Monthly Archives: October 2011

The Mysterious Origin of New Stores

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In 2002 I was on a panel at the Retail Systems Show in Chicago which was a technology showcase for the retail industry.  The panel was focused on analytics and my topic was the use of predictive analytics in real estate planning and site selection.  I had already been at the show for a couple of days and after speaking with many CIOs, CTOs, and merchandising executives it became apparent that there was little interaction between the real estate department and the other areas of the business.

I started my presentation by telling the audience that I had come to the conclusion that “everyone outside of the real estate department thinks that stores just magically appear.” Continue reading →

Please give me your feedback on this blog!

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After five months of weekly postings, I’d like to check in with the readers of this blog to see if it can be improved.

Please click on this link and complete the 3 question survey and list any topics you would like to see covered in future blog posts.

http://jimstone52.polldaddy.com/s/jim-stone-s-blog-survey

Thanks to everyone who has read these posts and especially to those who have offered comments.  The chain store world is changing faster all the time and finding the right blend of art and science in decision-making is crucial to survival and growth!

Regards,

Jim Stone, Chain Store Advisors

Anatomy of a Coffee Purchase

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A mathematician is a device for turning coffee into theorems.  -Paul Erdos

We have a natural tendency to oversimplify things because it’s easier to make sense of simple things than complex things.  The map on the right represents the simplest view of the relationship between a store and its customers.  The two-mile radius around the store is a reasonable estimate of the trade area for the store, which means that most of the customers will be inside the circle.  If this is true 90% of the time, we don’t care about the details of how customers make their choices.  But what if only 70% of the customers actually are in the circle? 60%? 40%? At some point we have to consider a more complex set of factors that determine our true trade area and whether it contains enough potential customers to make a store successful. Continue reading →

Real Estate Research Knows the Score!

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I just got back from the annual research conference of ICSC (International Council of Shopping Centers) in San Diego.  It was the same bunch of people with a few new faces, but the topics and conversations were very different!

Three years ago everyone was sighing with relief that online sales were not completely replacing bricks and mortar stores.  Social media was the personal ads in the local underground newspaper.  Web-based demographics and reporting were designed for running trade area reports in your hotel room.

This conference is clear evidence that the real estate research profession is keeping up with the changes in the marketplace!  First of all, hats off to the program committee that developed the topics and arranged the presenters.  I found myself having a morning conversation with one viewpoint and an evening conversation with a very different viewpoint!

There were three major takeaways from this conference:

  1. Most companies are trying to move real estate research tools to the web and provide access to dealmakers.  This was clear in the “Best Practices” session and the game plan is not just to provide maps and demographics, but analytics as well!  The need for “a single version of the truth” in data management was a recurring theme.
  2. Social media are generating critical data about the “voice of the customer” and changing the way we look at customer profiling, marketing, and merchandising.
  3. The bricks and mortar store is no longer the only way that shoppers can have a powerful shopping experience with the merchandise.  High bandwidth on computers and mobile devices (including tablets) are making it possible to create rich virtual applications such as Me-tail (http://metail.co.uk/how-it-works/) that will continue to feed the growth and market share of online sales.
It’s amazing to look at the last 20 years in the real estate research profession and compare the rate of change in practices and trends in the past three years to the previous 17 years.  However, I’m very pleased to see that the more senior members of the group are not being stubborn and sentimental about the past, but embracing the exciting changes and reinventing their practices to be useful and relevant.  Maybe it’s driven by concerns about job security, since many of us will be working into our 70’s to pay off college loans.  Or maybe we realize that technology may change the way we do things at an unprecedented pace, but the “art” of real estate planning and site selection is based on experience, and we will all have more of that as we get older!
Stay thirsty, my friends.