Advertisement
04/04/2022

5Qs for Placer’s RJ Hottovy on how data is driving store expansion

How traffic data is leading retailers to the right markets, not just the hot markets.
Al Urbanski
Real Estate Editor & Manager
Al Urbanski profile picture
Image
RJ Hottovy
RJ Hottovy

As a senior retail and restaurant analyst at Morningstar for the last 12 years, RJ Hottovy has regularly been called on by CNBC and Fox Business to share his knowledge of brands like Chipotle, Amazon, Best Buy, and Darden. But like many folks involved in retail intelligence, he noticed a marked increase in the segment’s data flow, led by the emergence of the foot traffic data provider Placer.ai. So impressed was he by the speed and accuracy with which Placer dispensed reports, he joined the company last year.

We decided to speak with Hottovy about retail data recalibration and the effect it might have on physical retail’s growth in the years ahead.

You spent many years at Morningstar analyzing companies like Amazon, Best Buy, Chipotle, Dunkin’ Brands, and Alibaba. What made you join Placer.ai?
In 2018, I was introduced to Placer.ai as a potential investor, but after seeing the company’s foot traffic and other data sets firsthand, I thought, “This will be the company to put me out of a job as an analyst covering the retail sector.” I wasn’t able to make an investment at the time, but got to know Noam Ben-Zvi, Ethan Chernofsky, and the Placer team in the years following that initial demo. I believe I was the first guest that Ethan had on the Placer webinars. The stars aligned last year for me to join Placer, and it’s been fun coming up with new ways for retailers and restaurants to make better decisions with better information.

I speak to lots of CEOs of retail center development companies and every one of them tells me that Placer has a different way of delivering data to them. How do you do it?
Retailers have increasingly become inundated with data the past several years, but I think our user-friendly, self-service dashboard sets us apart. Customer visitation studies that would've taken me months in the past now take hours. Still, I think we’re just starting to scratch the surface of what we can do with the data. Our analytical research team has been tasked with taking our visitation data and coming up with new ways to analyze the retail industry. We can do deep dives on individual companies. We come up with new ways to benchmark things like customer acquisition cost at the store level.

“Chipotle now thinks they can reach 7,000 units in the U.S. instead of its previous target of 6,000 locations by focusing on smaller markets.”

Can retailers learn that much with customer traffic studies?
To me, the foundation of any good retail analysis comes down to traffic. For a long time, there wasn’t a way to reliably assess customer visits. Scanners offered some visibility into store traffic, but it didn’t give you a complete picture of the customer coming into the store. Credit card data has also become more popular in recent years, but there are still issues compiling data for more cash-focused or digital-transaction retailers. If you take a situation like Sephora stores within Kohl’s, Placer can not only tell you how much foot traffic has improved at its 200 remodeled locations relative to the Kohl’s average, but also how that customer profile has changed by pairing our visitation data with Census and other data sets.

Available space in top centers is low now. Brokers tell me there’s competition for good locations in top centers. Can your data help national chains uncover great locations in secondary and tertiary markets?
With less availability in top centers, a number of chains are looking to smaller markets to accelerate growth now accelerating their new openings. Case in point: Chipotle now thinks they can reach 7,000 units in the U.S. instead of its previous target of 6,000 locations by focusing on smaller markets.  Placer’s data is almost real-time, so we were able to isolate and compare the recent performance of their smaller markets versus larger markets. We found that the company is seeing greater visitation trends in smaller markets, suggesting that this long-term store count goal might be achievable.

Especially for grocery-anchored center operators, Florida, Texas, and Arizona seem to be the big growth areas. Yet several brokers told me that lots of restaurants and retailers are looking for openings market-by-market. Are you seeing that to be true?
We’re seeing that as well. Take Dutch Bros for example. They’re growing in California and Arizona, but also markets like Oklahoma, Tennessee, and Kansas. Placer data indicates that each of these markets are underserved, with coffee visitations as a percentage of dining visits below the national average. Ditch Bros is making some smart decisions and market-specific data is a critical tool. What works in one hometown market and with that hometown crowd is often very different from other markets.