People have been hyping the death of the mall for the last two decades, but it’s not happening anytime soon, said Simon Property Group CEO David Simon.
"Time Magazine 20 years ago had that exact headline," Simon, who has been at the helm of the world’s largest mall operator since 1995, told CNNMoney at the Milken Institute Global Conference in Los Angeles. "If you look at our business and our profitability, it’s never been better."
Investors appear to agree. Simon Property Group’s () shares are up 22% in 2012, compared to an 11.7% increase in the S&P 500 ().
Simon admits growth in the United States is limited, even going so far as to say some lower-end malls around the U.S. could close. Most of Simon Property Group’s malls serve higher-end consumers.
He thinks most of Simon Property Group’s growth will come from driving sales into its existing malls by refurbishing them and adding new stores.
Simon points to Roosevelt Field mall on Long Island in New York as one example. After years of battling local community boards for approval, Simon Property Group recently landed luxury retailer Neiman Marcus as a tenant. Simon hopes such retailers will draw more high-spending customers into his malls.
For much of Simon’s tenure, buying up competing real estate investment trusts, or REITs, has driven growth. He’s spent roughly $27 billion in 17 years buying competitors, most recently paying $2 billion for a 29% stake in Europe’s largest retailer Klepierre.
Simon says to expect fewer big acquisitions going forward, yet there is one new area where he’d consider buying: technology. Simon wants to make his mall more more technologically sophisticated, and he said that buying up a technology startup could help Simon Property compete more effectively with e-commerce sites
"Ideally what I’d love to do is know when our best customers are in the mall. If you show up I want to deliver a free latte to you [and] I know exactly what kind of latte you want," said Simon.
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While aggressively courting new and existing consumers, Simon doesn’t expect to fight battles with shareholders. Last year, Simon’s board awarded him roughly $120 million after he agreed to stay at the company for the next eight years. That makes him one of the most highly paid CEOs in the United States.
Simon said he deserves it. "Nobody has had better performance over 10 years, and I expect that to continue," said Simon. "Our board took a serious look at what I contributed and the prospects for what it means to be part of the company for another eight years."
The REIT’s returns have been exceptional. Since Simon joined as CEO in 1995, Simon Property has generated annual returns of 11.2% compared to roughly 6.7% for the S&P 500.
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The Federal Reserve said the economy grew in all 12 of its regions as manufacturing, hiring and retail sales showed signs of strength in the face of higher fuel prices.
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The U.S. Coast Guard and a mega-yacht owned by billionaire Paul Allen are searching the Pacific for an American pilot and two Republic of Palau police officers whose plane disappeared as they tried to track down a Chinese vessel that was allegedly fishing illegally.
The search follows a deadly confrontation between Palau officers and a smaller Chinese boat that was part of the same fishing operation. One fisherman was killed Saturday after police fired on the fishing vessel as it tried to ram the officers’ boat, Fermin Meriang, a spokesman for Palau’s president, told the Pacific Daily News ( http://bit.ly/HQTKOG).
Meriang said officers had aimed for the ship’s engines. “One of the bullets must have ricocheted off the engine and struck him in the thigh,” he said, adding the fisherman bled to death before he could be taken to a hospital.
The missing men had been aboard a Cessna that was dispatched to track a larger Chinese fishing boat.
The U.S. Coast Guard has been searching for the three since the pilot reported Sunday that they were running low on fuel and having navigational problems.
Joining in the search, which spans more than 6,500 square nautical miles, is the ‘Octopus,’ a 126-meter (414-foot) yacht owned by Allen. The Microsoft co-founder visited Guam, some 1,300 kilometers (800 miles) from Palau, about a week ago, and the Coast Guard asked for the yacht’s assistance because it was in the area.
“The captain of Octopus has been in constant contact with Coast Guard officials through days of searching,” said David Postman, spokesman for Allen’s investment company, Vulcan.
The boat the plane had been looking for was ultimately found. About 20 Chinese fishermen from that vessel, and five from the smaller ship where the shooting occurred, have been charged with illegal fishing and other counts, according to court records.
The plane was believed to have gone down near the republic’s southernmost island of Peleliu, said Lt. j.g. Richard Russell, enforcement officer for Sector Guam. But since the plane’s navigational equipment was failing, the pilot wasn’t able to give an accurate report.
“Right now we’re hoping we can find some kind of debris or clue about where this plane may have gone down,” Russell said. “We’re really digging into this as deeply as we can.”
Rescuers have been poring over transcripts of the pilot’s conversation with the airport and over weather reports to try and match his description of the cloud cover.
Palau is in the mid-Pacific Ocean, some 500 miles east of the Philippines.
Palau President Johnson Toribiong on his Facebook page identified the missing pilot as American Frank Ohlinger and the officers as Earl Decherong and Willy Mays Towai.
“I ask for your prayers for the captain and these two fine young police officers,” he wrote.
With its testosterone-heavy marketing aimed at “young, hungry guys,” Hardee’s may seem like an unlikely user of Pinterest, a social media website that has become a popular place for women to find wedding ideas or to share pictures of shoes they covet.
But nonetheless, the St. Louis-based fast-food chain launched a Pinterest page a few weeks ago. The page now has boards full of everything from an homage to bacon to pictures of scantily-clad “Hardee’s hotties.”
“It is skewing very heavily female, which is not our demographic,” Jenna Petroff, Hardee’s spokeswoman, said of Pinterest. “But we’ve always been a brand that has been on the ground running with new technology. So we want to be there should our customers find their way there.”
There’s been a recent flurry of brands and retailers rushing to Pinterest, which is operated from Palo Alto, Calif., with less than two dozen employees, as buzz about the site has begun to bubble up into the mainstream. It’s a natural fit since retailers are interested in anything that helps inspire a desire for their products.
For the uninitiated, the site basically works like this: users create visual bulletin boards by uploading or “pinning” (tagging) pictures of things they want or find interesting.
While critics may wonder whether the Pinterest will be just another short-lived fad, data from the research firm comScore, which measures Internet traffic, shows that the site has been on an impressive growth trajectory.
The site’s numbers of visitors has grown about 55 percent in recent months and hit 11.7 million in January.
Pinterest is the fastest standalone site that comScore has tracked to hit the 10 million unique visitors, said Andrew Lipsman, the research firm’s vice president of industry analysis.
“It’s really showing an exponential growth curve at the moment,” he said.
Still, industry watchers aren’t sure how Pinterest plans to make money. Like many other social media startups, the site is figuring out a way to generate revenue and post a profit.
The website, which doesn’t charge users to sign up, is being funded by venture capital. On its site, Pinterest says it is looking at various possible funding methods in the future, such as advertising.
TARGET DEMOGRAPHIC
It’s not just Pinterest’s focus on products that are making many brands salivate. Women, who are a core consumer group for many companies, make up about 68 percent of Pinterest users and drive about 85 percent of page views, Lipsman said.
And when Pinterest users are spending some considerable time on the site — an average of 100 minutes a month, Lipsman added. (That compares to 400 minutes a month on Facebook and 20 minutes a month on LinkedIn.)
Another peculiarity of Pinterest is that it’s been predominantly a Midwestern phenomenon so far. One theory for that is the strong scrapbooking culture in this region.
“Typically, with a hot social media site, we see it take off on the coasts first,” Lipsman said. “But it’s been the exact opposite (with Pinterest). The coasts are under-represented and the Midwest is the highest indexing region faxless payday advance.”
Haim Mano, a marketing professor at the University of Missouri-St. Louis, said that companies have to be careful to not use social media, including Pinterest, just to blast their products.
They have to include some added content, too, otherwise people will zone it out, he said.
In any case, Mano added, “The younger generation are very savvy in understanding and realizing when this is a promotion created by a company or when it’s something that is consumer-generated.”
Jayme O’Renic, digital marketing manager for Overland-based Build-A-Bear Workshop, noted that some brands are merely pinning their entire catalog on Pinterest.
“But I think we’re making ourselves more authentic on Pinterest,” she said, noting the company has tagged everything from birthday party ideas to craft projects for St. Patrick’s Day. “We really want to be engaging with Mom.”
It’s a site that many Build-A-Bear’s customers are immersed in, she noted. For example, after the retailer recently launched new Kermit the Frog and Miss Piggy products, some users began immediately pinning the pictures to their Pinterest boards.
It’s hard to know whether Build-A-Bear has found new fans through the site, but O’Renic says it is surely driving some traffic to the company’s website.
Natalie Trivundza has been an avid Pinterest user herself and so decided a few weeks ago to launch a page for Phillips Furniture where she works as an advertising and marketing specialist.
“I love Pinterest myself for decorating ideas,” she said. “And our business is very visual. So I think it’s important for us to have a page because we’re design experts.”
When she first suggested that the company join Pinterest, she said many of her female co-workers were already familiar with the site.
“But all of the guys we work with had no clue what we were talking about,” she said.
Bill Elcan had been hearing the buzz about Pinterest for awhile, so finally decided to put Kirkwood-based Seeds of Happiness on it about a month ago.
The business, which is a little over a year old, makes and sells smiley faces out of lumps of clay.
“I know it’s one of the up and coming social media sites, so we might as well ride the wave,” said Elcan, the company’s president. “Right now we’re trying to grow our brand. This is just one more thing we can do to get in front of the public.”
He imagines that Facebook will continue to be the primary social media avenue for his business. But Pinterest can be another valuable outlet in the mix.
In addition to Facebook and Pinterest, he also manages Twitter, YouTube, Flickr, and LinkedIn accounts. And he recently launched a related blog. It can be a lot, especially for a small business where the president also runs the company’s social media pages.
“It’s a lot to think about and to manage,” he said. “But it’s worth it because it doesn’t really cost us anything.”
Home sales in the U.S. probably climbed in January to the highest level since May 2010, adding to evidence the housing market is regaining its footing, economists said reports this week will show.
Combined purchases of new and existing houses rose to a 4.97 million annual rate from 4.92 million in December, according to the median forecast in a Bloomberg News survey. Claims for jobless benefits held near the lowest level since 2008, bolstering consumer confidence, other reports may show.
A strengthening job market, combined with record affordability driven by the drop in home prices and mortgage rates, will probably keep underpinning demand. Nonetheless, the Federal Reserve and Obama administration are striving to find ways to lend the industry additional assistance amid concern that mounting foreclosures will continue to hinder the recovery.
The U.K. economy shrank more than economists forecast in the fourth quarter as manufacturers cut output and services stagnated, leaving Britain on the brink of another recession.
Gross domestic product fell 0.2 percent from the third quarter, when it increased 0.6 percent, the Office for National Statistics said in London today. The median forecast of 33 forecasts in a Bloomberg survey was for a drop of 0.1 percent. Public-sector strikes over pensions on Nov. 30 had
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Federal Reserve Bank of St. Louis President James Bullard pointed out pitfalls in a Fed plan to forecast interest rates, highlighting a debate among officials on whether the move will provide clarity about policy.
Bullard told reporters on a conference call yesterday that
Premier Mario Monti urged lawmakers Tuesday to accept his financial rescue package, including new and higher taxes, saying Italy had risked running out of money to pay state salaries and pensions.
Lawmakers on the right and left have been grumbling over his 2-day-old rescue plan, including pension reforms to make Italians work far longer and a revived home property tax.
Monti’s rescue plan, approved by his Cabinet on Sunday aims to pull Italy back from the brink of default on its staggering sovereign debt, a scenario that could doom the eurozone and worsen economic crises across the globe.
“Parliament is sovereign, time is short, the room to maneuver is very little,” Monti said on a state TV talk show when asked about political leaders’ insistence in Italy that the austerity plan be softened.
He said it is “premature” to decide if his 3-week-old government would resort to a confidence vote in a bid to get his rescue recipe approved by Parliament quickly and intact.
With no political base in Parliament _ Monti and his ministers are all technocrats asked to save Italy’s finances _ the government would topple if it loses a confidence vote, a prospect that could trigger catastrophe in global markets.
Monti, an economist and former EU commissioner, announced emergency measures on Sunday that seek to save euro30 billion through austerity measures and reinvest euro10 billion of savings from those measures to enhance growth, which has been stuck at zero for a decade.
Much of the austerity strategy hinges on new or higher taxes, such as the higher excise tax on gasoline and diesel fuel, which already took effect Tuesday. News reports said it would mean it would cost consumers an extra euro5 or euro6 (nearly $7-8) every time they fill up their car.
Monti called the hike in fuel taxes “indispensable” and needed to help keep local public transport functioning.
“We didn’t have to look far. Greece represented what could have happened to Italy,” Monti said, evoking the drastic situation of its fellow eurozone member across the Adriatic.
“We lived well, consuming the wealth produced by past generations instead of producing more,” he said. Under existing pension system reforms over the last decade or so, many Italians could retire at as much as 80 percent of pay in their mid-50s. With Italians enjoying exceptional longevity, the pension payments are becoming nearly unsustainable.
Italy’s public debt is amounting to a staggering euro1.9 trillion, or 120 percent of its GDP.
Asked if Italy had risked being unable to pay its public servants, Monti replied, grimly: “It was certainly possible” that salaries as well as pensions ran that risk.
On Tuesday, the government approved the release of euro4.8 billion ($6.4 billion) from state coffers to fund strategic infrastructure projects aimed at stimulating economic growth. The funds will pay for highway projects, high-speed railways and retractable underwater barriers to help protect Venice from flooding.
Economists have mixed views on how effective infrastructure programs are for spurring economic growth, with most favoring privately funded projects for better stimulus. Still, longer-term projects such as railways usually require state funding because the investment period is too long for many investors.
Sunday’s Cabinet emergency decree allows the funds to be released immediately, but Parliament must still convert the measures into law.
The new funding includes euro2 billion to upgrade the Treviglio-Brescia and Milan-Genoa railway lines, both in the north, to high-speed, euro598 million for highways, and euro600 million for the Venetian lagoon mobile barriers, a project already more than two years behind schedule due to financial problems and designed to protect Venice from periodic high tides. The projects are expected to stimulate growth by putting unemployed people to work and to keep construction contracts flowing.
Unicredit economic analyst Chiara Corsa said the measures appear “sufficiently bold” to allow Italy to balance its budget by 2013,” even with recession looming.
India’s commerce minister said Friday that the decision to open the country’s $400 billion retail sector to global chains such as Wal-Mart has a built-in safety net for small shops and farmers.
Anand Sharma told reporters that the Indian cabinet’s decision late Thursday allowing 51 percent foreign ownership of supermarkets would vastly improve decrepit infrastructure that causes massive food waste in a country plagued by malnutrition and high inflation.
Sharma said the new rule would only apply in cities with more than one million people. The minimum investment would be $100 million and half of this would have to be invested in rural infrastructure and refrigerated transport and storage. Thirty percent of the produce sourced by the retailer would also have to come from small and medium enterprises.
Top retailers such as Wal-Mart and Tesco have lobbied for years for a chance to build stores in the nation of 1.2 billion people and political deadlock on long-promised reforms in retail and other areas has helped cool foreign investor interest in India. Foreign retailers have Indian partners in wholesale operations, but no retail stores.
The Cabinet also allowed 100 percent foreign ownership of single-brand retail operations, up from 51 percent.
Advocates see the move as a way to strengthen India’s creaking food distribution system.
The country suffers chronically high malnutrition and soaring inflation, but it’s not for lack of food. It is the world’s second largest grower of fresh produce, yet loses an estimated 40 percent of fruit and vegetables to rot because of a lack of refrigerated trucking and warehouses, poor roads, inclement weather and corruption. That translates into lower incomes for farmers and higher prices for consumers.
If companies like Wal-Mart and Tesco can open shops of their own, the investments they make in improving farming techniques and getting produce into stores more efficiently, could bring down food inflation and possibly improving rural incomes.
Sharma said the policy would have a “multiplier effect” and tens of millions of people would gain jobs.
Analysts say India’s darkening economic prospects gave fresh urgency to the decade-long talks on opening up India’s retail sector. Many see Thursday’s move as an attempt by the ruling Congress Party to reassert its leadership, which has been weakened by corruption scandals, soaring inflation and slowing growth.
“When the government’s credibility seems to be under significant question, this is one way to give a message that the government is still in business and it means business,” said Arvind Singhal, chairman of retail consultancy Technopak Advisors.
The cabinet this month also indicated that it is open to allowing 26 percent foreign investment in pension fund management _ another headline item in the Congress Party’s promised second wave of economic reforms, which follow a round of liberalization forced by a balance of payments crisis in the early 1990s.
The central bank has raised interest rates by 5.25 percentage points over the last 18 months but that hasn’t been enough to control runaway inflation or the rupee’s freefall. Food inflation, which quickly becomes a political issue in India, has been bouncing into the double digits since 2008 and now stands at 9.1 percent.
“Monetary policy interventions have not been able to control inflation,” Singhal said. “Now they have to look into supply side policy, which could have an impact.”
International investors, who have grown increasingly wary of corruption, surprise tax bills and shifting regulations in India, have also put pressure on the government to make good on old promises to grant them greater access.
Rajan Bharti Mittal, vice chairman and managing director of Bharti Enterprises, said Friday that the retail move was a “major landmark in India’s economic reforms process.”
Bharti’s joint venture with Wal-Mart has 13 wholesale outlets in India and sources produce from thousands of farmers.
“We have always stated that development of organized retail in India will bring immense benefits across the value chain _ from farmers to small manufacturers and above all to consumers, while creating enormous employment opportunities at the bottom of the pyramid,” Mittal said in a statement.
Wal-Mart, British-based Tesco PLC and French-based retailer Carrefour welcomed the decision.
“This legal evolution should contribute to modernize the Indian food supply chain and to fight against food inflation for the benefit of Indian customers,” Carrefour said in a statement.
The change, which does not require approval by India’s fractious Parliament, was opposed by the Trinamool Congress Party, a key partner in the ruling coalition, and the main opposition BJP party. The country has struggled to find consensus because of concerns that competition from the foreign retail giants could hurt millions of small shopkeepers, as well as the poor.
Sharma said the new policy had been reached through a “transparent and democratic process of consultation with all the stake holders.”
India’s $400 billion retail sector is the nation’s second-largest employer, after agriculture, according to consulting firm Deloitte.
Ashish Sanyal, managing director of retailing consultancy AMP Retail Services, said small businesses had nothing to fear from the big chains.
“At the end of the day this is like the high tide. All boats will rise. We will learn from the big retailers,” he said.
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