Sales data has entered a world of confusion. There is uncertainty about what sales data is and how it should be used, while online retail casts doubt on whether sales data is the best way to measure a store’s performance anyway.
For retailers and property owners to act intelligently, the industry needs a new way to measure the success of a store or shopping centre. The more forward-thinking members of the retail sector have already started to gather data in new ways and establish more fruitful relationships with each other.
Retail property has not changed much over the years: everyone involved needs to know how a store is performing. Retailers need to know whether a site is pulling its weight, landlords whether they are charging the current rent and property owners whether it adds value to the location. Fifteen years ago, these were simple questions to answer – sales were sales. That is no longer the case now.
It is increasingly challenging to link sales data to actual performance. Tenants can be reluctant to share sales data with landlords or property owners and when they do it is often skewed by operations such as click & collect and online returns. For example, if an online order is delivered to a store it might be noted as a store sale or if a customer returns an online order to a store it might be noted as a store return.
Sales aside, retailers are increasingly putting properties to an experiential rather than transactional use. For example, Tesla’s store in Brent Cross is not used for securing transactions. It is there solely to provide shoppers with an experience – preferably ‘Instagrammable’ so that the consumers do the marketing.
Other retailers have added experiential sections to their existing stores. The aim is to draw people in and encourage them to browse. The ‘shopper’ might not make a purchase there and then but instead watch a demonstration and make a purchase online.
So how can a property owner measure success? Some think the value of retail valuations should be measured not by revenue but by footfall. This would provide a greater insight into whether a store or shopping centre attracts people through the doors – or if not through the doors, at least to pass by and window-shop.
There is also a growing desire to learn more about shoppers. Online, it is easy to gather information such as age and sex, but this is more difficult in store. New technologies can provide this kind of data, which is useful to landlords and retailers.
Along with the need to find a reliable, accurate way to measure performance, there is a growing realisation both among retailers and property owners that in order to get people into a shopping centre or on to the high street they need to collaborate.
A new relationship is forming. Already, many retailers are sharing data with property owners and vice versa. Where it works, they can collaborate on ways to optimise sales and create an improved shopper experience.
If the hostile relationship between retailers and property owners can be improved, both parties stand to benefit from new methods of data collection. Then they can approach the next challenge together: what to do with all this data. That will have to be a subject for another column.
Owen McCormack is co-founder and chief executive of Hoxton Analytics