In The Retail Shakeout, PropTech Tools Are Unseen Life Preservers

Retailer and shopping center survival these days increasingly hinges on how companies use PropTech to make the right leasing and investment decisions.

“In the U.S. we are over-retailed compared to anywhere else in the first world,” said Alan McKeon, CEO of location-based data analytics company Alexander Babbage. “We have more square footage than anywhere else, so people will talk about a retail shakeout. ... I believe that data or tech is the competitive differentiator that allows the winners to stand out from the losers.”

Retail PropTech is becoming more sophisticated, offering landlords and retail tenants everything from demographic profiles on individuals roaming shopping malls to information on what retail brands perform best in certain geographic areas to tools that help pair the right retailer with the right landlord. 

But there is definitely room for growth in the PropTech retail space, Deloitte Consulting Real Estate Group Managing Director John D’Angelo said. 

“I think there is a gap in the marketplace,” D’Angelo said. “It has not been historically a core competency of real estate owners and operators [to build and interpret data sets]. I think we are going to see a lot better tools and technologies come to help people pick where they want to invest.”

This also applies to technologies that help tenants and landlords decide what retail partners are the best bets for driving traffic to stores and shopping centers, D’Angelo said.

Fort Worth-based Buxton is the latest firm to cast its net in the retail PropTech space. The company just launched Top Tenant, a platform containing thousands of data points linked to branded retail and healthcare property sites across the country. 

Through the product, brokers, investors and landlords can determine if a retail brand going into a specific community has chosen a property with a data profile that matches, or is at least equivalent to, sites in the Buxton database that have successfully carried the same brand before. 

“We have developed at this point about 4,600 proprietary brand-level models where Buxton has gone out and studied every location of these brands and done that in depth,” Buxton Senior Vice President Phillip Crow said.

“We have studied the psychographics of the trade area of each of these locations; we have studied the competitive mix at a brand level. We also have studied the immediate co-tenants, and we studied cannibalization thresholds [for the retail brands].”

Buxton knew the app was needed when landlords started paying more attention to tenant curation and the need to maintain traffic long term. 

“They [retailers and landlords] are becoming more sophisticated,” Crow said. “There are more tools in the marketplace that make data more accessible to them, so I think the days of using one or three- to five-mile radius rings and basic demographics — while they won’t go away — they continue to fade more in the background.”

Another trend is the rise of geofencing, or pinging mobile phones in a specific area to collect or send data, STRIVE CRE Brokerage managing partner Jennifer Pierson said. 

Retailers have been using geofencing to send targeted ads to potential customers via social media.

“We are seeing landlords try to advise their tenants to get in touch with these companies [who do geofencing], so that they can help bring foot traffic in,” Pierson said. “Not just because there is a storefront or they saw an advertisement in a magazine, but because they got something on their phone.”

Landlords are also getting into the geofencing game to make smarter decisions about how to curate and lay out their properties.

Alexander Babbage and JLL got together in 2017 to launch PinPoint, a retail-focused tech tool powered by Alexander Babbage's location-based data. McKeon said his company became inspired by a client who was trying to determine if retail traffic was bypassing his shopping center and going to a nearby competitor. 

McKeon's team and JLL created a tool that uses mobile information from cellphones to determine shoppers' tastes and traffic patterns. McKeon said his company is continuously pulling data from about 120 million mobile phones and devices into a cloud-based platform. PinPoint then uses geospatial analytics to break down who goes to what retail centers and how long they spend there.

McKeon said the data is then appended with additional information to create profiles of the shoppers. 

“Not only do I know who is coming to my shopping center and which geographic or trade areas they are coming from, I get to know who the people are ... and that allows me to look at a market either for an asset I own or for a competitor and go, 'Who is shopping there?'”

While PinPoint data does not identify the exact identities of mobile device users, it does offer helpful marketing information on gender, income and ethnicity as well as individual shopping patterns to help create reliable mall and store traffic data. 

McKeon said PinPoint predominately serves property owners looking for tools to curate the right mix of retailers.

As the retail market evolves, both sides of the leasing fence have found it increasingly necessary to lean on tech — and each other — to survive and thrive.

“Retailers are becoming a lot more competitive and a lot more data-driven,” McKeon said. “And as retailers become more data-driven we see increased collaboration between the retailer and the landlord.”