Wikipedia defines Proptech as: "the application of information technology and platform economics to real estate markets". While many associate Proptech with technology that supports Smart Buildings, at Placewise we define Proptech as any technology supporting physical real estate. Today Proptech for retail real estate is pushing beyond the generally accepted boundaries of the past, opening up countless opportunities for shopping centres to redefine the economic fundamentals of the industry while at the same time providing shoppers with the convenience and personally tailored experiences they need and want.
The demand for Proptech from retail real estate has seen a significant increase during the Covid-19 pandemic. Technology gives hope and solutions in a time where traditional shopping is being further challenged and is a starting point from which to reimagine the role of the shopping centre and begin building the digital foundation necessary for their future health.
There are three main areas where we have seen a heightened level of interest from the industry over the last six months:
1. Crowd Management - Socially Distanced Shopping, Shopping By Appointment
2. E-Commerce - Digital Sales and Fulfillment, Click & Collect, Curb Side Pick-Up
3. Tenant Relationships - Communication, Engagement, Support
Whether imposed by government, or driven by socially responsible real estate owners, the goal of discouraging a crowd is obviously opposite the norm for retail destinations (unless you are an ultra-luxury brand). So, the overall technology needs to meet the requirements of social distancing, while at the same time apply a level of logic that maximises the total footfall potential. In the early stage of the pandemic we were involved in projects with development deadlines that were counted in days. The goal was simply speed of delivery, and minimum viable product solutions by default were sub-optimal. With short deadlines comes a lot of creativity and also some healthy cycles of trying, failing, and iteration. In effect early stage solutions created bottlenecks where people had to queue, and queuing is not good for social distancing.
Advanced footfall counters, heat maps from wifi routers etc. have existed for a long time. The problem however is that no solution in place captures anything close to 100 % of individuals on an identified basis. At best they give indications of crowds on a timeline (and normally not in real time), but provide no opportunity to manage crowds with a high level of accuracy. As a substitute several have ended up running their mall as an event; shoppers sign up to a specific time slot to visit.
The ideal crowd management system for malls will give shoppers a more dynamic and engaging experience with the mall. Imagine that everyone now visiting your mall has to use an app, normally not an ideal requirement to a shopper, but maybe needed under current circumstances. In the app there is live visualization of crowds and a count up to maximum number of visitors for specific sections of the centre. This feature should be combined with promotions from tenants and gamification aspects towards shoppers, all pointing to the periods where there is availability for more visitor density. And in parallel the centre will be building an amazing consumer database.
The second area we are involved in, which is of very high interest with some of the industry’s thought leading shopping centre owners, is mall-enabled e-commerce. How do shopping centres engage in this? and what is the value proposition for tenants and shoppers? Having some kind of e-commerce offering on behalf of a mall is the difference of being in business or not, under certain and recently experienced situations. As an example Placewise is now engaged in a project for a substantial new development in Europe where the ambition is that all products in the mall across all tenants are searchable and for sale in the digital channels of the mall. The products are offered for pick up at the mall or for home delivery.
From a proptech perspective the challenges with this ambition is leaning more towards data access and quality, and operational processes than technical. But new technology components still need to be developed to enable an end to end solution. The high level areas that need to be covered from a processing and customer journey perspective are; product data from tenant, stock data from tenant at location level, storefront, shopping cart, payment, fulfillment (pick up and home delivery), services for returns and settlement between shopping centre and tenant (dependent on chosen business model). All in all, complex matters that are typically solved between a handful of partnering companies.
As an entry point to e-commerce we believe a robust digital consumer database should be a first priority. Without a digital consumer database the mall will have to spend substantial marketing dollars to fuel traffic to generate a significant level of online purchases. With a digital consumer database, typically reaching 10 - 50 % of unique annual physical visitors and beyond, the shopping centre has as strong a value proposition towards tenants in the digital space as it does for those with physical stores: We will provide digital shoppers to our tenants as we provide physical shoppers at the shopping centre.
Get all this right and we believe a healthy three-year target should be that a shopping centre should generate 10 - 20 % of the total sales from online sales. Achieve that and your positioning for the next 10 - 20 years is managed!
Connecting shoppers with their favorite brands and retailers is the core of a shopping center’s business. However, perhaps equally fundamental is the relationship between the landlord and the tenant. Covid-19 highlighted a real need for retail real estate owners and management companies to strengthen their relationships with their tenants and provide more efficient communication solutions.
Whether during a crisis, or under normal operating conditions streamlining the operational back and forth that happen between the tenant and center management like: forms, permissions, waivers, repair requests, meeting schedules, security alerts or even financial reporting means more accurate and timely information for shoppers.
Just as the boundaries for our definition of Proptech are expanding, so too are the ways in which Proptech can unlock future potential for shopping centre owners. Shopper behaviour during the pandemic has provided us with a glimpse into the future. Not exactly a crystal ball, or a map, but rather a compass that can lead us in the right direction. A more holistic shopping experience for consumers, that is less about “channels”, online vs. physical shopping, and more about the ability to choose the details of purchase and fulfillment. For shopping centres it’s about connecting with shoppers, “owning” the relationship and embracing the financial potential of monetizing beyond the square meter.
Here’s to the future supported by Proptech!