Online retailers and the proliferation of mobile technology are two of the biggest threats to traditional bricks-and-mortar retailers, but could they also be the key to their success? That was one of the fundamental questions addressed at this year’s ICSC RECon conference in Las Vegas.
Based on the buzz of the 37,000 in attendance, the answer to that question was clear: online retailers and physical shopping centres are discovering they cannot only co-exist, they can complement each other, but the operators of these spaces must adapt to allow that happen.
To help physical and digital spaces intermix even more, mall operators need to get a better sense of who they serve and understand what draws consumers to their locations. Leading retailers and real estate operators are increasingly finding the most effective way to answer these “who, where and why” questions is through data and analytics.
To understand why online brands are looking to physical channels, look no further than Untuckit, an online retailer of casual men’s shirts that, as the name implies, are worn untucked. A week into its launch, the online retailer quickly realized it needed to open stores, with one in 10 of its customers asking where they could go try on their product. The chain now operates 28 stores and expects to open 20 more by the end of the year.
They aren’t alone. Since 2012, the number of stores opened by digital brands has been doubling every year. If there is one takeaway from this it is that the future of retail is neither physical nor digital, its omni, which makes it even more important to create the right marketing strategies to support these channels.
Here are some of the key takeaways from RECon to help make that happen:
For anyone without significant customer data, mobile data can offer detailed insights into shopper demographics, behaviours and preferences. To answer the “who” question, linking segmentation variables to each device offers a wealth of information. Knowing a customer profile allows for the optimization of tenant or product mixes at a specific site level. For landlords it is important to fill the vacant space with an appropriate tenant, whether a retailer, restaurant or “experience.” Segmentation helps target the right tenant. For retailers, shopper profiles can help answer sales performance questions. Depending on the actual clientele observed at a specific location, product mixes, pricing strategies and messaging can be tailored.
Once the “who” question is answered many “why” questions can also be answered through segmentation. Consumer attributes for each segment, modeled from survey data, help us better understand why some cross shopping between tenants may or may not happen. Knowing whether a fitness centre’s members just stick to their corner of a property or visit other stores while they are there, would be helpful to both the landlord and tenant.
Answering “where” questions can quickly refine location strategies. Knowing where the customers live, work or were immediately before their visit offers insight previously unavailable. The combination of defined trade areas, cross shopping and mapped target segments allow for better real estate strategies. This approach is even better when the same insight on the competition is included.
Consumers are seeking fun experiences, unique encounters and interactive activities. Some shopping centres are looking to include features like drive in movie theatres, family centres, climbing gyms, boutique spinning gyms, spas and more. The key is to enhance the shopping experience and extend times that the consumer is at the mall to hours that would typically be slow times. People are shopping differently and going to malls for different reasons so it is important to understand what motivates consumers by tapping into third-party data sources to get a clearer picture of the behaviour patterns, psychographics and social values.
In an effort to appeal to the hearts of consumers and differentiate, malls and retailers are turning to local products, services and attractions to add a unique element. Consumers want to be engaged with their community, which malls centres are responding to by adding more local food and entrepreneurs to their locations. An example of this is Lively Matcha at the Outlet Center in El Paso Texas. Not only does it serve as the area’s only Matcha Tea Shop, it also has a health and wellness angle that appeals to consumers with yoga classes. By understanding local customers and their needs, retailers can match the best solution for your local needs.
Most retailers and landlords are looking at new technologies to augment the customer experience. Lowes, IKEA and others have offered AR to customers for years and this technology is only getting better. One of the great benefits is collection of customer data. This is a major win for retailers in getting customers to engage with these technologies.
The technology landscape is rapidly evolving with hundreds of different software options available and new ones cropping up daily. With so many options, it is essential to know which technologies are most fundamental to your goals and how they can help streamline and positively effect your business. Before building or adding to your technology stack it is also important to consider a customer focused data approach that relies on high quality, first party data and best in class third party data.
Tracey Matchett is a Group Account Director at Environics Analytics, focused on U.S. retail and consumer packaged goods.