Space Age: How proactive management of the retail space can help retail property investors improve performance
Achieving optimal returns from a retail venue is not a game of chance.
One way of reducing investment risk in a shopping mall is to ensure the right mix of tenants to match the customer base and their shopping requirements.
Writing in Commercial Real Estate Agent, international sales coach John Highman offers one definition of space management for retail property investors:
“In retail shopping centre leasing, every tenant and every property vacancy should be leased to a plan. That plan is your tenant mix strategy. All good retail properties and shopping centres have a base plan of this nature. They know what tenant they want in what location, and over the years they shape the property performance and rental return.”
Before this can happen, management teams working across the portfolio need a clear line of sight around visitor habits and preferences, plus a strong plan of improvement and maintenance for their shopping venue to become destinations of choice.
This is where commercial property management software is leading to real improvement in space allocation.
Using interactive graphical dashboards, teams can evaluate performance at all levels. Beginning with a country and regional perspective all the way down to the performance of floors, zones or even individual units in specific malls. The latest software also makes it possible for the venue tenant mix to be displayed interactively on a floor plate of the mall, without any manual intervention
The facilities mix
First customers have to be comfortable with the broad planning of the facilities themselves. As an example, customer parking matters. No one wants to walk miles carrying shopping bags, shepherding children or getting wet on rainy days.
Once inside, the facility needs to be well maintained to provide an enjoyable shopping experience. The air conditioning needs to be controlled at an optimum temperature during all weather conditions. Common areas and shared facilities must undergo regular planned maintenance to ensure they are in perfect working order.
With commercial property management software, your venue managers can maintain total control over the facilities management cycle from start to finish, ensuring that all work tasks are properly carried out and completed satisfactorily.
A shopping venue should be a pleasant place to be and many newer venues are light, airy and attractive places to meet, greet and shop. Remember: the customer always has a choice. He or she can shop at competing retail locations or go online and buy in the comfort of their home.
According to a recent study by global property advisor CBRE, tenant mix and big brands are the key to secondary shopping venue success. Anchor tenants matter in so many ways to the retail dynamic. Customers may visit a venue solely to shop at their preferred department store, clothes retailer or sportswear shop.
In terms of tenant mix, it is the number, type and variety of shops and activities clustered with those anchor tenants that are just as important to ensure customers have a balanced, well-spread shopping experience.
For example, a customer intending to buy shoes from an anchor department store may choose another outlet when they are on site. A variety of other shoe shops offering different styles, qualities and price levels in the same section of the mall can be a real attraction.
A signal that the tenant mix among shoe shops is well balanced can be found though footfall data. This can be captured and used to gain key insights into your customers’ retail habits. For example, you can benchmark visitor access against spending, then use this data to drive footfall to the less busy shoe shops within the shopping venue.
Extend the analogy to the complete range of other goods and services and the shopping venue becomes a go-to place for customers across the board. This includes food and beverage outlets that statistically enjoy very high footfalls in many shopping malls.
Intelligent location planning
Location is vital in shopping venues, and knowing which locations are best-suited to which types of tenants requires insight through data analytics.
Data analytics are transforming retail property management and leading to state-of-the-art business intelligence reporting. Clear visibility of the data allows real estate teams to evaluate their property information by current and target tenant mix, tenant category, product category, area category and sales trends for any period, historically and predictively.
Data can also help teams to identify and develop new opportunities around the way customers behave.
For example, customers may visit their local shopping venue today to lunch with friends, go to the movies or to the gym. Clustering suitable outlets around such facilities is an established approach to lead to impulse purchases. The moviegoer may be attracted to the book of the film they’ve just seen, were it to be displayed in the window of the bookshop next to the cinema. The gym member might like to buy new exercise clothing if it is displayed in a nearby sports shop.
Meanwhile, juxtaposition of convenience outlets to entranceways such as newsagents, key cutting services or shoe repairers, makes goods in these outlets an easy buy for customers whose path takes them nearby.
This is just one example where analytics that take into account the traffic of shoppers at different points around the shopping venue can help venue managers to determine where shops can be optimally placed.
Such insights are of interest to tenants as well. A tenant that can see where their business would be most likely to attract the highest footfall will be the first in line when space becomes available.
Over time, venue managers and investors can use analytics to strike the right balance in their tenant mix. Knowing when units will become vacant – whether currently, historically or predictively over any user defined period of time – means they can be marketed to tenants that are best suited to occupy them.
CAD plans provide an easy-to-understand overview of all retail and property information, enabling investors and their real estate teams to determine exactly where tenant mix is unbalanced or where sales revenues are below average.
Achieving the right tenant mix is about improving returns on investment in the retail property. But it is also about reducing the risk of that investment by ensuring a healthy variety of offerings to customers. Customers will know that their visits will be rewarded by the variety and attractiveness of the goods, brands and the facilities on show.
With the right mix of retail outlets and facilities they will want to return frequently – a core ingredient for every high-performing retail property business.
Keep in mind:
- Data analytics are now a key tool to achieve optimal returns from shopping venues
- The best tenant mix can be predicted and measured through robust data
- Data around customers’ demographics and shopping preferences should be evaluated to assess which tenants will be most suitable
- Tenants can benefit from data analytics by occupying sites best-suited to shopping patterns within the mall
In today’s competitive market, retail property teams must work in close partnership with their tenants.
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