New Year Solutions
Technology trends are rippling through the retail real estate universe. Among the most important are new apps that dig deeply into data and automate tasks such as site selection, identifying and diagnosing underperforming stores and much more. Then there are apps that analyze what is going on inside shopping centers and stores. Technology is also helping to address a major change in lease accounting rules.
Trend #1
How we use technology is changing
The emerging generation of real estate technology is transforming the way we use technology.
“Over the last half-dozen years, the iPhone has revolutionized technology,” said Simon Thompson, director of commercial solutions with Redlands, Calif.-based Esri. “Before the iPhone, we used the phone to talk, computers for email and managing photos, paper maps for directions, and we had separate GPS devices. The iPhone synthesized all of this and more on one device and a couple dozen apps.”
The iPhone innovation hides the complexity of technology behind simple, intuitive apps. Real estate technology providers are emulating the simplicity of smartphone apps.
For example, an Esri app called Business Analyst Online can help analyze sites out in the field. Just open the app, set up a 5-mile circle and run the app. It will cycle through Esri’s 7,000 variables and show you how much the prospective customers inside the circle spend on lunch or apparel or toys or whatever you’re selling.
“And it is instant,” Thompson continued. “I can get the information, and email a link back to my office, asking my real estate director to check this out and give me his opinion.
“We used to focus on collecting the data, and that took so long that you didn’t have time to evaluate the data properly. Today we can focus all of our time on making the decision.”
Trend #2
Small data
While the software industry has been promoting big data applications for quite a while, some providers have adopted a different point of view. “Everyone talks about big data, but big data by itself is worthless,” said Bill Stinneford, senior VP in charge of client management with Fort Worth, Texas-based Buxton. “What’s important is processing data to find big answers.
“We build real estate answers by processing data about customers. The data is in the cloud. Clients process the data through Buxton’s SCOUT from their desktops and now from their tablets and smartphones through SCOUT Touch — an app with 18 icons.”
Each icon processes data about customers in a specific way, and there is no learning curve. If you have a question, just ask an app.
Suppose, for instance, that you are driving to a meeting and happen upon a shopping center you like. Pull over and tap the “Score Site” icon in SCOUT Touch. The app will run an analysis using your data in the cloud, and get right back to you with a revenue forecast and cannibalization report on the site.
SCOUT Touch isn’t just for the real estate group. “A district manager might show the manager of a poorly performing store that the location isn’t at fault,” said Stinneford. “Pull up a map showing drive times, existing and potential customers and revenue potential. The solution? More aggressive marketing.”
Trend #3
Indoor location services
Mall owners and retailers want to know where customers go and what they do. If a mall owner can identify the busiest corridors in the center, rents and signage rates can rise for the premium space. Retailers want to know what departments in the store — and chain — are converting sales or not. Did a promotion drive traffic to the right products? Are displays and signs working?
Yorba Linda, Calif.-based iInside (pronounced eye-inside) uses technology to answer these questions. “We use the public Wi-Fi system to count the people using handheld devices in a mall or store,” said Jon Rosen, executive VP with iInside. “That produces a sample that enables us to analyze traffic patterns.
“To count people in stores, in lines at cash registers, the number of people that go first to merchandise that has been advertised and carry out other in-store analytics, we add hardware in the store — small Wi-Fi or Bluetooth sensors.
“We can tell retailers where people are in the center. We can measure the draw rate — the percentage of passers-by that come into the store. That enables them to measure how signage changes affect store traffic.”
Rosen also noted that iInside adheres to privacy standards issued by a privacy consortium. The technology locates and counts devices. There is no listening in or privacy intrusions of any kind.
Trend #4
Prepping for the FASB challenge
Are you ready for the new lease accounting rule? The Financial Accounting Standards Board (FASB) plans to issue a final rule soon. The new rule will transform operating leases from expenses into assets and require a major accounting change.
Retailers and shopping center owners should get started now. According to “50 FASB-Focused Fields You Can’t Do Without,” a white paper from Atlanta-based Virtual Premise, the new standard will require lessors and lessees alike to redo financial statements for several years before the effective date of the standard.
“The new rule will change the process of managing lease data,” said Andy Thomas, president of Virtual Premise. “There will be new data to collect.”
According to the Virtual Premise white paper, there will be 50 new data fields to complete. Virtual Premise has readied its cloud-based real estate information management software to accept the new data.
There will also be extensive calculations, Thomas said. The process will have to withstand the scrutiny of GAP accounting and auditors. Technology will be fundamental to that.
“This kind of major rule change will shine a light on areas that you have fallen behind on,” Thomas continued. “We’re seeing forward-thinking companies preparing for the rule by implementing technology to gain control of their lease data. That will be key to compliance.”