For Retailers, Reinvention is the Name of the Game
There has been a great deal of talk about the need for reinvention in the retail sector in light of ecommerce, millennials, the weather, the dollar – you name it! CNBC’s posted that “It may be time for the bricks-and-mortar retailers to try something new.” And, Fortune recently came out with an article entitled “How American Department Stores are Fighting Extinction”. So, it’s not really surprising that at this month's National Retail Federation show, retailers are being “implored to reinvent themselves”.
The suggestion is that retailers need to look for new technologies to help them deal with growing online shopping, mobile apps and buying habits:
“Coming off a holiday selling season when shoppers spent less than expected, the nation's retailers came to their annual convention in New York City this week in the mood to buy. Retail investment in new technology is expected to surge this year, and vendors said retailers are reacting positively to pitches for new technologies.”
The article goes on to talk about digital technology advances that are helping traditional retailers address the challenges. As I wrote in a couple of our latest blog posts here and here, all is not lost for traditional retailers.
In fact, at Tango we’ve seen a great deal of our growth coming from helping these retailers remain competitive. Whether we’re helping them understand the interplay between ecommerce and bricks and mortar or accessing the best data to better understand their customers to improve the accuracy of their trade areas, our solutions are helping them address the changes and stay one step ahead. More specifically, there are three areas where we’ve seen an increase in interest and investment from retail and restaurant companies as it relates to strategically managing their #1 asset and what drives over 92% of their revenue – their store portfolios.
New Data Sets
Identifying, procuring and incorporating new data sets into real estate strategy and analysis is not new . What’s new though, is the dramatic increase in the number and variety of data sets available, as well as the speed at which new data opportunities are emerging. The explosion of data is being fueled by technology advancements which afford unique data collection opportunities - whether it be cellular data points, expansion of the Internet of Things (IOT), or even the utilization of drones. The key here is determining which raw data sources have legitimate business applications for real estate strategy, then transforming, blending and manipulating the raw data to improve predictive models.
At Tango, we’re working with our customers to accomplish just that, and have had great success recently augmenting and incorporating mobile point data sets to better identify who is visiting stores, where they came from prior to visiting the store and where they are going once they leave. Doing so has opened up new areas of insight as it relates to the changing behavior of trade areas over time and the impact of changing market dynamics such as a new competitor, a store remodel, a promotional campaign, etc.
Speed to Market
In retail, competition for the best location is not limited to a retailer’s traditional competitive category, but rather any retail or restaurant company who has a similar real estate requirement. This reality dramatically increases the competitive set for the best real estate, and how fast one can identify, assess, approve and close on a new site is a distinct competitive advantage.
Today, many retailers reply on a multiple vendors to make this happen – GIS, data, predictive modeling, market planning, and site selection. To further slow things down and complicate the equation, there is a clear separation between what functions happen at headquarters (market research, GIS, finance) and happens in the field (deal making and construction project management). As you might expect, if a retailer can make this pain go away, deal flow dramatically improves.
That’s exactly what we’re working with customers to address – the utilization of a single solution that seamlessly works at headquarters and in the field, while covering the full scope of the requirement - including GIS, data, predictive modeling, market planning and site selection – what we call Total Product.
Enabling Strategic Partners with Technology
Retailers and restaurants concepts are becoming more acutely aware that their success is directly tied to that of their strategic partners. The more they can enable these partners, the better. This realization has resulted in a new willingness to invest, and most importantly share, mutually beneficial technology. For us here at Tango, a clear example of this trend is occurring in the franchising space.
For a franchising business model to work it must identify, attract and partner with successful operators in order to grow profitably. Leadingfranchise concepts have shifted their paradigm and are now viewing the franchisee relationship as a lifecycle that requires investment and enablement to be successful. Think about it, from recruiting a franchisee, to reviewing and approving their application, to executing a territory development agreement or an individual franchisee agreement, to tracking mutual compliance, to selecting sites, building locations and operating them.
The lifecycle is complex and the line continues to blur between where the franchisor stops and the franchisee begins. Winning franchisors are moving to a single platform to manage and enable the franchisee lifecycle because most franchisees do not have the expertise or capital to do it themselves.