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"PiinPoint has become an integral part of my role as Retail Analyst at Cushman & Wakefield Waterloo Region. The platform allows me to put together professional looking reports and provide clients with the insights they need to make real estate decisions.

I honestly don’t know how I would do my job effectively without PiinPoint."

Jessica McCabe, M.Ed.
Retail Analyst

Retailers are expanding market reach using new models and methods

Retailers are expanding market reach using new models and methods

Tom Peters

-

October 1, 2021

If the pandemic has taught us anything, it’s that consumer shopping behaviour has changed, likely forever. Convenience and safety are now a high priority which has reduced shopping trip frequency and dwell times in the store. We all know what that means - a reduced basket - making the economics of brick and mortar investment more challenging. So retailers have to adapt, and they have!

DETECTING NEW MARKET DEMAND USING DIGITAL REACH

eCommerce has enabled retailers to experiment with following a digital-first approach to new geography development and curating assortments designed with the micro-market in mind.

Rather than investing millions in new brick & mortar developments, retailers can service the market online to validate the opportunity, explore the aptitude for different product lines, and understand potential market size. eCommerce POS data can help identify pockets of demand where a store does not exist and answer such questions as:

  • Is there enough demand overall to invest in a store?
  • If yes, do you sell the same SKUs online as in the new store?
  • Does eCommerce cannibalize the store? Or do eCommerce and brick & mortar compliment each other?

Geo-spatial analysis can help answer these questions and guarantee that future store placement is driven by where their consumer is located and by using small-scale experiments, like pop-ups, to validate the opportunity.  

In addition, the pandemic has accelerated delivery in the restaurant sector to a whole new level. The result is that their trade areas, once defined by proximity to the restaurant itself, have expanded to include territory not usually considered obtainable without a new store location. Not only do network planners need to consider traditional “franchisee” territory rules, but the delivery areas now have to be optimized so as not to cannibalize sales through delivery. For Network Planners, it’s critical that location intelligence tools be configured to include the online data dimension when making expansion or infill decisions.

STORE INNOVATION TO ENGAGE A NEW SHOPPER

There are many examples of how retail is innovating to improve the customer experience and get them back in the store. This trend was already in-flight pre-pandemic.

Consider IKEA, who established a digital-physical hybrid early on by prioritizing online shopping and print catalogues for awareness, and then combined them with experiential showrooms to have a sensory in-store experience.

IKEA has continued to innovate with add-on services to support assembling their furniture at home, such as utilizing the TaskRabbit service app. They have expanded their product line beyond furniture to lightbulbs, food, and appliances, where they can further apply their focus on sustainability through smart tech, energy savings, produce certifications, and so on.

While the IKEA in-store showroom experience is iconic, IKEA has launched smaller footprint design studios where consumers can also replicate that inspiration through personalized design consultations with IKEA experts. This is a way for IKEA to get closer to their consumers without having to build a new flagship location, and at the same time, provide a more convenient and safer way to engage their customers.  

We know the in-store experience is still the gold standard, so retail network planners are being put on notice to find the right places to experiment and validate investments.

EXTENDING THE AISLE THROUGH RETAIL PARTNERSHIPS

Brands are starting to think outside their standard store footprint and instead consider which departments, product categories, and even SKUs are most applicable to each micro-market. For some, this means experimenting with smaller format stores, different styles of real estate, or shared space with other retail partners.

A creative real estate partnership can be seen in Canada with Rexall Pharmacies and M&M Food Market. Their  “M&M Food Market Express” concept shares square footage with pharmacy, health, and beauty products at Rexalls nationwide. Further, Rexall is doubling down on this strategy by announcing in August 2021, a new retail partnership with Staples Canada.

“At Rexall, we are always looking for new opportunities to expand our service offering and provide patients and customers with convenient, accessible products,” said Nicolas Caprio, President, Rexall, “Not only are we enhancing our best-in-class offerings, we are providing customers with quality office supply products that meet their day to day needs.”

The announcement goes on to say “The offering also intends to place dozens of Rexall’s Nosh and Co™. and Be Better™ products on Staples.ca, allowing customers to seamlessly browse items during their online shopping experience. These products and other brand partnership opportunities will also be available in Staples stores in the coming months.”

And we have all recently seen the announcement by HBC to launch Zellers pop-up store inside HBC flagships.

‍Identifying complementary businesses like these is a strategic retail decision of course, but then choosing which markets to expand into with these creative new approaches are informed by location insights. Not every store location will be ideal for retail partner to enter. So the key here will be to identify and prioritize the store-brand combinations that “match” to the intended trade area profile. Data sharing between the organizations and having an understanding of the local market dynamics is critical to getting it right.

Summary

All these trends were happening already, pre-pandemic, but have only accelerated as a result of the pandemic. Whether you’re testing some ethical product lines, experimenting with store formats or retail partnerships, or finding new market growth through eCommerce penetration, these changes impact the purpose of the real estate space itself, and by extension, how real estate teams organize their micro-market insight to drive network performance.

PiinPoint Webinar

‍Please join us at our upcoming virtual webinar - Network Planning for 2022 and Beyond on October 14, 2021 from 11am-12pm EST. We will be sharing some trends in retail real estate network planning uncovered in our recent Future of Market Planning research paper as well as hosting a special guest speaker, Phil Besner, VP Real Estate Planning at Sleep Country Canada.

You can find a sign up form and a detailed agenda on our website.

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