Every week we talk to retail-based companies about how to improve their tools and systems for real estate management, site selection and location intelligence. Many are using tools they’ve had for years and they feel it’s time to review what’s now available to them. Others are still using a mostly manual process with critical data floating around in Excel spreadsheets.
There are a variety of reasons to consider a change or upgrade. Among those are better data now available for them, the need for more exposed analytics and modeling, delays in service or requests from support, bottlenecks in the real estate process slowing the team down, and overall sub-par site selection results. Whatever the reasons, tools and offerings have evolved and are worth regular review to be sure you’re using the data and tools best designed to help your teams be successful.
One of the critical components of systems review and potential upgrade always comes down to internal buy-in. Occasionally, a team of real estate research professionals seek out new tools and data, only to find out there is not yet an appropriate appetite internally for a change or increase in investment. Sometimes it’s a simple – “if it isn’t broken, don’t fix it” mentality, and other times it may be “they’re all the same so what difference does it make?” We’re here to help.
TAS has many staff who’ve previously worked client side, managing real estate strategy and making location decisions daily, so we recognize the challenges you’ll face. But we also understand the best ways to make the business case for investment in location intelligence.
Putting things in terms executives understand is critical. Can you properly assess the strengths and weaknesses of your current tools? What do those weaknesses or deficiencies mean to your team and KPIs? One example may be data that’s difficult to update and access – does that lead to missing out on prime locations due to competition for the site? Or does the job of site assessment, whether for a new location or existing store decisions (reinvest, relocate, renew, consolidate, close, etc.) fall on the shoulders of one or a few market researchers who are understaffed and over-taxed? Does that interfere with your ability to make fast, accurate decisions? And how about analytics? Do your existing models offer accurate enough forecasts to be trusted? Can you explain how they come to certain conclusions and what the data being used shows? We talk to many professionals who tell us data integrity and the ability to defend forecasts is more crucial than ever in their roles.
Once you can explain what limitations you face, and how they affect you, your team, and the company’s goals, it becomes easier to explain ROI in clear terms. TAS clients report, on average 3x increase in productivity, 4x improvement in real estate committee approval ratio, 90% reduction in dead deal and related real estate costs, and payback period (ROI) measured in just weeks. They can give us this data because they understood the impacts of previous tools/systems/processes and could measure the differences. An effective argument to support your need for improved data, tools, and even processes is always stronger with associated metrics – even based on just potential outcomes.
There are many types of risks in real estate decision making. Choosing a poor location or making a poor choice on existing portfolio strategy becomes easy to spot in time with sales and/or profits below expectations. For many in retail, these decisions come with multi-million-dollar price tags, and long-term lease obligations. So why won’t some companies invest more in assurances of getting those decisions right? Hard to say – but it’s likely that your executives or decision makers do not fully understand how the right data and tools can help you mitigate these risks. Sharing with them specifically how better, updated, and centralized data along with tools for collaboration can impact these decisions will help. Even better, quantify it further by illustrating how many location decisions don’t meet expectations and presenting how an improvement in those statistics can impact the bottom line.
Another risk element we’re seeing talked about much more often is IT’s interest in security and some of the risks of sharing Excel reports via email. Excel is, and will continue to be, an important tool for us all – but when proprietary data about sales, leases, and more is routinely shared via Excel, many CIOs take notice. Employing a system to reduce the need to share via Excel, done inside those tools, can alleviate some of those security risks, which IT always appreciates.
Growth and bottlenecks
We see this a lot – whether about new store growth strategies or existing portfolio decisions when you have a large number of stores and leases to consider. Many companies face bottlenecks in their key processes due to system limitations or required tasks put on few people’s shoulders.
We can all only do so much in a day, and if you don’t have tools which can both prioritize deals and automate processes, you may be at risk now or in the future. Those risks are two-fold: one missing out on opportunities as the real estate landscape changes more than ever and is incredibly competitive; and two if one or a few key people are relied upon to keep the decision process moving were to leave, what then?
Considering tools and systems to remove the burdens from a few people and to automate much of the analytics around what data and insights will help you determine a good decision on any location. What's more, it's more important than ever as the speed of real estate decision making continues to increase.
Many TAS clients use the tools to quickly identify locations that either don’t fit key criteria or no longer do so under such rapidly changing dynamics, allowing them to focus on the best sites. Removing locations from your pipeline that would never make it through real estate committee early in the process can significantly reduce your bottlenecks and increase efficiencies. We’ve had several clients reduce their pipelines by a factor of 10 quickly eliminating sites that don’t fit, and focusing on those that do, allowing them to secure those locations and improve their portfolio.
'We don't need it'
At TAS, we work with businesses in retail, restaurant, convenience, grocery, pharmaceutical, service, entertainment, and everything in between. A good location strategy supports decision making beyond the real estate department - from helping a marketing team position the brand appropriately, to helping your sales operation determine the right product set for the consumer at each site.
Fact of the matter is that if you’re not using all the tools and insight available to support your decision making, you’re sacrificing competitive advantage – and that alone should be sufficient to get buy-in from even the most resistant stakeholders.
To learn more about how TAS and make better decisions, get in touch today.
Alternatively, check out our webinar on what goes into a good real estate strategy in 2021.