Retail Apocalypse – Insights From Alternative Data
They call it the retail apocalypse. Traditional bricks and mortar retailers are at risk as changes in consumer shopping behavior drive continued rapid growth in e-commerce.
Bloomberg posted a story today about System2, a big data start up that is crunching multiple sources of traditional and non-traditional data to determine the future trends in retail. Using their data, System2 identify 197 JC Penney stores they believe are at risk of closing, on top of the 140 stores already announced for closure by the company.
What sort of data sources are System2 using for this analysis? The article quotes sources such as mobile phone pings, demographic information, credit card bills in addition to other sources of data.
The System2 proposition focuses on the hedge fund and financial markets industry. However insight on these trends is relevant to a wide range of stakeholders in the Commercial Real Estate value chain.
I’ve already written a blog post on the role of data in Commercial Real Estate Valuation, but let’s look at some other stakeholders and understand why they should care:
I need to know which retail brands are at risk because…..
“I’m a retail chain planning an expansion, and I want to choose the best mall options with the strongest anchor tenants.”
“As a mall owner I need to compete in the changing retail environment and want to know which brands will be the strongest bets.”
“I’m a construction company bidding for work from retailers and mall owners, and I want to know I’m going to get paid.”
“A new mall investment opportunity has been offered to me and I need to understand the risks attached to the current tenants.”
“I’m a REIT analyst looking at overall portfolio quality and want to understand which properties in the portfolio carry the highest risk.”
“The marketing plan for my property management company will be much better if I can prioritize the best quality target clients.”
“I’m a consultant advising a retail brand on store transformation and want a list of the worst performing brands as examples of what not to do!”
“As a bank lender with significant exposure to retailers I want to know if I should lay off some of that risk.”
“I’m a researcher / journalist and I want more data to support my story on the retail apocalypse.”
If only I could get some data that shows……
- How overall foot traffic into and out of malls is changing.
- Foot traffic into and out of the retailer I am interested in.
- How long customers are staying in store and how that is changing over time.
- How much money customers are spending in store.
- Consumer feedback on their experience of different malls.
- Changes in the demographic mix of customers in malls and stores.
- Which retailers are investing in transforming their store experience.
- Which retailers have the most integrated offline / online experience.
- How many cars are in the parking lots of major malls.
I could go on here with more examples of use cases for data and the sort of data that helps answer these questions, but you get the point…. there’s a lot!
The most data-savvy data users are already well along this adoption curve and taking advantage of new data source. Recent research from multiple sources shows that these users are gaining competitive advantage. If you haven’t started yet, it’s never too late.
It’s easy to see from this example why so many companies are realizing that they have data that is valuable to other users. In fact over half of all companies in a recent Forester survey indicated they are looking to commercialize their data.
Of course, recognizing the need and the opportunity is only one piece of the puzzle. We also have to connect the need to the opportunity so that value can be exchanged. That’s what our mission is at dmi and why we believe so passionately in the future role that data will play in business decision making.
Data for the Retail Apocalypse – and more!
If you’d like to find out more about what we have to offer, come and check out the website through our Data Explorer tool.
Will is a senior data executive with extensive experience across the spectrum of data management and analytics, and a deep understanding of what it takes to find, wrangle and incorporate data into your business decision making workflow. His previous roles include periods working at some of the world’s most forward thinking firms, including Thomson Reuters and Bridgewater Associates, as analyst, data manager, data buyer, business owner amongst other roles.
Will is a passionate data evangelist and happy to engage in a conversation anytime to talk about the opportunities and share war stories. When he’s not got his geek hat on, you will find him on the tennis court or at the piano.