The way that retail space is priced needs to be changed to focus on data for retailers to be given the best chance of survival in 2021. Spend data, footfall, and brand exposure metrics should all work together to create a fairer payment strategy for retailers and landlords and mirror how online stores operate, states Colliers International.
Matthew Thompson, Head of Retail Strategy at Colliers International, commented: “We have been aware for a long time that data is at the heart of understanding a retailer’s success, but we have never seen that being taken into consideration in discussions around rent and lease structures. Understanding spend data isn’t anything new, but combining this with footfall - dwell time, age and demographic data – and a measure of brand exposure could revolutionise how we define success. This can then be used as a base point for a transparent and open discussion between landlord and retailer on their terms of agreement.”
Colliers argues that this method of ‘pricing visitors through the door’ will create a more level playing field for online and offline retailers, whilst also providing those with an online presence to create a sense of consistency between the two strands of their business. Matt continues: “There has long been an outcry on the unfair deal that online retailers get through avoiding traditional bricks and mortar costs. By introducing a data-first approach we can help brands understand the behaviours of their customers and help find and create a physical space that works for them.
“COVID-19 has accelerated many changes in the real estate industry, and it has thrown into sharp focus the need for a new retail leasing model. Our new proposal for a data-centric approach will help create transparency between landlords and tenants and a flexibility that doesn’t rely on the traditional zoning model. Having a framework of data will help to level the playing field for tenants, and we hope it will incentivise landlords to further invest in a location to raise footfall and, in turn, create an uplift in rental income. This is particularly true in shopping centres and estates where we can have oversight over multiple stores.”