Once a sign of a prosperous community, many of today’s malls face strong economic headwinds. But that doesn’t mean the mall will be relegated to the history books. In fact, there may be a new chapter in the mall’s story. As The Wall Street Journal recently reported, a diverse group of players are investing in retail locations, or buying retailers outright, because they see an opportunity to shape the future of brick and mortar. But who will win that future?
Unlike in years past, where investors often banked on the cyclical nature of real estate, the winners this time around will be firms that understand how to leverage data to better analyze the connection between geography and consumer behavior. Yes, location still matters, but just as important is what you know about that location and the people who are likely to frequent it.
You can find millennials, but you need to take that data with a grain of salt
More than any other age group, millennials are attached to their mobile devices. Therefore, it stands to reason that retailers and mall landlords that focus on mobile location data should be able to identify Millennial consumers and better understand their behavior. But as with any generalization about millennials, there’s an important grain of salt.
Mobile location data provides a wealth of touch points for inferring the age of the user, but even if the data looks highly certain, the conclusion is still based on inference. The lesson: if you’re looking to align your location with millennials, start by looking for restaurants, stores, and other establishments that appeal to them, then look to the data to confirm your assessment and deepen your insights.
Deeper insights on cannibalization
A commercial lease can be a risky proposition for both mall landlords and tenants because even a good location can turn out to be a poor choice, if a strong competitor turns up within the trade area. A nearby Bed, Bath, & Beyond, for instance, could be bad news for a mall with stores that cater to household needs. But of course, it’s not a given that the Bed, Bath, & Beyond represents a cannibalization threat just because it’s in the area.
Using mobile location data, mall landlords and their tenants can see the true patterns and preferences of the consumers in the area. Perhaps the Bed, Bath, & Beyond attracts the people in the neighborhood around the mall, or maybe that particular Bed, Bath, & Beyond underperforms for reasons that are specific to its location. Another possibility is that the stores at risk of being cannibalized by Bed, Bath, & Beyond draw customers who come from outside the neighborhood because the mall represents a one-stop shop for their household needs, clothing, and cosmetics.
The critical thing mall owners and tenants need to understand is that it’s impossible to adequately assess cannibalization without knowing how consumers in the area behave. By looking at mobile location data—as opposed to just noting the competitors in the area—landlords and tenants gain deeper insight into the threat of cannibalization, and with those insights, they stand a better chance of thriving.
Mall marketing will become more precise
The next time you open your mailbox, you may notice that little has changed in the way mall owners market their location to consumers. For the most part, the strategy is to carpet bomb every household around the mall with direct mail and hope that something about the ad resonates with the person reading it, assuming of course, that the mailer doesn’t go directly in the recycle bin.
By turning to mobile location data, mall owners and retailers can add insight and depth to their understanding of the consumers who are likely to visit the mall. They’ll know, for instance, how many of the people who visit a given location actually live within a few miles of the mall, or if there’s an attraction that draws people from greater distances. Likewise, mall owners can get a better read on traffic density, day-parting, and which locations in the neighborhood around the mall are popular with consumers so that they can incorporate new retail and dining trends into their long-term planning.
But the real advantage of mobile location data is that mall owners can take advantage of the same mobile marketing campaigns their tenants are using. eMarketer predicts that brand marketers will soon shift half of their digital budgets to mobile, and so mall owners would be wise to follow the lead of their tenants. Rather than trying to get consumers to download an app at the mall or log onto WiFi so the mall can serve visitors ads, the focus should be on using mobile marketing to attract more customers to the mall in the first place.
Eric Aledort is chief business development officer at UberMedia