I have become obsessed with the realization that chain store operators are leaving billions of dollars of sales on the table by failing to properly train and develop their talent in the real estate teams (total sales of US retail establishments is around $4 trillion according to the 2007 Economic Census published in 2009).

Why is this?  Laziness?  Ignorance?  I don’t think so.  Some of the most clever AND street-wise people I’ve ever met are senior executives in chain store companies.  I think that the training challenge is relatively new and requires adapting to new market conditions.  It’s the natural evolution of the chain store business.  Sears built an empire with selection (“Sears Has Everything”).  Wal-Mart revolutionized retailing with their supply chain management.  Apple has seemingly cornered the market on “cool” and “easy.”  Here are some of the driving factors that have increased the priority of training from low-moderate to high:

1. Chain stores in the US are generally overbuilt and the need for new bricks and mortar development will be modest in light of economic weakness, slow population growth, and the growth of ecommerce.
2. Adoption of information technology in real estate decision support systems has captured the “low hanging fruit” of screening bad sites and justifying higher rents for the best sites.  Tools that compute trade area demographics and show competition on maps are ubiquitous and affordable.
3. Real estate analytics that address more strategic issues such as store network optimization, cannibalization, and the interplay of site characteristics with trade area demographics require a higher level of expertise from users and a well-orchestrated teamwork to maximize decision quality.  This can only be achieved through a deliberate and thoughtful effort by company executives that includes a rich, ongoing training and development experience for all team members.
4. The slower pace of store development will allow more careful planning and evaluation of store networks and sites.  This does not necessarily translate into fewer people or more time to play golf.  Returns on real estate investments will need to be higher to offset the reduced quantity of deals, so “working smart” will be more important than simply opening large numbers of units.
5. Many chain store firms have invested large amounts of time and money in the development of predictive models to guide investments.  The expectations for accuracy of these models have been very high and have disappointed many.  The hope of creating better models is being replaced with the recognition that experienced and well-trained people COMBINED WITH good analytics and information systems will be the path to success.
6. The quality and affordability of web-based “Learning Management Systems” (new buzzword for many) has improved dramatically in the last few years.  eLearning is not simply putting classroom training online; it can include highly interactive methods that include simulation of key decisions based on major advances in our understanding of human cognition (neuroscience, cognitive science).

I’ve been a “techno-optimist” since 1983 when I got my first Apple II computer with Visicalc to create real estate discounted cash flow analysis models.  After 28 years of frantically learning the next new technology (I almost had a heart attack when I learned about gravity modeling software), I have become more realistic about the way technology helps us make better decisions.

No longer do I  believe in trying to put all the intelligence into the computer so that any idiot can harness its power.  I now realize that it’s a lot of hard work to gain the leverage provided by technology (like most good things, it doesn’t come easy).  The computers, software, data, and the internet are sitting there waiting to become competitive advantage.  But it doesn’t happen without a dedicated effort of time and money.  And that’s why everyone isn’t doing it…yet.