An Extraordinary Way to Increase Sales for Mall Tenants

Data is the new oil; sales data is the pulse of the shopping centre. At a time when tenants are careful about transferring sales data to shopping centres, I would like to share the real case of how both retail and shopping centres did benefit from sales data sharing with malls.

Alexey Knyazev is an advocate of data-driven approaches to shopping centres’ management with two higher degrees in Stanford and Ivey Business School. He is an expert in the field of innovative technologies, IoT and behavior analytics in shopping centres. He has 20+ years of experience in the real estate market and a member of the MECS+R.

ALEXEY KNYAZEV

CO-FOUNDER, CHIEF BUSINESS DEVELOPMENT OFFICER MALLSENSE

Few months ago, a leading European shopping centre developer with five malls and 600,000 sqm under management asked us to help them understand why some tenants of one retail chain had similar performance in two shopping centres, and some of the same-chain tenants performed twice as bad in one location compared to another. With Focus systems, the developer automatically collects tenants’ sales from POS machines and customer movements data inside the malls.

So, the case under research refers to two shopping centres located in one city in different districts: Blue Mall and Orange Mall (names used for illustration purposes). Orange Mall brings less tenant revenues compared to Blue Mall. On the other hand, Blue Mall has higher traffic compared to Orange Mall. Stores operated by the same retail chains in both malls have been analyzed. Some tenants experienced a similar difference (as shopping centres) in sales volume. Some tenants managed to get comparable sales in both malls despite the difference in traffic.

The reason for poor performance for some tenant groups seemed obvious, but why did other groups perform similarly in both malls despite lower traffic in one of the malls?

After identifying a group of tenants to analyze, we started to check hypotheses on possible reasons for the difference in efficiency of the same-chain tenants. The full path to purchase analysis in two malls showed all the metrics in Orange Mall are twice lower than in Blue Mall.

It seems the reason for lower sales is the lower traffic of the mall and tenants. But we decided to go further and analyze the sales structure of same chain tenants. With ABC analysis, we identified the list of goods generating 70% of revenue in stores. It was a surprise to find out that 60% of the most popular offers are missing at the Orange Mall same brand stores with low performance. At the same time, we found out that tenants showing similar performance at two malls had 90% of high-demand items in both stores.

The “problem” group of tenants missed high-demand items, resulting in fewer transactions and lower revenue. The insight was surprising, because the primary analysis showed the similar level of all the metrics: conversion rate, capture rate, avg check, units per transaction, which made us think that could be a reason for different performance of same chain stores in two malls.

Shopping centres developer presented research results to brands suffering from lower sales in Orange Mall. After that, retailers reviewed their product assortment. Within three months, Orange Mall started to fix the increase of tenants’ revenue, respectively rentals’ revenue. Stores with lower shopper traffic often get residual customer attention. Our surveys show 80% of mall traffic are returning customers. If a visitor enters the store to discover there is “nothing to buy here”, he/she will never return. Thus, despite there being an obvious reason i.e. different shopper traffic in the malls covered in our examples, some tenants manage to have identical sales levels! Yet some tenants are plagued by the “vicious circle” of poor traffic. Believing the reason is outside the store (low traffic in the mall), considering no options other than to cut costs in the store, reduce shopper attention and make customers never return. As a result, traffic diminishes instead of rising and the store manager ends up with closing this location.