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Retail Strategy Is Changing Fast: What Footfall, Sales Data & Experience Reveal · The Retail Podcast

• 0:22
  Hello, welcome back to another fabulous edition of the Retail
• 0:25
  Podcast. Now the following guest, I think
• 0:29
  I was scheduled to meet at Mappick in December, which for
• 0:32
  those who may or may not know, Mappick is one of the sort of
• 0:36
  foundational events for organisations, companies,
• 0:40
  development companies that own massive portfolios of retailers,
• 0:44
  whether that's shopping malls or big property developers.
• 0:48
  And I'm happy to introduce Mark Bruce from Conexion.
• 0:52
  Mark, hello. Hi, Alex, nice to meet you.
• 0:54
  Lovely to meet you. Welcome to the podcast.
• 0:56
  So really quickly, before we get stuck in, do you mind giving us
• 1:01
  an overview of who you are and then maybe what Conexio does?
• 1:05
  Sure. So yeah, I'm the Data and
• 1:07
  insights Director at Conexio. My background consists of many
• 1:10
  years on the shop floor retailing fashion for for a
• 1:14
  number of brands including River Island and Primark and Republic.
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  So really operating stores. From there I moved, as some
• 1:21
  people say to the dark and crossed over to be a landlord
• 1:25
  working for British Land, assisting in managing Meadowhall
• 1:28
  up in Sheffield and then moved on to looking at data and
• 1:31
  insights across the majority of their portfolio, including
• 1:34
  retail, parks and offices. I'd worked with Conexio for many
• 1:37
  years as they were a provider of technology for us, a British
• 1:42
  Land. And finally, I was convinced to
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  join last year as Data and Insights Director to really head
• 1:48
  up the product development side now of our solution.
• 1:51
  OK, so fantastic. So I guess just just before we
• 1:54
  get into connection with your old sort of old retail or
• 1:58
  property manager mindset, what are the key insights that you
• 2:02
  would be looking for? What?
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  What is it that sort of helped you in your job?
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  Well, obviously, yeah, it's showing my age.
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  It's changed dramatically and continues to change at pace over
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  the years. Certainly in the last couple of
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  years working when I was at British Land, the challenge was
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  there's a lot of data and it's hand how you handle that data
• 2:22
  and how you combine that data to generate the insights.
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  But also work with the tenants very much hand in hand try and
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  dispel the old relationship of landlord and shopkeeper, right?
• 2:34
  The the right way to to manage an asset now is to have a very
• 2:39
  collaborative relationship with the tenants, share data, whether
• 2:43
  that be information on how the property's performing around
• 2:46
  footfall and trends or sharing sales data so that both the
• 2:51
  landlord and the tenant are on the same page and can work
• 2:54
  together. Yeah, around peaks and troughs,
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  a lot of collaboration and how. Did you find the transparency
• 3:00
  there in sharing data in terms of retailers openly gonna you
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  know share their sales data in terms of or put full data?
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  Did you find that they were open to doing that?
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  Initially, no, initially it was very much sitting across cross
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  purposes on different sides of the desk saying I'm not telling
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  you that because you'll increase my rent and a landlord say,
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  well, I'm not telling you my foot falls down because just
• 3:23
  going to complain. So it took a lot of work to
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  change that mindset. And I think the key term I
• 3:29
  always use was very much treating the tenant as a
• 3:32
  customer, convincing them and proving to them that the data
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  that we had about the property could add value and did add
• 3:39
  value to the way they ran their stores.
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  And then lastly, you know, again, collecting that data and
• 3:44
  demonstrating to them how we use that data.
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  It wasn't about just increasing rents.
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  It was about understanding when they were struggling, we were
• 3:52
  able to intervene with additional marketing and
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  thought. And lastly, I think the other
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  thing that's changing now is there's a lot more turnover only
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  rent models coming into the market where what that means is,
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  is actually the landlord and the tenant are both equally as
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  interested in the sales performance of that unit.
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  And that naturally makes it an incredibly collaborative
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  relationship. So it's, it's certainly got
• 4:16
  easier and the majority of our customers now are collecting
• 4:19
  sales information using our systems from retailers to yeah,
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  are you? Predominantly UK based or you
• 4:25
  focused across the world? No, we are across the world.
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  So we operate in pretty much all of Europe, America, Asia and
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  we've got, you know, over 2000 properties now globally using.
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  And is there a sweet spot in terms of the size of properties
• 4:42
  that you help or support? No, not really.
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  We manage and support everything from a retail part that's got,
• 4:48
  you know, 4 units all the way up to super regional asset such as
• 4:53
  the likes of Meadowhall, which is what, 300 stores and also the
• 4:57
  Westfields in London and URW across the US So yeah, it's
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  completely scalable and can adapt quite quickly.
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  And so just going into the sort of what you're what, what's the
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  data telling you? So I'm really, so you must meet
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  obviously with the executives from these retailers, you know,
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  and when you're having these negotiations or you're talking
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  about the data, yeah. What are the trends that you're
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  seeing or what, because you, you know, this, the, the industry is
• 5:21
  going through a sort of seismic transformation.
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  And what's interesting is whether you're in the UK or
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  Germany that you actually mean 2 completely different things,
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  right? Or Serena using, I know that in
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  terms of the Spanish physical use of retail to digital, which
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  in the UK digital is increasing physical.
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  Well sorry from old numbers I was aware of was the claim, but
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  what's the data telling you? It's incredibly fascinating.
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  So I mean, every, every region, property type and even category
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  has its own particular cycles and trends.
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  But I think what's fascinating for us is, is, is the
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  commonality across the world in terms of some of the key
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  differentiators. So, So what we've certainly seen
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  and I think you know, certainly post COVID is the consumer now
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  absolutely wants experience. So they want to get out, they
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  want to socialise, they want to meet people.
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  So experience LED leasing and certainly, you know, operators
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  are trading very well, value LED operators.
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  We're also seeing, you know, again, grow and that's across
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  North America, Middle East, APAC, it's.
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  And it's exact people like Primark.
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  When you say value, is that what what you're thinking?
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  Like, yeah, yeah. And I think I think that's,
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  again, you know, the behaviour of the consumer.
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  I mean, if there's a lot of uncertainty in the world at the
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  moment, which gives a rise to a lot of consumer caution.
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  And when consumers are cautious, they very much look for value.
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  And we define value very much as two things.
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  So value is either price. So they want something, you
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  know, that's, that's really gonna, you know, hit the price
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  point. They're looking all the value
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  comes in. It may be a premium brand that
• 6:56
  has very strong ESG credentials. It's local, they're interested
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  in where it's sourced. So the good news with that is
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  it's very evident. The bad news is there's a mid
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  market and the middle market is where we're seeing a lot of
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  exposure and a lot of failures. And interestingly, that's not
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  just in the UK, that's that's globally.
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  So yeah, so that mid the mid market is really the best way I
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  describe it is it's not just that mid market price point, but
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  it's mid market market being a brand that is struggling to
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  differentiate between the value and the premium or as I call it
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  value and value. So yeah, that's that's where
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  we're certainly seeing the struggle and the and the rise of
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  that experience LED market, whether that's, you know, gaming
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  events, restaurants, you know, people want to socialise and
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  that's continuing. And does that include F&B as
• 7:46
  well then? Yeah.
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  Does your data then look at how, I mean we'll get into in the
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  next half the got two more questions and we'll get into
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  that how and what you do, but how does F&B fit into that?
• 7:58
  F&B fits into it incredibly well.
• 8:01
  Yeah. So F&B very much is again
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  around, fits into a, it's the experience LED.
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  So, you know, more and more consumers are wanting to dine
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  out and socialise. We're seeing the evening economy
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  growing in the majority of markets and driven by that
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  social element. But again, you can also see that
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  polarisation within F&B. So again, value LED doing very
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  well, whether that be on the grocery side with the likes of
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  the Littles and the Audis or very much premium LED where
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  people are, you know, willing to maybe go out once a month rather
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  than every week. But that once a month event
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  would be a real experience LED, maybe linked into another
• 8:42
  activity as. Well, a final question and then
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  what we'll we'll get to what you guys do.
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  I'm looking for like a personal perspective here.
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  One of the things that I, I think retailers in general, the
• 8:53
  industry struggles with when you talk about experience, is this
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  return on investment as in return on square footage.
• 9:00
  Yeah, If I do an experiential element, my return on square
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  footage is potentially not because I'm not going to sell
• 9:07
  that much, right, but I'm going to give my customers a Fanta.
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  How do I look at that? How does the, how does the data
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  transpire? What's your, what's your view on
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  how retailers should be looking at experiential LED?
• 9:17
  That has potentially a low return on investment, but it's
• 9:21
  probably fantastic for the brand, you know?
• 9:23
  Yeah. I think you've almost, almost
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  answered the question there. So, yeah, I think an experienced
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  LED leasing deal typically, yeah, will, will generate lower
• 9:31
  turnover. Yeah.
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  But equally, it's about looking further than just the sales
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  turnover and looking into the actual cost to operate and the
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  affordability for the tenant. And you know, the retailer is,
• 9:42
  is the expert in that. But what experience LED retail
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  does is it's ultimately increasing the attractiveness of
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  the asset. Yeah, it's driving visitation at
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  other times of day, which is always a positive.
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  And secondly, it's pretty much a known fact that anybody coming
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  to a destination for an experienced LED activity will do
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  something else while they're there.
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  So they're likely to engage in. As a retailer, that's
• 10:06
  potentially I'm not going to see the value in that right The the
• 10:10
  the the owner will, but I won't. The landlord will, but I won't.
• 10:13
  Yeah. So it's about for the retailer,
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  it's about making sure it's the right space and the
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  affordability is right. And that's generally what we're
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  seeing now. So if you think of good example
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  in the UK, the the the old Debenhams units, which are
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  typically in large spaces, the vast majority are getting
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  occupied now by lease LED, sorry experience LED retailers that
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  are optimised space. And it's a big space.
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  It's an expensive piece of real estate, but the experience LED
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  retailer, you know has done their sums, they've got the
• 10:44
  affordability and they know they can occupy that space.
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  And perhaps what the the landlord is doing is maybe
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  working on less of a turnover related deal linked to sales,
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  but actually linking that back in to perhaps footfall or
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  affordability or purely on a base rent metric.
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  So it's about adjusting to that different retail scenario.
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  OK, cool. So moving on to connection.
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  So how are you? Like, what is your proposition?
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  How do you help retailers? Well, what we've got now is
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  we've got the ability to assist in collecting data from the
• 11:18
  actual retailers themselves. So we use a mixture of AI, app
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  based collection, finance, linking in terms of integration
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  with landlord systems, etc, to make sure that collecting the
• 11:30
  data is as quick and effective and as accurate as possible.
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  So in a number of cases, we're collecting data every single day
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  from hundreds of tenants within one property.
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  And what that does is it means that unlike the old traditional
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  method of managing an asset where you would possibly wait a
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  quarter before you received a turnover certificate to
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  understand how the retailers were trading, our customers now
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  can view this daily and spot trends very, very quickly.
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  And then on top of that sales data, we also connect with
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  footfall information and also lease terms and lease
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  information as well. So the simplest way to explain
• 12:09
  it is imagine having a Mao plan that is updating every day
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  showing you exactly where your risks, opportunities, maybe
• 12:18
  problem categories, problem areas, public brands.
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  It's completely live data that's feeding our system.
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  And it means you can spot volatility very, very early
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  before it becomes a problem really.
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  So before the retailer rings you and says I can't afford to
• 12:34
  operate here anymore, you know, I'm gonna shutter the store and
• 12:37
  create a void. Yeah, you would know that months
• 12:40
  in advance. So therefore, you can step in
• 12:43
  and desist or, you know, perhaps, you know, come up with
• 12:46
  an alternative strategy knowing that that is going to be a
• 12:49
  problem in the next 6 to 12 months.
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  And so just taking a sort of going back because obviously I,
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  I, I think I sort of confused the, the retailer and the
• 12:59
  landlord. This is, this is for land
• 13:01
  owners, right? This is for property owners,
• 13:03
  shopping centres and malls as you, as you mentioned.
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  So when you think about like a property like Meadow Hall and
• 13:09
  maybe, well, I don't want to just take a typical customer.
• 13:13
  Yeah. How much integration do they get
• 13:15
  with their tenants? Like are you?
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  Because for that data to be accurate, I need a high
• 13:20
  propensity of my tenants to allow me to get that date.
• 13:24
  Like, yeah, what does that normally look like?
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  It varies across the world, all right?
• 13:28
  Certainly. I mean, in the UK we've got
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  anything from 70% to actually now 100% of retailers actually
• 13:35
  providing the data. That goes back to really what we
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  were discussing earlier around we've seen a shift.
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  I think retailers are generally more more confident in providing
• 13:43
  that data because they understand the benefit to the
• 13:45
  landlord and equally the benefit back to them.
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  In Europe, it's, it's even higher.
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  In Europe, a lot of it's actually a mandatory part of the
• 13:51
  lease is actually to provide that information.
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  And again, the same in the US. So you know, in a lot of cases,
• 13:57
  it's, it's almost every retailer who's providing this data to the
• 14:02
  landlord. And in a lot of cases is now
• 14:04
  what we're assisting with is actually how we provide data
• 14:07
  back to the actual tenant. So whether that be that footfall
• 14:10
  information for the property or benchmark it.
• 14:13
  So showing them how they're performing against down to
• 14:18
  highlighting particular days of the week where they're not
• 14:21
  performing. So they can look themselves at
• 14:23
  some operational changes internally within that unit,
• 14:26
  even benchmark their properties. So they might be working with
• 14:30
  one landlord where they have 7 properties across France and
• 14:34
  they can very quickly highlight which of their properties is is
• 14:37
  out of kilter with the rest of their portfolio.
• 14:40
  That's fantastic. What's the one question that
• 14:42
  land owners should ask when they come to talk to you?
• 14:44
  But they don't. I think it's, it's, it's how to
• 14:47
  measure retail performance. So retail is always being
• 14:51
  relatively data rich. There's always been a lot of
• 14:54
  data, but it's never really been joined up.
• 14:57
  And as we say, the, the, the sales performance of a tenant is
• 15:01
  sometimes masking what's going on.
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  So you could have a retailer that looks on paper to be
• 15:06
  performing very, very well and he's reporting growth year on
• 15:10
  year. But until you actually
• 15:11
  understand how many people are visiting the actual unit and
• 15:15
  also the costs to occupy that space and the trading
• 15:20
  performance per square foot, it's not to lift the lid and
• 15:23
  truly analyse it that you realise that those sales results
• 15:27
  are a little bit of vanity. And actually the sanity is under
• 15:30
  the bonnet where you say actually this isn't good and you
• 15:33
  need to interview here. And the interventions so
• 15:35
  important because you know if if the retailer isn't performing,
• 15:40
  it's clearly not resonating with the customer, therefore you've
• 15:43
  not necessarily got the right brand or the right mix within
• 15:46
  that property itself. That's fantastic.
• 15:48
  And is there one question I should have asked you that I
• 15:50
  haven't? I don't think so.
• 15:52
  I think, I think for me, I think it was there was one question
• 15:55
  around what we saw over peak in terms of the golden quarter.
• 15:58
  And I think it was a really, really great question because I
• 16:01
  think the key for us is that the trends we saw over the golden
• 16:04
  quarter, we were able to spot months in advance.
• 16:08
  And that's the key. You know, we, we, we certainly
• 16:11
  looked at the data over the golden quarter and it was, you
• 16:13
  know, it was a relatively successful Christmas certainly
• 16:16
  at the UK. But the key point here is that
• 16:18
  actually we saw distress a long time before that.
• 16:22
  So use examples like the body shock, whatever it's Smith's,
• 16:25
  Claire's, we can we can rewind our system probably 18 months to
• 16:29
  two years and show that we knew then that those retailers which.
• 16:33
  Footfall. You'll get the footfall numbers
• 16:36
  declining right. People are not choosing them
• 16:38
  naturally and so. Correct, Yeah.
• 16:40
  And you'll also see that that retailer in comparison to other
• 16:44
  retailers within the category is completely out of kilter.
• 16:47
  So you know the pounds per square foot that Smiths were
• 16:50
  generating for example were flagging to us years ago that
• 16:54
  the stores were far too big and were very, very in affordable
• 16:58
  for the retailer. Therefore, any lease that was
• 17:01
  coming up for renewal was either going to be broken or renewed on
• 17:04
  terms that weren't sustainable. So that, you know, I think you
• 17:07
  know, in many cases the landlord there could have intervened
• 17:10
  rather than waiting for the for the business to fold.
• 17:14
  Yeah, that's, I mean it's something that it's making the
• 17:16
  invisible visible, right. And I guess that's that's what
• 17:19
  you guys are doing. And in terms of the company
• 17:22
  itself, it's what's the, is it a British company?
• 17:25
  Is it where? Where are you guys
• 17:26
  headquartered? Yeah, we're headquartered in
• 17:28
  London, but we do also have an office over in New York and
• 17:31
  we've got teams, you know mobile all over the world.
• 17:34
  So and we're by with multilingual which we have to be
• 17:37
  as our product operates in so many different languages across
• 17:40
  so many different countries now. But yeah, ultimately
• 17:42
  headquartered in in the UK. That's fantastic, Mark.
• 17:45
  Thank you so much. Look for taking the time to to
• 17:48
  talk to us and taking me through it.
• 17:50
  No problem at all. Thanks, Alex.