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Shopping Centers Today -> September 2002
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OWNERS GET MORE SCIENTIFIC ABOUT DEMOGRAPHICS
By Donna Mitchell
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| Demographic profilers go well beyond income when defining consumer groups. |
Once upon a time, demographics were a lot less complicated. Retail developers wanted to know the average ages and household incomes of the people within their markets, and that was about it. These days, however, they’re getting much more inquisitive.
Though developers once designated $75,000 as a market’s desirable average household salary for a dominant regional mall, today they know this tells them almost nothing about who the customers are and where they like to shop. One household in that salary range might consist of an unmarried person interested in fashion, while another may shelter a young family with very different priorities.
“To me, that is the most dangerous number,” said Carol Gies, vice president of corporate marketing services at Taubman Centers, Bloomfield Hills, Mich. That’s because it tells the landlord nothing about a customer’s buying habits.
What’s more, consumer tastes are constantly changing; clinging to assumptions based on past experience can get retailers and landlords into trouble fast. Today’s young men between 18 and 34, for instance, shop more like their female peers than older men, according to “How America Shops,” a new study by New York City-based WSL Strategic Retail. They make almost as many weekly shopping trips as young women their age — 3.6 versus 4.1, respectively — and visit nearly as many stores per trip, the report said. Getting into the societal underpinnings of the trend, the report theorizes that this group of young men is the first to grow up in households with working, “liberated” mothers, women who did not have time to do all their shopping for them. Mom delegated grocery shopping and errands, and sent them to the mall to get their own jeans and sneakers.
Taubman has spent four years intensely tracking its customers, learning who they are, how they live, how they circulate through its malls and where else they shop. The REIT wants to know what consumers in its trade areas are likely to come through the front door, not what their salaries can buy, Gies said.
It’s all very methodical, and it relegates traditional market data, consisting mainly of the age ranges and household incomes of its trade areas, to a mere starting point. Starting with a modeling system called MicroVision, which it licenses from San Diego-based Claritas, Taubman gets an idea of the consumer segments that lie within a certain radius of its centers — mainstream families, mainstream singles and a top group of wealthy suburban home owners labeled “accumulated wealth.” Taubman has developed a proprietary system that builds upon the MicroVision data. The company surveys about 600 customers at its shopping centers in the same month every two years and asks a set of 35 questions, including where they came from, which stores attracted them to the mall, how often they shop there and how long they stay for each shopping trip. Patrons are also asked to rate the center on cleanliness, merchandise selection, ease of parking and other issues. Responses are compared to previous surveys so that the mall can follow changing tastes and attitudes.
Having tracked 34,000 shoppers, the company has learned that its customers visit an average of 2.3 stores per each visit to a Taubman mall and prefer to drive shorter distances to shopping centers than in the past.
This information allows Taubman to predict each market segment’s buying habits, and to do so fairly accurately, claims Gies. To confirm its conclusions, the company compares the information to retailers’ sales reports by retail category. It also surveys its parking lots, recording license plate numbers to see where the shoppers are coming from and whether the plates correlate to its surveys and the MicroVision data.
“It usually locks in like pieces of a puzzle,” she said. Taubman then incorporates the findings into merchandising strategies and the larger business plan.
Other mall development and management firms are getting equally demanding about the details of their customers.
“I think demographics has a role in understanding people, but it’s not destiny,” said Chris Middleton, a director in the Paris office of Sociovision, a social research consultancy serving the London operation of Jones Lang LaSalle. A global provider of real estate and investment management services, Jones Lang has partnered with Sociovision to develop what one official at Jones Lang LaSalle calls a retail futures program. The program is based on a research tool called Social Milieu, which divides people in an area into groups of like-minded individuals who share similar behaviors.
“It’s how you shop and behave that expresses who you are,” said Brenna O’Roarty, an associate director in Jones Lang ’s London office who oversees European retail research. “The traditional approach is no longer useful on its own.”
Jones Lang LaSalle recently applied some of the retail futures techniques to the BullRing, a city center rejuvenation project under way in Birmingham, England. The project will bring 1.2 million square feet of new retail, dining and recreational space to the city when it is completed in October next year.
O’Roarty declined to reveal Jones Lang’s futures perspective about the local market, citing strict confidentiality agreements between itself and its developer clients. She noted, however, that BullRing has to attract customers from an ethnically diverse market.
Jones Lang is also trying to create a social map of the area encompassing the largest urban regeneration project in London (for that matter, one of the largest such projects in Western Europe) in the King’s Cross area of London, on which work is expected to get under way in 2007. The area, which surrounds a major railroad terminus, has long been notorious for poverty and crime.
“It is very much a futures project,” said O’Roarty. “It would serve a massive area of London, so does that get focused on a new urban population, commuters, or both?”
There could be room to meet the needs of both commuters and the local population, but Jones Lang wants to avoid a generalized approach that may ultimately end up satisfying neither group. In the past, malls and other shopping centers in Britain have used broad-market appeal to try to reach their customers, said O’Roarty, and it has failed.
Middle-market retailers have faltered, and in some cases, collapsed, in the past five years, precisely because they failed to target and serve the more discerning consumers. London-based Marks & Spencer is just finding its way back to being a retail powerhouse after broadening its appeal to younger shoppers, only to lose its more traditional consumer base. Another retailer, C&A, a value, mass-market clothing retailer, stumbled in the United Kingdom for some of the same reasons, and exited the market about three years ago. The chain still operates stores throughout Europe, said O’Roarty.
By harnessing the scientific demographics expertise that is available today, landlords can avoid mistakes that are costly to retailers and can be devastating to a mall.
“We can help [retailers] come into markets that are stacked in their favor, where they will do well,” Gies said. “We’re really retailers of retailers, aren’t we? That’s our catalog: the stores.”
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