Inside The Shopping Center Group's Data-Driven Strategy

Inside The Shopping Center Group's Data-Driven Strategy

ESRI AND THE SCIENCE OF WHERE PODCAST: THE SHOPPING CENTER GROUP

INTRO:
Welcome to the Esri and the Science of Where podcast.

Understanding why people shop the way they do requires accurate data, some understanding of psychology, and experience. And because the margins are slim, if you want to own or rent a store, you need an edge to ensure success.

That's where The Shopping Center Group comes in. It helps retailers find ideal locations to attract more business. Brian Chandler, VP of Innovation, Technology, and Analytics at The Shopping Center Group, relies on location technology to help his customers understand their options.

BRIAN CHANDLER:
If you look at a property, like I'm looking out my window here in our office at Akers Mill Shopping Center, there are 20 different brands on that property. And even though they're all located a very short distance away from each other, how each of those brands looks at how that property has to serve them is going to be different.

INTRO:
Brian Chandler describes the demands of retail real estate to Esri's Gary Sankary.

GARY SANKARY:
Hi, Brian, and welcome to the Esri and the Science of Where podcast.

BRIAN CHANDLER:
Hey, Gary. Pleasure to be here.

GARY SANKARY:
When The Shopping Center Group launched almost 40 years ago in Atlanta, the founders made a deliberate bet: retail real estate only. And the focus really has paid off. The Shopping Center Group is now the largest privately held retail-only real estate platform in the country.

Brian, maybe you can talk a little bit about the process of finding the right location for businesses and how that may have changed.

BRIAN CHANDLER:
Yeah, absolutely. About 40 years ago, these things called shopping centers outside of malls really didn't exist, or at least not here in the Southeast.

Traditionally, if you were a retailer that wanted to come to Atlanta, you would reach out to the local regional mall and see if they had space. If they did, great. They'd tell you all about the people that were around the mall. You'd negotiate a contract, and you'd open up your doors.

Well, things started changing. There were strip centers that started to get developed, sort of neighborhood centers that started to get developed, and retailers started to recognize that they didn't necessarily have to be in the mall if they wanted to enter a market. They could use these other alternative spaces to open up new doors.

But the piece that was really missing was that sort of local knowledge. When TSCG was formed, we came on at a time when the Southeast in particular was really having some explosive growth, and we realized that for brands that were expanding, they needed that boots-on-the-ground knowledge of the local market.

We made the decision that, compared to other brokerages, we were really going to focus just on retail. We wanted to be that local go-to for the brands that really had to figure out this new alternative space that was becoming available for them.

That's what we decided to do at TSCG, and we've been successful at it ever since.

Interestingly enough, if you were to go back and look at what we were doing for quote-unquote GIS 40 years ago, it really wasn't sophisticated at all. It was a paper map that we would have a local printer print hundreds of copies of.

Here in Atlanta, where our home office is, it would show the Atlanta region, and we had brokers and administrative staff who were basically rubbing dots onto these paper maps. So they had a quasi-sophisticated approach to it.

But I've also heard horror stories that they'd fold up these paper maps, go on tour, spread them out on the hood of a car, and half of those dots would fall off. So it wasn't super sophisticated, but it got the job done.

Thankfully, we've evolved. Now we're here today using all of the latest and greatest out of Esri and a whole host of other third-party data tools and platforms to help our brands really succeed in this very competitive space.

GARY SANKARY:
One of the things that strikes me, and you alluded to it, is that there has been a transition from brokers and retailers using experience and intuition to make decisions. Now we're really enabling and bringing in data to help make those decisions.

I wonder if you could reflect a little bit on what you've seen and how that has changed the game for how properties are selected.

BRIAN CHANDLER:
Sure. I've been with TSCG now for 11 years. When I started, when we were looking at properties, it was usually a radius ring map, a demographic report, and a market aerial.

And when I say "market aerial," it's basically imagery with logos of retailers, so you could see who was around in that particular retail corridor.

A couple of years after I started here, we began doing things that were a little bit more advanced. Brands started to realize that it's not just a household income or discretionary income number. You really needed to start to understand what motivates a particular segment of people to buy from a particular brand's storefront.

Or, if you were looking at things like affinities toward certain brands, if you were co-located with maybe a Costco or a Starbucks, what was making your location successful?

We started to dabble in that and figure it out. That was really the first time we could begin to narrow down whether a visitor showing up in the middle of the week, Monday through Friday, looks any different from a customer who might be showing up on the weekends or at night.

We could begin to segment the visitors and look at that in a lot of detail. That started to create, I think, what we now know today as retail analytics, where brands are segmenting their consumers. They're trying to market to each of those in very specific ways.

They recognize that somebody who's in their store on a Tuesday at 10:30 might look completely different from somebody who's visiting their shop space on a Sunday at 5:00 p.m. And that is now the crazy world of retail analytics that we are all trying to operate in.

GARY SANKARY:
And I think if you continue that, for retailers themselves, the demands on those who have to do site selection have also changed. The nature of retail has changed.

We went from just a storefront. There was the logistics of getting product from the distribution center to a storefront. All of their focus was on the operations of that storefront. You needed good people, you needed good merchandising, but that was the channel through which you sold the majority of your products.

Then we had online shopping come, and it was going to change the world. It was going to kill retail. But none of that really came true. I think we saw poorly operated brands sort of fade away, but there have been new brands that have come in and taken their place.

BRIAN CHANDLER:
Yeah.

GARY SANKARY:
And then, of course, we had COVID. So it was not only storefronts and online shopping, but now you had in-store pickups or curbside pickups.

If you're a brand looking at a site, it's now not just a storefront. It has to do so many more things, and there's a lot more data that has to be provided to ensure that they're making the right decision.

When I think about The Shopping Center Group and the services you offer, I want to dive in a little bit more on this idea that it's not just a storefront. You guys are really involved in several distinct areas: tenant representation, landlord leasing, property management, and investment sales.

How do you find location intelligence serves all four of these different types of businesses?

BRIAN CHANDLER:
In a lot of ways, it's similar, but each of them looks at location in a slightly different way. Each of them has its own slightly different angle when looking at a location.

How many consumers are already coming to that space? Do those consumers match the profile for that particular brand? If they're not showing up, are they in the immediate area? Is that something that we can show with the data that we have access to?

If it's on the landlord side, they want to understand what the competitive landscape looks like. For the retailers that are on a particular property, how many of those same sorts of categories exist within a one-mile drive time?

For landlord leasing, when they look at a property, they want to understand the competitors that are on the property. Are they close by? If they're going to go talk to a retailer, can they show that this is a unique opportunity for that brand to enter into a space? What do the consumers look like? Is that something that matches that brand's core customer, and why should they be there?

For investment sales, it's a little bit different. Usually, it's more of a marketing angle that we're taking with them. They want to see the logos. They want to see what's around. They may want to look at the consumers within the general proximity, but it's a little less data-driven and more of a marketing angle.

On the investment sales side, we want to show good demographics. We want to show good segmentation. But it comes back to more of the mapping side of what we produce here at TSCG versus the data analytics side of what we produce.

Those properties can be used for different things, so each of those viewers of that space is going to look at it in a slightly different way.

GARY SANKARY:
How have mapping and geospatial analytics enabled you to share those insights with your clients?

BRIAN CHANDLER:
We like to look at our GIS team as consultants. Depending on the project and depending on the client, each of those clients has different needs and different desires.

We try to provide what our external clients are asking of our brokers. We also have our brokers as clients, so there might be questions they have that may never get back to the brand itself or the landlord. But they have questions that they're looking to us to provide answers on.

Oftentimes, we'll provide that information back as a map, or it could be a report with a map.

GARY SANKARY:
What makes retail real estate more complex than other types of commercial property, and why does that complexity matter to your clients?

BRIAN CHANDLER:
I think retail commercial real estate maps are probably more complex than, let's say, office space or industrial.

If you look at a property, like I'm looking out my window here in our office at Akers Mill Shopping Center, there are 20 different brands on that property. And even though they're all located a very short distance away from each other, how each of those brands looks at how that property has to serve them is going to be different.

We can map the same place, but the number of maps that we have to make to answer all of those questions becomes almost infinitely complex.

You can have brands that are more simplified in what they do, and they might have 10 or 15 different check boxes that they need to tick off. It could be things like, in a three-mile radius ring, what do the demographics look like?

You could have other retailers, though, on the same exact property that want to dive into the mobile location data to understand when the visitation happens. What times of the week does it happen? What days of the week does it happen? What does the consumer segment look like?

There's so much more information that they demand for that exact same property that it can become quite complex. It drives us to have to provide all of that information.

Usually, when it gets to that place, that's where we like to shift over to web-based applications that our brokers and that particular brand can sit together and start to dive into, layer those things on, and toggle different layers off to really understand what's happening on that property.

GARY SANKARY:
Sure. Coming from a retail background, at the end of the day, it's really all about understanding who the customers are and, as you described, who's going to be coming into my store.

I'm curious, as you've talked with folks and pulled some of the various attributes that we consider, like foot traffic, demographics, competitor proximity, and other types of data, what is the variable that surprises your clients most often when they see it on a map?

BRIAN CHANDLER:
We work with different brands, and I think right now we're representing north of 750 different brands.

You can get demographics and even some of the segmentation data. But I think when we start to dive into the spending attributes that we're able to get at and tailor a data set specifically for them that speaks specifically to their clientele, it's fun to watch the light bulbs turn on in their heads.

It's like, "Okay, well, if you can answer that question, we'd love to know about this. What are they spending on this? Because we feel like there's a category that we've rolled out that we're not quite sure about. Do you have information around this?"

Usually the answer is yes. And even if it's not a true yes, it's a maybe. We have to look at a proxy.

It's fun to be able to work with those brands and begin to answer questions that, outside of using GIS, they wouldn't have been able to answer.

GARY SANKARY:
Sure. One that comes to my mind, and I think about my time when I was working in the retail space, is that it's not just where our customers might live, but who's actually coming into our store and how they are moving in and around.

I can think of an example of a downtown store that has a high office occupancy rate around that store between 8:00 and 5:00. They have a very different customer Monday through Friday than they might during the weekends, when the folks who live around there might be coming in. So being able to tailor that becomes important.

BRIAN CHANDLER:
The challenge with demographics is, let's say $100,000 here in Atlanta is going to look very different from $100,000 in LA, right?

GARY SANKARY:
Sure.

BRIAN CHANDLER:
But if you can figure out the segmentation, what's drawing that customer to your site, what motivates them to shop the way that they do, that's universal.

It's really trying to understand that each individual store might have a different type of profile.

GARY SANKARY:
And I imagine that you're able to translate that. So if I'm a specialty retailer, I can come to you guys and say, "This is my target customer. This is really who I'm looking for." Then there are some opportunities that you might be able to go after.

BRIAN CHANDLER:
Yeah, absolutely. We've done work on the external consulting side. At TSCG, we also have an external consulting division, and we've done some work with a large tire distributor.

They came in and said, "This is our customer. We want to do some expansion. Help us figure this out."

The more we dug into it, we actually realized that they didn't have just one customer. They actually had two different types of customers.

For their more suburban, more urban-fringe stores, the data showed that you really have two different consumer bases. You're not currently going after this one, but if you look at the stores that are successful, this is why they're successful.

You have to do it tactfully, of course, but it can be really eye-opening for some brands who come in thinking one thing. You challenge them and show that, through the data, they could have one or maybe even more consumer segments that are really driving the success of their locations.

That can open up so many opportunities for them because some sites that might have been a no in the past can turn into yeses. You can show that, in that particular location, it's not the core customer they thought. It's actually this customer, and they're there. You just weren't looking at them.

GARY SANKARY:
How much does having that data ready in advance, and having these tools at your disposal, allow you to speed up the close of the deal?

BRIAN CHANDLER:
In commercial real estate, I would say it's only ever getting quicker. We don't do anything any slower than we did the year before.

With vacancy rates where they are in the United States currently, there can be an open spot, and there are probably already five or six people looking at it. There aren't the options out there currently for retailers to expand.

So the more that we can have ready to go, or at the fingertips of our brokers who are working with these brands and restaurants that are working to expand, the faster we can provide that, the better.

They need information as quickly as they can get it. If you're taking three weeks to put together an analysis, there's the potential that somebody has come along and snapped up that location.

For us, our approach has always been: Let's try to do things as well as we can, but always with the mindset of, can we automate this? Can we get it delivered faster while maintaining that look and feel that we're known for? Can we do this in a quicker way?

We now have an internal app that all of our brokers have access to. They can open up that app, put in an address, and see if we have a market aerial available. That's something they can now just grab. They don't have to make a request to a GIS person to put that map together.

We're reusing high-quality deliverables that have been created. They can take that map, put a site arrow on it, and get that out to their client to begin that conversation.

Then, if there's more information that we need to develop specifically for that brand or that broker engagement, we can get working on that. But the broker can start that conversation and get down the road while we're delivering those products.

GARY SANKARY:
I'm curious where you see location intelligence taking the retail real estate business in the next five years.

BRIAN CHANDLER:
AI has changed the way that we are doing business, even in the world of commercial real estate, which has traditionally been very slow to adopt newer technologies.

When a broker is having a conversation, when they're thinking through a site strategy, when they're on the phone, or when they get that email from their client at 11 o'clock at night that says, "Hey, I'm going to stop in your market tomorrow. I'd love to go see these five sites," we have to do better about getting them the insights and information that currently kind of sit inside of a GIS and almost require a GIS practitioner to tease that out and create a deliverable.

I think for our brokers, the expectation is that a lot of that is now put at their fingertips.

What we're looking at doing internally is, we've just rolled out foundational AI within the organization. We're looking at the data that we have and making it accessible to that AI.

It won't be everything out of the gate, but there are definitely certain data products that we get asked to create very frequently, or common requests, that we're looking at figuring out ways to give our AI access to so those brokers can come in, simply ask the question, get the answer, and move forward.

GARY SANKARY:
Awesome. Well, Brian, I really appreciate you being here.

Site selection today is genuinely complex. You've got more variables, more competition, and there's less margin for error. What The Shopping Center Group has built, I think, is really helping clients cut through all of this and make better decisions faster.

I really appreciate you sharing how it works with us today.

BRIAN CHANDLER:
Yeah. Thank you for having me. It's been a blast.

OUTRO:
Thanks for listening to the Esri and the Science of Where podcast. If you like this episode, please share it with a colleague.