even better in locations that have been open for at least a month.

While this is certainly welcome news, the biggest unanswered question about Tanger's future (even before the pandemic) is how effectively outlet shopping can compete with e-commerce. Sure, outlet shopping has some advantages, like the discounted and unique nature of its products, but the reality is that an increasing percentage of retail has been shifting online over the past decade or so.

Tanger isn't planning to simply sit back and see how it plays out. The company is trying a new initiative to build out the omnichannel and e-commerce capabilities of its outlet centers, and it could end up being an especially big help in the post-COVID-19 retail world.

Tanger's virtual concierge

Now more than ever, it's important for retailers to innovate. E-commerce competition has taken the retail world by storm, and physical retail operators need to offer customers a truly unique experience in order to keep traffic flowing through their doors.

Tanger Factory Outlet Centers recently launched a new program called Virtual Shopper. In a nutshell, this is a concierge service that aims to bring the experience of shopping in physical outlet stores into consumers' homes. Consumers will be able to use the platform to hunt for bargains at Tanger's outlet properties with the help of onsite shoppers.

The service can allow customers to look for a specific product or simply let one of Tanger's personal stylists custom-select items. And it allows shoppers to explore any of Tanger's outlets, not just whichever one is located nearest to them.

The best part? Using the service is free for shoppers. Personal styling services have historically been prohibitively expensive for most people, and even the newer and more innovative personal styling methods like Stitch Fix (NASDAQ: SFIX) aren't selling bargain-priced products. Tanger's Virtual Shopper gives people access to a real, live personal stylist while buying items at outlet prices.

Will it successfully take on the e-commerce revolution?

Obviously, nobody has a crystal ball, and initiatives and innovations that sound promising don't always pan out as planned.

That said, there are some big draws to outlet shopping, even without a virtual concierge service. Not only do discount-oriented retail businesses tend to do well in recessions and bring in foot traffic no matter what the economic climate, but outlets in particular have an advantage in the uniqueness of their bargains. In other words, there's a treasure-hunt aspect to outlet shopping that simply can't be replicated online.

The only problem is that people don't always want to have to leave their homes to shop, and that's where Tanger's Virtual Shopper program comes into play. It offers an experience that has previously only been available in person, and it can be enjoyed from the comfort of home. It combines the draws of outlet shopping with the convenience of e-commerce. Obviously, it's far too early to know if Tanger will be successful, but it certainly looks promising.

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Matthew Frankel, CFP owns shares of Stitch Fix and Tanger Factory Outlet Centers. The Motley Fool owns shares of and recommends Stitch Fix. The Motley Fool recommends Tanger Factory Outlet Centers. The Motley Fool has a disclosure policy.

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