Data And AI Are Reshaping How Retail Developers Understand Their Shoppers
At the American Dream megamall in New Jersey, each customer is a data point.
Where they park their car, the path they take around the mall and each time they spend money informs the shopping center’s chief operating officer, Paul Ghermezian, of adjustments to make. And he is constantly sorting through the data.
“There's always going be that human element, but you're doing yourself a massive injustice whenever you're not embracing whatever is the newest and best and latest creative technology,” Ghermezian said Thursday at Bisnow’s National Retail Conference.
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As artificial intelligence becomes more accessible, the real estate industry is exploring how to integrate it into properties across the country. On the retail front, the store of the future is here, and developers want to bring it to shoppers everywhere, property owners, architects and construction experts said at the event.
More than 72% of commercial real estate companies have already or are planning to commit money toward the use of AI technology in their firms, according to a Deloitte global survey of 750 executives. However, the vast majority of that is for property transactions, such as listings and valuations.
Just 8% of executives are using AI for data and analytics, 6% for architecture and 11% for sustainability and building analysis, the survey found.
But even if developers aren't using the technology, many acknowledge that there is a need to learn and adapt.
“We're lagging. Maybe by the time something gets to me, all of the 30s and younger have used it, and I just don't realize it in the PowerPoints and models I'm getting,” Acadia Realty Trust Chief Investment Officer Reginald Livingston said onstage at the New York Marriott Marquis. “But we do need to make a more concerted effort to meet the future.”
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Some architecture and construction firms are already using new technologies in modeling. 3D cameras scan interiors, eliminating the need for measuring and mapping dimensions. AI can quickly change colors and make other adjustments to renderings in real time during calls with clients.
Those on the front lines are already making the investment. In April, CoStar Group reached an agreement to acquire Matterport, one of the largest 3D-camera makers, valuing the company at $1.6B.
“These are things that you would have an intern spend eight hours doing previously, and it's done in two minutes,” said Aksel Solberg, HFA Architecture + Engineering's development design studio lead. “It frees us up to use our imagination to make those things even better than they could have ever been before.”
New technology is also used postdevelopment, often interacting directly with customers. In stores, AI and other tech is often promoted to shoppers as a way to similarly free up time, like e-commerce does, while still encouraging them to go inside a physical destination.
Last year, Walmart announced expectations to automate 65% of its stores by the end of its fiscal year 2026. At the same time, the company revealed that it will lay off more than 2,000 employees, and it added that the plans would reduce the need for lower-paid roles, Reuters reported.
The retailer has also begun experimenting with other technologies to assist shoppers. That includes blinking lights on shelves that guide customers to a product through a tap on Walmart’s app, eliminating time spent scouring the store for goods, Bloomberg reported. Target is also rolling out a chatbot to employees to assist with on-the-job questions.
Overall, in-store robot revenue is expected to grow by more than 25% between 2022 and 2030 to more than $8.4B, according to ABI Research. That includes tech like contactless checkout and AI-powered smart shopping carts.
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JRM Construction Management Director of Retail Joseph Schimenti said he has seen some stores dedicate a portion of their square footage to robots packing online orders. Customers come in to quickly retrieve their purchases without ever having to interact with a human, but they must walk through the entire store to get to the robots.
“It's an aha moment when this Apple-looking box comes out of the robot, and it's the coolest thing they've ever seen for the online experience,” Schimenti said. “It gets them into the store, talk about the robot with their friends, order more and, while they're there, hopefully pick up something else.”
Ghermezian said technology is integrated throughout the 3M SF American Dream complex, developed by Triple Five Group. Cameras allow the developer to put together foot traffic heat maps, which can be shared with retailers looking to find the right space.
Credit card purchases at the amusement parks provide data on customers’ home ZIP codes and spending habits, showing how far they traveled to get to the mall and what they bought when they arrived, all of which can be used to find ways to increase sales.
Ghermezian said he gets daily, weekly and monthly reports, which he uses AI to examine. Chatbots can determine whether traffic is up compared to the prior year because it happened to rain on the same day last year or if a change is really working.
In one instance, the research revealed that customers are parking in one lot over another simply because Google Maps directs them to make a left turn despite the developer wanting them to go straight. In that case, the directory and other new signage was placed where customers are actually going.
“The reality is that once the consumer comes in, they're going to move the way they want,” Ghermezian said. “Now we have the data. Let's try to understand why they're doing this.”