Landlords steadily are testing and adapting retail-oriented technologies that help them learn about their customers and run more efficient and profitable enterprises.
“Landlords are now learning the importance of being active operators of shopping centers,” said Richard Rizika, partner and co-founder of brokerage and advisory firm Beta. “They are using customer traffic, previously only used by retailers, to identify and understand the customer pattern and profile of the shopper. In addition to using mass mobile data, they are increasingly becoming more adept at using social media to reach out to the community to market the specific offerings of the center. More and more owners are also offering Wi-Fi for guests to use in the center, as well as compelling websites that create more engagement in the community that the center services.”
According to Eve Sembler — vice president of leasing at Sembler, which has developed more than 350 projects totaling 30 million square feet and leases and manages 8 million square feet — it’s time for landlords to step up. “We are the best advocate for our shopping centers,” she said. She notes the newfound quality of affordable and actional mobile data. “By owning this data and these insights, we are taking control of our narrative and the perception of our assets in the marketplace. We can tell stories using data to attract highly desirable tenants, speak to lenders, market our properties for sale or have an edge on an acquisition target,” she said.
Rather than relying solely on the names of the anchor tenants and the perception of the types of customers these anchors attract, landlords now can point to hard data demonstrating this conviction. “Access to affordable mobile data has allowed us to be an active participant in shaping the perception of our assets,” said Sembler. “We can be even better advocates for our shopping centers and be even more effective in our marketing efforts.”
Mobile data allows the firm to understand better the trade area size and customer demographics than traditional radius rings. “We can model the magnitude of cannibalization a retailer might experience if they were to open a store at our shopping center, and we can prove the competitive edge our property has over the one across the street,” said Sembler.
Collaboration is key to migrating retailer-centric technologies into the landlord realm, according to Mall of America executive vice president of business development and marketing Jill Renslow: “It is important for landlords to work closely with tenants to learn from each other. We are purposeful not to lead with technology but to find the right technology to fit our strategic plans to build a stronger business and community for our tenants and guests. There is art and science in what we do every day. Making informed decisions with insightful data and balancing that with a focus on the guest experience contributes to our ongoing industry leadership and success as a property.”
Molly Westbrook, Cushman & Wakefield Asset Services executive managing director in Canada, agreed that success involves a partnership between landlord and retailers. She cited the firm’s product discovery tool, What’s In Store, which allows customers to pre-shop items to purchase and to create and share wish lists, as well as to plan their trips to the mall. “This is then partnered with our social marketing cloud tool, which helps site teams use ChatGPT technology to create engaging content, gather real-time consumer insights and manage community feedback by tuning into each market’s audience,” she said.
Retailers have been using cameras and traffic counting measures in stores for years, but now some of that technology is being harnessed by landlords like Mall of America. “We have car counters in our parking ramps and people counters at our entrances to measure traffic counts and help understand consumer patterns,” said Renslow. “With historical data from these counters, we’re able to provide predictive analytics to our tenants for upcoming time frames and seasons, which is helpful for tenants to plan appropriate staffing levels. We also layer in weather conditions, special events and days when kids are out of school to consider variables that impact traffic.”
Many landlords use those data points and layer in artificial intelligence systems from firms like Placer.ai, Pathr.ai and Deep North to dive deeper into analysis of their customers.
In the past year and a half, Simon, Brookfield Properties and Macerich have partnered with buy-now-pay-later service Klarna, and Simon kicked off the trend a year earlier by engaging with BNPL service Afterpay. The deals involved digital marketing opportunities, a concept landlords have been embracing since the onset of the pandemic.
Retailers have been adept at digital marketing for some time, but landlords only now are seeing its value. “Creating direct digital relationships with consumers instead of leaving that to retailers, as in the past, is a big change,” said Peter Tonstad, CEO of Placewise, which provides technology solutions to both retailers and shopping center owners.
“Despite what you call them, loyalty, affinity or rewards programs are essential to connecting with shoppers,” he said. “With more competition, lease terms getting shorter and pop-up stores becoming more commonplace, this is mission critical. Relationships create opportunities for personalization, better engagement, increased customer retention visits and sales. Retailers already know this, that’s why most have been investing in loyalty and customer data platforms for the last decade. What happens when the retailer leaves? Landlords are realizing it’s time to catch up.”
E-commerce “marketplaces” are also a relatively new offering for landlords, while retailers have provided them for the past 20 years. A recent new layer is click-and-collect, said Tonstad. “Only a few centers around the world offer a full omnichannel experience to their shoppers and tenants. We know from a consumer survey we did a couple years ago that 86% of shoppers want the option, but it will take mass adoption by the industry for shopping center e-commerce marketplaces to reach their full financial potential. It’s a bit of a Catch-22 situation at the moment, but we strongly believe that’s where shopping is headed,” he said.
On a practical property management level, Phillips Edison & Co. first explored retailer-based technologies to better serve tenants in 2018, according to senior vice president of property management Eric Richter. “PECO’s larger retailers have always done an impressive job tracking and managing the numerous work orders for their hundreds of locations,” said Richter. “When PECO began to explore these types of products for its own use, the team found that many of the tools on the market were geared toward the retailer needs and not the landlord, and so, DashComm was developed.” DashComm is a proprietary system that allows the PECO team to communicate with its tenants about maintenance, billing and other concerns, but it also streamlines the operations of the company’s shopping centers. It integrates with several of the company’s vendor partners, dispatching work orders directly to vendors when appropriate, and provides tenants with online access to pay invoices, view their leases and submit sales information.
NewMark Merrill president and CEO Sandy Sigal was an early technology adopter and investor in 2016 and knows a thing or two about adopting and creating proptech for owners. The firm owns and manages more than 12 million square feet of retail assets with more than 2,000 tenants across 95 communities. “Technology that provides more transparency to the performance of tenants, as well as the reaction of customers to these merchants, is probably the biggest game changer,” he said. “Today, who can imagine doing a renewal without understanding where your store ranks or leasing a space without knowing how much traffic your center brings as compared to your competitor?”
And yet, the boost technology adoption can give landlords has room to grow. “We are just in the first few innings of the technology game,” said Sigal. Artificial intelligence will give an advantage to landlords who understand how to use information gained through technology as they make investing and transactional decisions, he said.
Before adopting any new proptech, Sigal recommended asking at least three high-level questions:
- Is the information unique and reliable, and is there a process for keeping it relevant?
- Is the user interface, the customer-facing information, strong enough that your team likely will be able to use and understand the information? If it’s not accessible or takes too much effort to gather, the information gained won’t be relevant.
- Can the vendor who provides the technology provide ongoing development and support to your team so you can develop and execute a plan?
“I suppose the biggest question, as we shift from limited technology to almost unlimited choices, is to pick companies whose leadership and commitment to the customer is significant so you know you hitched your wagon to the leading sources,” said Sigal.
When determining what technologies to consider implementing, Rizika has a simple filter: “Any technology that provides a greater understanding of the consumer that creates a competitive edge over other centers. Our industry is becoming more sophisticated, and if a property owner cannot articulate the analytics of the demographics and traffic trends of the consumer, they are at a constant competitive disadvantage for attracting and maintaining the best merchants. The transparency of the data can enhance or negatively impact the property in the eye of a lender or buyer.”
The bottom line is that whether now or in the near future, proptech will continue to grow in importance. “Change is constant, and ultimately the benefit to landlords of adopting technology is a matter of retaining relevance,” said Tonstad. “Experience alone won’t be enough. Landlords will need to pick a path as a disruptor or become disrupted.”
Article by Ben Johnson – Contributor, Commerce + Communities Today for ICSC
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