The state of malls & P.F. Candle Co.'s Made in America strategy

0:08Hello, everyone. Welcome to the Modern Retail Podcast. It is our show that covers the ways the retail industry is changing and modernizing. I am senior reporter Gabby Barco. I'm here with my co-host, Melissa Daniels. We are going to be joined by our reporter, Mitchell Parton, in a little bit. But first, hi, Melissa. How are you? I'm doing well, Gabby. How is your week going so far? It's good. It's busy, but good, as always. This week, we're going to be doing something a little bit different. We have Mitchell on to talk about this package that we ran on Modern Retail this week called The State of the Mall.

0:51Later in the episode, we're joined by Kristen Pumphrey and Thomas Neuberger of PF Candle Co. to talk about how brands with Made in America products are still affected by all of the tariff discussions. They are not immune, and they're going to be walking us through why that is. But first up, Mitchell, hello. How are you? I'm good. Yeah, I believe this is your first time on the podcast, so welcome. It is. Thanks. Yeah, this is a great week to have you on since we had our team coverage of the State of the Mall package this week that ran on modernretail.co. I mean, why malls? Malls are fun. I'm so glad we covered malls.

1:32Everyone has memories of malls, shopping in them, working in them, now bringing our families to them. But they've changed so much over the years. And malls are still a super important driver of retail sales, right? So despite years of the death of the mall proclamations, the format is alive and well. So our team looked at different types of properties and how they're staying relevant. I looked at how Tanger Outlets is modernizing their strategy to go beyond heavily discounted brands and get more into experience and service. Gabby, you reported on how malls that have been around for decades, like the Houston Galleria, have been able to constantly reinvent themselves.

2:10But Mitchell, you come to modern retail from a world of reporting on real estate. And I'm wondering if you can kind of tell us about your previous experience reporting on malls from your history reporting on real estate and in commercial real estate. Yeah, I was a real estate reporter for a few years. before this. So I have a lot of experience talking to developers and landlords and tenants of all kinds from commercial to residential, but I have covered a bit of mall over the years. What's your favorite mall? I'm in Dallas. The North Park Mall here in Dallas is pretty extravagant. That's a pretty good mall.

2:53I think that was the first time I ever saw an Apple Store and then the Microsoft Store like right down the hall or like right across from it and you're just like oh yeah competition that's still a thing um but yeah just some current stats to frame this conversation uh Placer.ai data shows us that mall traffic declined in June across all formats uh maybe just a representation of some of the demand that we're seeing this year um from consumers but still visit duration is up across all formats for the first half of the year um which kind of suggests that malls are still a really popular thing and, you know, that the quality of malls is improving to keep them there.

3:31Mitchell, you specifically looked at the American Dream mall and what's happening with that property as well as its growing plans. Tell us a little bit about American Dream for those who aren't familiar with the New Jersey staple. Well, yeah, I actually wrote about the Miami iteration of the American Dream, which is still in the works and probably has been for a decade and probably will be for a while. But people probably already know the New Jersey American Dream, which also took, I think, like 20 years or multiple decades to come to fruition. So it's not a surprise that the same project in Miami is also taking quite a while.

4:12But when they proposed this years ago, they proposed a bunch, like the New Jersey one, they proposed a lot of entertainment concepts as part of it. The New Jersey one had an amusement park. This would have a sea lion show, an indoor ski slope, a lake with submarine rides. I'm reading off a giant list of attractions. Mini golf, water park, skating rink. So a bunch of entertainment concepts, which is kind of the whole idea behind these properties. But again, it's taken a while to come together. There's been legal challenges, and it will probably take a little while as well. But we did eventually see the New Jersey one pick up, and now it seems to be in pretty decent shape and is getting a bunch of really cool concept stores.

4:59Yeah, you mentioned some challenges legally, too. But I'm wondering, like, what are some factors that have delayed this so much? I mean, we're going on a decade now, right? Yeah, there's been plenty of work with the roads that I haven't gotten into. But there's been a lot of things they've had to do on the roadways around the malls. And I think financial challenges as well, similar to the Jersey ones. So, yeah, a few things they're dealing with. You know, Mitchell, in the headline for this story, we called this a mega mall. And to me, that is sort of encompassing of all these different experiences and services that are provided.

5:40It's not just a place you go to shop. You know, is there any indication that there's still demand for this kind of thing? or what tells you or what tells the folks behind the American Dream projects that, you know, this is the way that people are still going to want to shop in 10, 20, 30 years? I think a lot of people in the area would point to the fact that South Florida is such a fast-growing region. It's a huge tourist market. So if it's going to work anywhere, it would probably work there. I talked to one real estate expert who basically said, you know, if it's going to work anywhere, it could work there.

6:17Like maybe it wouldn't even work in L.A. because there's so many competing projects in L.A., so many competing entertainment spaces in L.A. But, you know, Miami, it could be far enough from Orlando to kind of to work in that way. So we'll see if the demand's there for it. But, you know, if anywhere in the country, Miami would probably make sense. Gabby, you've been to the OG American Dream in New Jersey, right? Any hot takes? Yes. My biggest gripe was probably that you have to pay for parking. That feels sacrilegious in New Jersey to me to pay for to park at a mall. But it just kind of goes to show, obviously, you know, it's in the Meadowlands.

7:05It's at like this really congested area. So I think maybe they're accounting for crowded parking. But I was taken aback by that, I think, last year when I was there. That's very LA of them. Right. But as far as tenants go, it does seem to be shaping up. There's like a mix of, you know, your typical fast fashion big retailers. But there's also a lot of, you know, these younger D2C brands that are trying to tap in because it is a little bit of a destination. It has a different feel than a lot of even the other bigger malls in the area. in that you can tell this was basically designed with tourists or people that want to spend the entire day there in mind.

7:51Yeah, you know, that's kind of a great segue for the topic that I was looking into for the State of the Mall series. I spoke with Justin Stein. He's the head of leasing for Tanger Outlets. And he talked to me about how they've changed up their leasing strategy over the years to become more experienced and services driven. You know, before COVID, the outlet malls that Tanger worked with had about 80 % of footwear and apparel brands making up their tenants. But these days, that number is around 70 % with more food, more services, and even more places like gyms and pickleball courts on the properties.

8:29And the whole idea is that people aren't just coming in to, you know, buy something from the, you know, Lucky Brand Discount or the Tommy Hilfiger outlet store. They're also coming because they want to get lunch, they want to shop around. And maybe there's even a place that they can hang out with their family, you know, some green space, some sports TVs, things like that. Yeah, that makes sense. It's almost like, I mean, I think outlets lend themselves to discovery to begin with, like you kind of go in there with something in mind, but then you're like, who knows what I'm going to find based on the brands.

9:03But at the same time, you know, because so many of them are, people are seeking them out. Sometimes they're driving out, you know, maybe an hour to go there. It makes sense that they want to make it worthwhile by adding these other experiences or at the very least, maybe some elevated eating options. But what are your thoughts on, I guess, the fact that that's all trickling down, you know, from the luxury or class A malls down to outlets or, you know, off prices having a big moment. So maybe it makes sense. Yeah, I mean, I think there's a lot to the idea that people are going because they want a great deal on even the highest event brands.

9:44And I think that's why you're seeing some companies, you know, start looking at outlet malls if they hadn't before. Tanger actually has the first and only Birkenstock outlets at two or three of its centers. Yeah. And it was something that, as Justin put it to me, was kind of a hard sell almost because Birkenstock didn't want to cannibalize the sales of its existing owned stores, of which it has many. And instead, what they did was sort of triangulate the data around, OK, well, here's where we have our flagship Birkenstock. Here's where we have our own stores. Here's where we don't, but where the sales data tells us that there could be more Birkenstock customers.

10:24And then it kind of triangulated based on there of which centers made sense. And it's doing well. And so they're going to be opening in Deer Park, Long Island next for the third Birkenstock outlet. Tanger is also doing this thing where they have some full price stores sprinkled into their centers. You know, they have, I think, at least around five Sephoras at this point. And they're not any different than in either Sephora you'd walk in. But what that does is turn the outlet into more of an everyday destination for people who live in the area and potentially, you know, induce spending at other brands.

10:58One thing that keeps coming up when I talk to mall people, like food is such an important part of the mall. Like it kind of fits in the experiences category too. But I think when I talked to Tanger, they mentioned this last year at some point. It's such a big focus for malls now. and some malls are really filled with a lot of high-end restaurants too. It's not just pretzel shops. It's sit-down restaurants. Yeah, I was saying that for my story, I had the pleasure of writing about these sort of destination lifestyle centers. Sounds very jargony. But, you know, the Houston Galleria specifically, I mean, they got Enobu a few years ago.

11:37And to me, I was like, that's a bellwether. I mean, the fact that, you know, you've got these high end restaurants in the middle of malls means that there is this customer there, right, that is willing to go and have a nice dinner maybe after browsing or not. You know, you could also just go to the restaurant. But it seems like elevated food options are table stakes now. It's a far cry from the basic food courts that maybe we want, you know, while growing up going to malls. So it's really interesting. I mean, I'll forever stand mall Chinese food. Like, I don't know. There's something about that, that greasy fried rice and orange chicken.

12:17That's like such a comfort food meal to me. I hope they don't take that away. Yeah, I keep going back to the word elevated, right? I mean, even if you're having fast food tenants, like now you've got a Shake Shack pretty much in every mall I've been to recently, which is really interesting. Yeah, I think people just want to be able to have as many options as possible. You also want it to be family friendly, but then maybe for some older shoppers, you want to have some maybe a little bit of a higher end option for dining. But yeah, that and then I think the experiential aspect is really interesting to me, too.

12:56I don't know if you guys came across this, but in my coverage, I heard a lot of Lego store, camp, like these family experiences are becoming, I feel like they're almost like anchors at this point, at least from what I can tell, because you want to keep the family there as long as possible, right? So just laser tag, and then you can go E, and then you can maybe stop at a Sephora. So it's like somebody put it this way. It's the IRL version of scrolling TikTok for hours. Literally, like the malls are becoming TikTok. I was just at a suburban mall that had a Pop Mart and you can just go see the Lububu and not actually buy one there.

13:38And I had a Miniso too, which is a cool, like kind of in the same vein. Lububu is very important to Mitchell for those who don't know. So he's become La Boo Boo Pilt. So this was an important shout out. My La Boo Boo is watching me as we go. Yeah, there's something to me about malls that really are representative of generations though and generational change. Not to get too like armchair historian here, but I feel like when we think about the 80s, the 90s, the early 2000s and kids and teens who grew up in that area, the mall sort of represented something about your culture. It was where you hung out.

14:16It was what stores you shopped at. It was where you picked up, you know, the latest CDs. God forbid I age myself, you know, at the FYE or whatever the entertainment store was. And, you know, nowadays it's still that. It's still where kids and teens and young people are going to see the products that they're seeing on TikTok and that they want to buy online that they might be able to see in person. And even though there's more convergence of mediums and ways we shop and the ways we see things, I still think there's something to the mall as a cultural touchstone that's become just like a really big signifier of American consumerism and American culture.

14:56Yeah, it's like in these high traffic areas, it's still a gathering point. The malls that are dying are the ones that maybe aren't in the best areas or don't have the best stores there. But if there's something to bring people to and if it's a high traffic area, that's where all the investment's going. Yeah, I think so. Melissa, to what you said, I mean, to me growing up, going to the mall, this is going to sound weird, but it represented freedom because as a teen, it's kind of like where you get dropped off in the suburbs. It's the place where you can, yeah, spend the day and then come back home.

15:33I would come back with nothing most weekends. But yeah, you still get to have that experience and gathering spot with your friends. But I think what's happening now is that that version of the experience is just modernizing, right? Now it's for these Gen Z and Gen Alpha customers who, by the way, do love malls. We're seeing that data. But they want, yeah, they want to be able to have an experience. They want to be able to try on things at Sephora or at an Alta. And yeah, I think it's very representative of that shopping behavior because at the end of the day, that's kind of the only way you're going to be able to compete with e-commerce, right?

16:11the convenience of an Amazon. This is the only way to do it. Right. If you're going to be leaving your house, it better be for a good reason. And you better give me an experience when I'm there. You know, I think this makes me think about how we talk to a lot of brands about where they choose to locate, you know, which malls, which neighbors are there, which other tenants are there. Because if you know there's something that's bringing people in that is complementary to your brand, that's a really good sign that you could have some good foot traffic. Yeah. For my story, I talked to Rothy's, the footwear brand.

16:47They just opened their store at the Houston Galleria. And one thing they mentioned was that they're in the same hallway as Lego. And that's, of course, maybe exactly where you want to be. It's the perfect crossroad between wings to be able to bring in families or customers that maybe haven't heard about the brand. Well, as someone who recently had to chase a toddler through a Lego land, I cannot recommend flats enough. Oh, there you go. Tie in. Well, thank you so much, Mitchell, for joining Gabby and I for this conversation. It's great to hear about your reporting. And I love the insights that you bring to our team.

17:25You can read the rest of our team's coverage of this series at modernretail.co, which will be linked in the show notes. Up next, we have Kristen and Thomas from PF Candle Co. They are joining us to break down what it's like to run a brand or business here in the U.S. Even though it is made in the U.S., they still face a lot of challenges when it comes to raw material. So they're just going to take us behind the scenes. But it was a really fun conversation. Yeah, I'm so glad we got to have them on. PF Candle Co is a great example of a company that even though their product is made here in America, There's components that are made overseas or there's different supply and demand factors that they're being affected by because more companies are looking for things that are made in the US.

18:12But there was also some upsides we talked about that their brand's experiencing right now. So, yeah, I'm excited we got to have this conversation again and excited for folks to hear it.

18:31One of the biggest stories in retail this year is the Trump administration's rollout of higher tariffs on imports from other countries. And this is defining so much of retail brands' operation these days. While the changes are purported to support domestic manufacturing, even brands that are made in America are not immune from the effects of tariff policy. That's because so many components might come from other countries. Spray pumps, glass jars, other packaging materials just aren't made here, and there's a whole other kind of trickle-down effects in the supply chain. Today to talk about all this, we have Kristen Pumphrey and Thomas Neuberger from PF Candle Co.

19:11Hi, Thomas. Hi, Kristen. Yeah, thank you for having us. Thanks for having us. And we're here still with my co-host, Gabby Barco. Gabby, how are you doing today? I'm good. I'm excited to talk about candles. I mean, what better topic? Yes. Many people may know PF Candle Co. from their signature amber jars, and their candles are made right here in Southern California. But what we've learned at Modern Retail from our reporting and research on companies being affected by tariffs is that even companies who make their products here are not immune from tariffs. So let's get into a little background for those who aren't associated with PF Candle Co.

19:50yet. But why did you decide to make your candles here? How did you become a business that manufactures candles in the U.S.? PF really grew out of just an Etsy shop and craft fairs. So I definitely consider us a manufacturer now. But in the beginning, we were just makers. And I started it on my kitchen stovetop. Tom came on board about five years after I started it and just started to help me scale it. And that's when we really turned into a manufacturer. But why we keep it here, I would say, is we can control the cost and having an excessively priced nice candle is really, really important to us.

20:26And that's a huge component, but also the quality is really important too. We watch that quality so closely and we know that we can stand behind our product. we're not just sort of selling a brand, we're selling the whole product. Yeah, well, let's just dive in, I think. For the past seven months, things have been crazy for a lot of brands. Obviously, for those importing from China specifically, they've been really hard hit. But today we're going to be talking about how you've specifically felt it, at least in relation to one specific product that you were trying to launch, right? Do you want to tell us a little bit about the mini candles and some of the troubles you ran through?

21:07Yeah, I mean, the last seven months have been nothing but chaos. It's really hard to plan anything, but we do have a very specific story about how that chaos affected us. So I think Kristen ideated this new product last fall, maybe. I think we were doing comp shopping, shopping around. Last holiday season. And she was like, oh, you know what our customers would really like? They would like something really giftable, a combo pack to where you can buy this thing and you can give it to someone. So our development teams are ideating it. Last year, we came up with our suppliers and everything. And then liberation.

21:43Actually, it may have been before Liberation Day. I think one of the first things Trump may have done was to increase tariffs on metals. I think it may have been like steel. So one of the candles were actually going to be made out of metal. They're tin. So the price was going to double for us. So a product that we were aiming to sell for$30 or so was going to end up being$60. And when that was brought to Kristen, I don't know, in like March, late March or so, she was like, Oh, no, no, no, no, that's not a price we want to sell for. That's so much more expensive than anything else we sell. It's not giftable.

22:17It makes it almost like, why wouldn't someone just buy a regular candle at that point? Why would they do that? So what we had to do at that point was the development team went back to the drawing board. They realized like, oh, we used to make these mini candles that we've been trying to discontinue for years. One of the reasons we don't is because we have a lot of supply of the glass jar for it. So instead of doing a tin jar, why don't we do it in glass? So we have the material. So they made the switch to the glass and we were moving all smoothly. And then one day my AP team flagged that we were going to be ordering a bunch of packaging supplies from a vendor in China.

22:53And I was like, whoa, I think this may have been April. So it was right after Liberation Day. And I was like, how are we going to do this? Aren't the effective tariffs like 120 % on this? They're like, no, no, no, it's fine. It's still cheaper than if we get a domestic. And I'm like, maybe it is, but I don't know because five days ago, the pricing was different. So we argued about it for a bit because I was like, you know, I'd be willing to pay more money just to make sure that we knew what the product pricing was going to be. But I think what ended up happening was that there was a stay. The U.S.

23:31administration in China had an agreement where they would lower tariffs from that above 100 % range to, I think, in the 40 % range. And at that point, we're like, well, this is cheaper. And if we can get it not only on the boat, but to us before this ends. Because that's how tariffs work is it's the effective tariff rate when it actually reaches the port, not when it leaves or before it leaves. But at that point in time, which over the past like seven months, it's been eight different rates. So you really don't know what it's going to be at any time. So we ended up going forward with that and getting it shipped through at an OK rate.

24:08So there's a lot to unpack there. And I feel like it kind of does exemplify how there's so much that has been in flux, where even if you think you have in front of you a plan on what you're going to do, something could change that all the next day. So do you go ahead with that plan? Do you wait and see what happens? Just a lot of uncertainty. I'm wondering if there's anything that you sort of learned through that process. You know, it sounds like you and your team had a lot of dialogue about this. you know, just wondering if there's anything you can kind of share for folks who maybe are also running brands or just sort of interested in these kind of discussions.

24:45Like, how do you orient yourselves in these discussions where there is so much uncertainty? That's hard because I think with this in particular, we knew we could make it work. With another vessel that we had loaded on a ship as the effective tariffs were in over the 100%, we were just gambling. We didn't know what to do at that point. We just gambled like, hey, it's rolled the dice, what is it going to be, one price or another? So intellectually, I'm not sure how to plan for that. I think, and maybe this may be the intention of all this, but if you can find a domestic supplier that's competitive, you know your pricing will stay the same, whereas otherwise it's complete chaos and you're just, you can buy a bunch at once and try and get it in.

25:31I know that's what a lot of large companies are doing. If you can afford to buy a half a year's worth of inventory, which is really hard, you'd have to have access to a lot of capital to do that. Then maybe you have an idea of what it's going to be right then and there. But again, let's just say someone had done that during their initial Liberation Day tariffs, the reciprocal tariffs. And then a month later, they were reduced by like over half. And maybe they had overpaid because they weren't sure what it's going to be. The uncertainty has been the hardest part as being a small independently owned business, because if you can't predict, you don't know how to run it.