The Real Name Of The Retail Game Is Still Data Collection
During this time of flux in the retail industry, one thing still holds true: access to customer information is key for malls to succeed.
One of the reasons retail has become so experiential is because mall owners are increasingly dialed in to customer shopping preferences and habits, using technology and data analytics to track how customers shop and why.
“This is where I sometimes laugh, because the name of the game is still information,” Colliers International National Retail Tenant Rep Director Jawara Partee said.
Customers will no longer flock to any old mall that has two department store anchors and a mediocre food court. Shoppers today need a reason to power down their computers. This has led to an experiential retail explosion — food hall anchors, entertainment-focused tenants, restaurant and beverage offerings galore. Retailers are focusing on creating a sense of place by providing somewhere friends can gather, shop, eat and enjoy a social experience.
But pivoting a dying mall or a struggling retailer into an experiential mecca requires data.
"No one wants to talk about strategy if you're not talking about it through analytics," Partee said. Before pursuing a course of action to drive traffic and increase sales, retailers and landlords are looking to analytics to determine what customers want.
The questions this data aims to answer are seemingly endless: What makes consumers enter the store? How many come? When do they shop? How do they shop? How much do they spend? How long do they stay?
“Everyone is looking to enhance [the customer’s] experience. It is calculated and focused, but a lot more involved than it used to be,” Partee said. “You need to have the info to be able to dissect and give some sort of meaningful outcome. When you have that data, you’re able to say, 'You should have this tenant mix.'"
Data Collection Is As Easy As 1, 2, 3 — Or Is It?
Now the largest living generation in the U.S., millennials have a lot of buying power. How they shop dictates how retailers present their products.
Growing up with technology always readily available, millennials are tech-intuitive and constantly plugged into their phones. The generation uses its devices to navigate through daily tasks — whether it be ordering shampoo on Amazon, hailing a ride via the Uber app or ordering a hot meal for a late-night work session through Seamless.
Simply by having their smartphones turned on, even if resting idle in a back pocket or a purse, shoppers are providing valuable information to mall owners. Malls can up the ante by offering free WiFi. By agreeing to the terms and conditions when they connect to it, many shoppers are also agreeing to having their data tracked and used by the property owner, CBRE Head of Retail Research in the Americas Melina Cordero said.
This is often made possible through the use of beacons. Beacons communicate with smartphones to boost customers' in-mall and in-store experience. These beacons are sending signals through mobile apps that, at a very micro level, can track where customers are — down to which aisle in the store. Mall owners can send relevant promotions and other marketing materials to customers based on their exact location. One expert predicts that by 2021, 70% of retailers will have installed beacon technology in their stores for location-based marketing.
Geofencing is also becoming increasingly popular. Similar to the use of beacons, "virtual fences" send targeted messaging to consumers' phones once they enter a certain parameter.
"Most retailers don't see that journey. This is a challenge for retailers when creating experience," Cordero said. "Having that data and understanding how consumers are interacting with that store versus the internet, for that particular brand, that allows the retailers to change the shape of the store and invest in the store to cater to what that customer wants."
A Few Challenges
Though gaining access to this information seems fairly simple, Cordero said privacy laws have caused challenges in the past. To get around this, some mall owners have taken to developing their own apps where users have to opt in to use, giving the creators access to that data.
“Major REITs are investing in app platforms where if you download the app and sign up for an account, then every time you go to the mall the app registers it," Cordero said.
Funding these new tech initiatives can be rather costly, not to mention risky, Cordero said. If an app fails to help retailers’ boost traffic and sales, they are out of a lot of cash.
“Data has become important and is becoming a bigger and bigger part of a budget. It is critical. The question is which data points and tech is most important? There is risk for retailers taking on this new tech, there’s an inherent risk involved at the end of the day," Cordero said. "Data costs money, but the costs of the data is not as much as the cost of losing business or not having the right strategy."