Real Estate Research Knows the Score!

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.

The Voice Of The Customer: Can You Hear It Through The Screaming?

Listening to the “voice of the customer” has been the hallmark of successful retailers, restaurants, and service businesses for years.  Technology has greatly increased our ability to capture and analyze customer data.  With the explosive growth of Facebook, Twitter, and other networks, social media are becoming the loudest, clearest, most current voice of the customer yet!

The challenge today is finding the “signal” in the data so that we can reduce the voice of the customer to actions such as real estate planning, site selection, marketing campaigns, and assortment planning.  With data warehouses full of customer transactions, household files with demographics, and feeds from social media, it’s harder to understand what the customer is saying than to guess the Dow Jones average by walking onto the trading floor of the New York Stock exchange! Continue reading

Will “Big Data” lead to “Big Answers” for Chain Store Operators?

One of the hottest topics in business analytics today is “big data,” defined by Wikipedia as “a term applied to data sets whose size is beyond the ability of commonly used software tools to capture, manage, and process the data within a tolerable elapsed time.”

How big is “big data?”

Last year, consumers and businesses around the world are estimated to have stored more than 13 exabytes of information on PCs, laptops and other devices — the equivalent of more than 52,000 times the information housed in the Library of Congress. An exabyte is 1 followed by 18 zeros, or a billion gigabytes.  And the amount of data stored in such “technological memories” is growing 25 percent a year, said Martin Hilbert, a researcher at the University of Southern California.  These were some of the estimates shared at the The Economist Big Data Conference last June in Santa Clara, CA. (for complete story see http://pittsburghlive.com/x/pittsburghtrib/business/s_745039.html). Continue reading

At Least We Don’t Have To Worry About Cannibalization…Or Do We?

Tens of thousands of chain stores and restaurants have closed in the last three years.  Few chains are expanding at all and many aren’t done shrinking their fleets (Collective Brands is closing 475 shoe stores as we speak).  Maybe the only good news about all this downsizing is that we don’t have to think as much about cannibalization, which is a big part of the problem that got us into this mess.

If the chain store business was simply fighting through another recession and waiting for the economy to turn around, this might be the case.  Unfortunately, we are also going through a fundamental change in the way customers shop and dine.

On the shopping front, e-commerce now captures about 6% of all retail sales.  But that’s only part of the story.  Analysts are now tracking “Web-Influenced” retail sales which account for more than a trillion dollars, or 40% of total retail sales.  Both of these numbers are expected to rise in coming years which clearly demonstrates the need for retailers to approach marketing and store planning with an integrated plan that utilizes stores, websites, and social media to create a powerful brand and a rich customer experience.

Continue reading

Effective Training: If It Was Easy Everyone Would Be Doing It

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: Continue reading

A Vision for Profitable Chain Store Development

I have had the good fortune to get a close up view of many chain store operators in action over the past 20 years.  It’s amazing to see the wide variety of approaches used to find, open, relocate, and sometimes close stores.  There are many different org charts and reporting structures that sometimes place the real estate function directly below the CEO and in other cases reporting to the CFO or VP Marketing.  There are Real Estate Research Directors who have large staffs and tight controls over deal approval as well as companies who give the dealmakers responsibility for research. Continue reading

Different Problems Different Questions – The Challenge of Context

Years ago I was trying to sell site evaluation software to the commercial lending group at Freddie Mac.  They had fifteen underwriters around the country with huge piles of loan requests on their desks and very little time to analyze each deal.  The person I was working with described his problem like this:

“There are only about ten criteria we need to evaluate in order to approve or reject the loan.  Unfortunately the ten criteria are usually different for each deal!” Continue reading

Connections: the Key to Success in Chain Store Real Estate

Not too many years ago, chain store real estate was almost entirely a “people” business. The ICSC was the formal organization that provided regular gatherings among landlords, tenants, brokers, and all the other suppliers to the shopping center/chain store industry.  “Going to Vegas” has become an annual pilgrimage for dealmakers since 1986 (the first convention was held in New York in 1958). The telephone and the automobile were the primary research tools.  The research department was often located at one of the many bars, restaurants, coffee shops, and golf courses across the country. Continue reading

Take Me Out To The Ballgame

It’s hard to miss the similarity between baseball and site selection, right?

“That store is a home run.”

“We’re going to have to step up to the plate and do the deal.”

“She threw me a curve ball with that percentage rent clause.”

“We’re going to have to knock it out of the park to catch up to our competiton.” Continue reading