2024-04-06 07:05:58
When executives at the menswear retailer Untuckit were looking at locations for a new Long Island store, they initially gave up on a location they thought was too close to its existing store at Roosevelt Field Mall.
But then someone at the company looked at data received from cell phones, and identified that there were two locations that were attracting customers from opposite ends of Long Island. This convinced him that if they opened a store in the second mall, it would not cause cannibalization of the existing store. Executives signed the contract, and the store is expected to open at Walt Whitman Shops next month.
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This is one of at least 14 stores that the Untuckit chain plans to open this year. The company, which relies heavily on technology, uses cellular data and other information from the technology company Placer.ai in selecting locations, says Chris Riccobono, the company’s founder. “It allows you to see the demographics,” he says. “It gives another level of security.”
combine information
Retail chains opened more stores than they closed in 2023 – for the third year in a row. According to the companies’ announcements, scanned by the consulting firm Coresight Research, the wave continues into 2024, and the rate of vacant spaces has fallen to a low across the US.
This expansion relies on an increase in the sophistication of information drawn from phones and other location information, which allows companies and property owners to identify points with successful stores more precisely than in the past. Pings and GPS signals from shoppers’ phones teach retailers not only how many people are in the mall or strip of stores each day, but also what time they arrive, how long they stay, where they shop, and how many times a year they are likely to return. The retailers add their information, including customer addresses and shopping preferences, as it emerges from online shopping and customer clubs.
“There is a lot of information with the owners of the areas and with the retailers today,” says Josh Safin, president of the real estate services company RetailStat, “much more than there was 10-20 years ago.”
Many retailers purchase this information from third-party companies such as RetailStat, whose clients include property owners, brokers, and more. Food store owners, for example, estimate how much their sales will reach if they open a store in a certain location. “If the projected sales volume is not high enough, there is no deal,” says Safin.
Digital tracking
The use of information is not new. Retailers used to rely on Central Bureau of Statistics data to choose store locations. Starbucks looked at where it sent the most ground coffee when it expanded to the East Coast in the 1990s, says David Fierstein, managing partner at TSCG, who helped the coffee chain sign its first contract in New York City.
Retailers also used to hire measurement companies that stationed workers in parking lots and street corners with clickers, counting cars and pedestrians.
Companies that grew in the digital age, such as Warby Parker and Allbirds, analyzed their customers’ orders and shipping addresses, and decided where to open their first physical stores in the middle of the previous decade. Recently, retailers have started to collect information about the habitual traffic.
The Madison Reed company, which began selling its hair coloring products online in 2014, opened a physical store in 2017. It uses the knowledge it has gained about its customers and the mobile phone analysis it receives from Placer.ai to make decisions about new locations.
Placer.ai collects information from tens of millions of users on mobile devices. It gave Madison Reed executives ideas for locations they wouldn’t have thought of, and alerted them to others, says founder Amy Art.
Art says she doesn’t just rely on the information gathered in the field. She likes to sit on a bench in a shopping center and watch the passers-by for hours, before signing a contract at a new place.
Retail chains and brokers agree that mobile devices provide more reliable and accurate information than in the past. This helps chains feel confident that a particular store will succeed before they sign a long-term contract and invest millions of dollars in construction, says Angie Solanki, national director of retail services at consulting firm Colliers.
Machine learning and AI are expected to further accelerate the process of opening stores. RetailStat is working on training artificial intelligence with the information it has, where stores have opened and where they have succeeded or failed. “We are just at the beginning,” says Safin.
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