Opinion

Big Data and Shopping Centers

From consumer goods to the shopping center industry, the term “Big Data” has reached the shopping center world. It is the new buzzword in the business. But what is it and is it really so important? I think it is.

BY ALEXANDER OTTO

The same way digitization revolutionized the shopping world with regard to e-commerce and customer services, it will change the back office and the B2B landscape. We have already collected a large quantity of data about our centers and our customers and we will get even more in the future. However, the art when dealing with “Big Data” is to connect data sets smartly to gain new insights.

Retailers are very good at this as they have always collected and processed a lot of customer data. Tech giants such as Google and Amazon depend solely on their ability to improve their algorithms, which analyze the data flood efficiently. All this is rather new to shopping center operators and it is a challenge, because we, unlike the retailers, do not know our customers in person. Until now, the data that retailers gained from purchases and customer cards has not been within our reach.

However, we have also been collecting data about our customers’ wishes and preferences, for example with customer surveys and, since recently, from our center apps. Customer counting systems are installed at centers’ entrances and we analyze our customers’ length of stay and the traffic in our parking garages. This way we can manage our parking fees or we can gain information about customer service deficiencies or about our customers’ additional wishes.

We will have even more data at our disposal soon: The WiFi-network throughout most centers allows them to generate so-called heat maps, which show the movement of customers and the footfall anywhere in the center. There has already been talk about whether such data should be used to determine rents. iBeacons are another helpful technology. Using Bluetooth, they help smartphone users to navigate accurately through the center. Furthermore, they enable retailers to send customers push notifications containing information and discounts to their cell phones when they pass by their stores. This way, customer journeys and customer behavior can be analyzed.

For some technologies, we await further research or the creation of industry standards: Once most merchandise management systems of the retailers have eventually been equipped with standard interfaces, we, as center operators, can display the current product availability of all stores at the center on center homepages or on apps, just as Ikea or Media Saturn have been doing it for their shops.

But it is not only center visitor and product data that will prove its worth: The tenants will also benefit more from the data collected by the center. Turnover and footfall figures provide more analysis options than most operators actually use today. How is my shop holding up compared to center’s overall performance? How are we doing compared to the competition? Can the turnover be best explained by the good location or the management of the local store? Does the turnover depend on the footfall or on other factors as well? We can find answers to these questions by looking at smartly-connected and smartly-analyzed data.

Despite this good news, we still need to consider data protection matters. On the one hand, there are strict German and European laws, and, on the other hand, there is the critical public who questions any use of its data. Thus, the paramount objective has to be to obtain our customers’ permission and to demonstrate transparency when collecting and using customer data. Furthermore, we operators have to value the safety of the collected data. Neglecting these aspects can lead to considerable loss of reputation and to business setbacks.

The use of “Big Data” requires substantial investments into IT systems and into people who can draw the right conclusions from the data. However, I am convinced that these efforts will pay off. Otherwise, if you do not deal with this issue now, you might fall behind the competition very soon.

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