Retail analytics: Big and Getting Bigger

LAS VEGAS - Viewing the market one-dimensionally can be fatal for retailers in today's rapidly changing environment.

Though retailers don't have a crystal ball to determine the best location for a new store, a new technology at least provides them data - scads of it - to make an informed decision.

Dimension - a location analytics platform - was shown by developer CBRE Inc. at a major retail and real estate convention last month in Las Vegas.

CBRE wants to have this interactive tool for retailers in all of its U.S. markets by the end of this year.

CBRE spokesman Kris Hudson said a handful of Philadelphia-based retailers have already used Dimension in some form.

The service combines multiple data streams, public, proprietary, and vendor-provided, and creates digital maps to allow retailers to see what specific locations best meet their needs.

"Think of it as Money Ball meets retail-site selection," said Brandon Famous, CBRE's senior managing director and head of retail tenant representation in North and South America.

The maps include things such as population, neighborhood income, and store sales in relevant geographic locations.

Common applications for Dimension include:

Determining the best locations to open a store;

Finding the proper merchandise mix;

Identifying which stores to close or revise;

And locating retail voids by specific retail categories.

Besides retail, Dimension can be applied to office, industrial and other property.

The goal is to reduce the risk for a retailer of failing at a given site.

Dimension arrives as online shopping continues to batter brick-and-mortar retailers. More department stores announced closings last month amid dismal first-quarter earnings. Opening a new retail store is more risky than ever.

Moody's senior analyst Christina Boni wrote in a May 19 note: "We expect more department stores to reduce their footprint by closing stores, building smaller boxes and subleasing space."

In September, Macy's announced that it was closing 40 stores, and in February, Kohl's Corp. said it was shutting 18.

"It's not always about expanding, but understanding what you currently have," said Famous, who is based in CBRE's Center City office at Two Liberty Place. "It's when a retailer looks at Philly and asks, 'We have 40 stores in the region . . . and do we really only need 30 stores?' Then, the retailer positions itself accordingly. Dimension helps it understand the existing market.

"In the past, it was a very basic methodology based on census data," Famous said. "Dimension is much more analytical and involves more variables."

As in about 150 of them, including psychographics, the makeup of a retailer's customers, and prism segmentation, which segments neighborhoods by lifestyle, such as how Northern Liberties is heavy with millennials.

While the software is less than a year and a half old, it began rolling out in March 2016. Retailers in Philly began using it a month later.

Dimension is a propriety CBRE technology that is free to clients. The firm represents about 1,200 retailers nationally.

A large Canadian restaurant chain is using Dimension to help it expand in the U.S., said the firm's director of real estate. She asked that the restaurant chain's name not be disclosed for competitive reasons.

She said Dimension narrowed down more than 300 U.S. metro areas to the top five, and then created hot spots out of top five metro areas based on such criteria as population, average income, employment, and spend per visit.

Michael Hovsepian, vice president of real estate and development at Urban Plates, a restaurant chain that started four years ago near San Diego, is adding three more locations on the West Coast, and looking to launch on the East Coast.

It has used Dimension to narrow down sites to three locations for the first phase of its East Coast expansion: King of Prussia, Ardmore Suburban Square and Center City.

"It's been very helpful," Hovsepian said while scouting sites in Virginia, which Dimension had picked out. "We have a certain customer that we are looking for. We plug in all that information, such as someone who is a college grad, is health conscious who might shop at Whole Foods or Wegmans, and has an upper-tier income. CBRE will punch in all that information and create heat maps. Where the areas are most red on the maps are our hot spots, where we should consider locating.

"I go out to those sites and see how the competition - other restaurants - are doing and how close they are [to our site]. My position requires me to handle the whole East Coast. It saves me a lot of time."

Hovsepian said his chain was hoping to open here in nine to 12 months.

At last month's uber retail meeting, ReCon at the Las Vegas Convention Center, Marko Haarma, CBRE's director of Geographic Information Systems, showed part of Los Angeles using Dimension on a screen.

"We can provide a story map and tell the story of a market," Haarma said. "All this data is rolled up in one platform - from credit card data to mobile data; housing data, crime data, retail information."

"Clients today expect you to understand their business, and not just the retail estate market," said Peter Patnaude, CBRE's managing director for location analytics. "The technology is really making Big Data a reality within the commercial real estate world."

sparmley@phillynews.com

215-854-4184 @SuzParmley