Stockland has been investing in deep insights into shopper behaviour, in order to ultimately maximise traffic for its retailers. Two of Stockland’s national experts – strategic Insights Manager, Jenny Van Der Voort Van Zyp, and General Manager, Retail Leasing, Tony Tsekouras, shared their insights on the importance of fostering an optimised retail mix and how shopper data collection, advanced artificial intelligence machine learning and centre layouts can combine to potentially offer retailers increased turnover, whether it be ongoing or even before a new tenant moves in. As Ms Van Der Voort Van Zyp explains, a successful retail mix depends on a unique combination of art – being experience – and science – being machine learning.
Shopper data and modelling
Stockland continually strives to improve retail mix performance throughout its town centres, and continues to evolve its insights to ultimately benefit its retailers with an increased likelihood of foot traffic and sales.
“The first is going beyond mere demographic understandings of our customers and discovering more deeply how they behave,” said Ms Van Der Voort Van Zyp.
“Examining what category shoppers most engage with. How often they come to centre, how long they stay, what time of day they come. So it's a very rich behavioural segmentation which then allows you to make predictions with consistent outcomes.
“You could have two 39-year-old mothers in the same age demographic who have completely different profiles and therefore shop very differently. Getting a deeper understanding really helps us action opportunities to tailor our mix in order to increase sales.
“The second point is us really leveraging different data sets and employing geospatial machine learning over a lot of historical data in order to learn how different shops perform in their relevant locations and how their performance can optimise the whole centre.
“It’s really about finding the right tenant and location mix. You can only optimise that with large amounts of data and advanced applied analytics techniques.”
Stockland’s Tony Tsekouras works closely with Ms Van Der Voort Van Zyp and her team, and applies his more than 25 years of experience to complement it. “Everything comes down to us asking, ‘What is the value proposition for the customer?’,” said Mr Tsekouras.
“Retail mix is all about the customer at the end of the day, you need to provide an optimal mix to the customer that meets their requirements. If you open a store that nobody wants, then nobody is going to come.
“When we come up with a retail mix, we perform a very detailed analysis of the trade area and the demographics of that trade area for our retailers, and from that analysis we determine the market potential in terms of what the available spend is, what the mix is likely to deliver in terms of sales for our retailers.”
Another key aspect to consider for retailers is the considered design of Stockland’s retail town centres. “There's no point putting shops in places shoppers can't reach conveniently,” said Mr Tsekouras.
“Convenience and accessibility of the infrastructure and how you design the centre are primary value-propositions for shoppers. I always think to myself, 'How is a shopper with children in-tow and a laden trolley going to easily navigate to the car park after they've bought groceries from the supermarket and been to the butchery and bakery. The shopping centre’s internal machinations must make such a journey as easy as possible.
“The next layer under that is offering our retailers opportunities to succeed. Sales might be occurring in an area, but that area may not be optimised for a particular type of retailer. Optimised co-location of tenants in the retail mix is a crucial consideration.
“So, if you are putting a big supermarket on the ground, you need to have specialist related businesses around it; the butcher shop, the bakery, the seafood shop, because proximity to that supermarket creates convenience for shoppers. So, it's about design and how shoppers interact with the centre’s layout.”
Mr Tsekouras points out that retail mixes are ever-changing, and Stockland is equipped to adapt to vacancies and to vary the store mix in order to increase collective turnover efficiently and accurately. “A critical consideration in retail mix is that the mix exists in a point-in-time. Retail is constantly evolving and being disrupted, all driven by changes in consumer requirements.
“Knowing that, we have to be open to adapting to changing circumstances. To constantly maximise your retail mix you must be equipped with tools that allow you to rapidly and accurately alter the mix 'on the fly', if you will. What has changed is that our analytics tools have vastly improved over time.
“We gather and use data in order to provide optimal outcomes for our retailers and shoppers. We can use that data to predict how a store will perform. We are looking at the trade area analysis and the spend, the sustainable sales of each of our retailer’s shops.
“We can actually predict what happens if we include certain stores in a growing category, to see how they would likely perform in terms of sales and how it would holistically impact the other stores in the overall mix.”
Ahead of the pack
Ms Van Der Voort Van Zyp explains that Stockland’s industry-leading capability comes down to the work it has done to harness advanced data-collection and modelling. “We experienced a big step-change a few years ago when we moved away from merely purchasing software that all our competitors also had access to.
“We knew we needed the best analytics in order to create a competitive advantage to ensure our retailers could be as successful as possible.
“In an omnichannel trading market, shopping is such a strong and integrated offering. It’s no longer just about bricks-and-mortar but rather an accepted, normalised combination of the two; being in-store, and online.
“Our analytics have deepened our understanding of our customers, and not just from a demographic point-of-view. It's easy enough to pull demographic stats together, but it’s far more challenging to understand what shoppers are actually doing, to understand how they behave in order to attract them to come to our centres more often and/or to spend more. We need to understand that. Without understanding the baseline, we can't formulate strategies to influence those behaviours and ultimately make our retailers, and the business, more profitable in the long-term.
“We have had an in-house team of data scientists for about four years who explore the geospatial area in order to extract more value from our vast data sets. Obviously, the more data you have, the more accurate your machine-learning model results can be.
“Our introduction of this geospatial component was another step-change in terms of our capabilities. Machine learning complements the many, many years of experience our business has in understanding optimal retail mixes.”
Stockland’s customer insights have afforded it the ability to be forward-thinking, rather than reactionary, as Ms Van Der Voort Van Zyp explained. “We have been successful in our benchmarks in the past, and now we are being even more forward-thinking. We don’t just put a business on the ground and assess it over time in order to understand what is working and what isn't, and make performance-based conclusions in retrospect.
“Now, we can predict what's going to happen and avoid experimenting with a retailer who is potentially not optimised for the exact space and retail mix. We can ensure our retailers are going to be set up for success before they even move in. So, our customer insights are going to further improve the likelihood of success for our retailers.”
Mr Tsekouras concurred. “I'm proud to share the developments we have made with our retailers in order to demonstrate that we are constantly improving in our capabilities and ensuring we're going to the next-level of accuracy in our retailer mix.
“We are constantly fine-tuning our retail mix by adding on-trend retailers for the benefit of our tenants and we think that gives our business partners faith in our abilities to ensure their ongoing success.
“Our retailers need definitive evidence of their likely success, presently and ongoing. Our customer insights provide our retailers evidence that Stockland really is on the right path to offering an optimised retail mix, not just as a broad marketing claim but through legitimate, closely analysed data and modelling. And that gives them the assurance that we are on the right path, that we are differentiating ourselves from our competitors to give confidence to our retailers in partnering with us, and to be sustainable in the future. That is a very powerful string to our bow.”