I had the opportunity to participate in QuantumListing’s most recent webinar featuring Placer.ai, a technology startup that uses anonymized, aggregated location data from cell phones to find patterns in foot traffic behavior. The company’s VP of marketing, Ethan Chernofsky, explained how the data Placer.ai generates can be used to find opportunities and analyze trends in retail’s recovery from the COVID-19 shutdowns. “As the saying goes, people vote with their feet,” said Chernofsky. So, what exactly do these “votes'' tell us about the prognosis of the sector’s future?
Looking at grocers, Placer.ai’s data found that while sales overall increased, it was thanks to bigger basket sizes, not more visits. In terms of quantifying data, Placer.ai counts a visit as anything that lasts longer than five to seven minutes. Visits that do not meet that threshold are not counted as foot traffic. I was curious how curbside pickup fits into the equation, and Chernofsky explained that the length of the visit determines whether it counts as a sale from foot traffic or whether it’s lumped in with online sales. Chernofsky mentioned that online orders and curbside pickup sales surged upwards of 500 percent initially, but then they tapered off back to “normal” levels, indicating that once people felt comfortable enough to do so, they preferred shopping how they normally would, in store.
In addition, Placer.ai’s data found that niche grocers like Whole Foods and Trader Joe’s did not perform as well as all-encompassing chains, like Publix, Kroger, and Albertsons. Chernofsky attributed this to consumers wanting to get all their shopping done in just one trip, and chains tend to offer more variety and cover the basics whereas Trader Joe’s might be shopped more for specialty items. Similarly, the times for high foot traffic changed drastically as much of the country transitioned to working from home. More people were shopping on weekdays during the morning, rather than weekends. As remote work policies continue to gain traction, these trends could likely continue.
I asked Chernofsky about some of the trends within some of the other areas of retail. Also influenced by the work from home phenomenon was a surge in sales at office goods stores compared to pre-pandemic levels. As home offices become increasingly important people want to make sure they have what they need to be productive there. The need to be productive at home also spurred on DIY projects and could mean opportunities for the home improvement sector to grow. Similarly, furniture stores are doing well because people are spending more time at home than ever before.
Other opportunities for growth include big box stores like Walmart and Target partnering with direct to consumer (DTC) brands. By incorporating DTC brands into retail properties, “you get a more differentiated retail experience,” said Chernofsky. “Lots of things can live in harmony with each other and don’t have to directly compete for business,” he explained. He thinks brands like Warby Parker and Everlane that began as DTC now have the opportunity to expand into these partnerships with other stores, but also in retail spaces. As I discussed in my recent retail series for Propmodo, malls and centers are looking for tenants with staying power, and popular DTC brands often do a good job of securing a core customer base without relying on location as a factor.
I also asked Chernofsky to share some of the interesting data in terms of retail apparel trends. Plus size retail, or extended sizing, is an area to watch. “I think plus size is the most exciting space. It’s a growing market that‘s incredibly underserved,” said Chernofsky. He also believes the athleisure category has tremendous potential. “Nike and Lululemon have such a strong brand affinity, and their success will have massive ripple effects,” he said. They also were seeing sales grow before COVID.
With the foot traffic “votes” of over 30 million Americans, along with advanced algorithms to process this data, Placer.ai is able to determine things like trade area analyses, customer journeys and demographics, cannibalization, benchmarking competition, void analyses, and market share. There’s a difference between data gathered from what people say versus data gathered from what people actually do. Behavioral data provides facts rather than opinions, which allows for a more accurate understanding of what is taking place. In fact, Placer.ai’s location data was considered the most accurate when compared to actual transaction data in the U.S.
Placer.ai’s data reflects the obvious challenges the industry faces, too, but as some stores close, it provides void opportunities for others to grow. In the short term, people want to get out and do the things they’ve missed, but compared to long term data, sales are obviously still down year over year. This is to be expected. Commercial property owners with retail tenants should determine on a property by property basis what they’re missing, but they should also focus on macro trends within their respective geographical areas and within the sector as a whole. Looking at layers of behavioral data can help landlords identify opportunities and make decisions based on facts, rather than sentiment or opinion.
Click HERE to watch the replay from the webinar, Data-Driven CRE for the Retail Recovery.
About the author: Sam Brown is the assistant editor at Propmodo. She has an M.A. in Writing from Rowan University.