New Year Solutions
Technology trends are rippling through the retail real estate universe. Among the most important are new apps that dig deeply into data and automate tasks such as site selection, identifying and diagnosing underperforming stores and much more. Then there are apps that analyze what is going on inside shopping centers and stores. Technology is also helping to address a major change in lease accounting rules.
How we use technology is changing
The emerging generation of real estate technology is transforming the way we use technology.
“Over the last half-dozen years, the iPhone has revolutionized technology,” said Simon Thompson, director of commercial solutions with Redlands, Calif.-based Esri. “Before the iPhone, we used the phone to talk, computers for email and managing photos, paper maps for directions, and we had separate GPS devices. The iPhone synthesized all of this and more on one device and a couple dozen apps.”
The iPhone innovation hides the complexity of technology behind simple, intuitive apps. Real estate technology providers are emulating the simplicity of smartphone apps.
For example, an Esri app called Business Analyst Online can help analyze sites out in the field. Just open the app, set up a 5-mile circle and run the app. It will cycle through Esri’s 7,000 variables and show you how much the prospective customers inside the circle spend on lunch or apparel or toys or whatever you’re selling.
“And it is instant,” Thompson continued. “I can get the information, and email a link back to my office, asking my real estate director to check this out and give me his opinion.
“We used to focus on collecting the data, and that took so long that you didn’t have time to evaluate the data properly. Today we can focus all of our time on making the decision.”
While the software industry has been promoting big data applications for quite a while, some providers have adopted a different point of view. “Everyone talks about big data, but big data by itself is worthless,” said Bill Stinneford, senior VP in charge of client management with Fort Worth, Texas-based Buxton. “What’s important is processing data to find big answers.
“We build real estate answers by processing data about customers. The data is in the cloud. Clients process the data through Buxton’s SCOUT from their desktops and now from their tablets and smartphones through SCOUT Touch — an app with 18 icons.”
Each icon processes data about customers in a specific way, and there is no learning curve. If you have a question, just ask an app.
Suppose, for instance, that you are driving to a meeting and happen upon a shopping center you like. Pull over and tap the “Score Site” icon in SCOUT Touch. The app will run an analysis using your data in the cloud, and get right back to you with a revenue forecast and cannibalization report on the site.
SCOUT Touch isn’t just for the real estate group. “A district manager might show the manager of a poorly performing store that the location isn’t at fault,” said Stinneford. “Pull up a map showing drive times, existing and potential customers and revenue potential. The solution? More aggressive marketing.”
Indoor location services
Mall owners and retailers want to know where customers go and what they do. If a mall owner can identify the busiest corridors in the center, rents and signage rates can rise for the premium space. Retailers want to know what departments in the store — and chain — are converting sales or not. Did a promotion drive traffic to the right products? Are displays and signs working?
Yorba Linda, Calif.-based iInside (pronounced eye-inside) uses technology to answer these questions. “We use the public Wi-Fi system to count the people using handheld devices in a mall or store,” said Jon Rosen, executive VP with iInside. “That produces a sample that enables us to analyze traffic patterns.
“To count people in stores, in lines at cash registers, the number of people that go first to merchandise that has been advertised and carry out other in-store analytics, we add hardware in the store — small Wi-Fi or Bluetooth sensors.
“We can tell retailers where people are in the center. We can measure the draw rate — the percentage of passers-by that come into the store. That enables them to measure how signage changes affect store traffic.”
Rosen also noted that iInside adheres to privacy standards issued by a privacy consortium. The technology locates and counts devices. There is no listening in or privacy intrusions of any kind.
Prepping for the FASB challenge
Are you ready for the new lease accounting rule? The Financial Accounting Standards Board (FASB) plans to issue a final rule soon. The new rule will transform operating leases from expenses into assets and require a major accounting change.
Retailers and shopping center owners should get started now. According to “50 FASB-Focused Fields You Can’t Do Without,” a white paper from Atlanta-based Virtual Premise, the new standard will require lessors and lessees alike to redo financial statements for several years before the effective date of the standard.
“The new rule will change the process of managing lease data,” said Andy Thomas, president of Virtual Premise. “There will be new data to collect.”
According to the Virtual Premise white paper, there will be 50 new data fields to complete. Virtual Premise has readied its cloud-based real estate information management software to accept the new data.
There will also be extensive calculations, Thomas said. The process will have to withstand the scrutiny of GAP accounting and auditors. Technology will be fundamental to that.
“This kind of major rule change will shine a light on areas that you have fallen behind on,” Thomas continued. “We’re seeing forward-thinking companies preparing for the rule by implementing technology to gain control of their lease data. That will be key to compliance.”
By Steve Ryan, Robert Huang and Allison Bard
Data centers use an astounding 2% of the nation’s electricity. And for a number of years, the EPA Energy Star program has focused on providing companies with tools to gain a better understanding of the efficiency of their data center. For example, EPA’s building energy efficiency tool, portfolio manager, allows a company to compare their data center’s efficiency with hundreds of other data centers from across the country. Data centers that fall within the top 25% earn Energy Star certification. (Energy Star is a voluntary program that helps businesses and individuals save money and protect the climate through superior energy efficiency.)
Target, one of the largest retailers in the United States, recently shared information with the EPA about a series of cost-effective energy-efficiency upgrades on two 45,000-sq.-ft. centers in Minnesota. As a result of the efficiency upgrades, Target was the first company to have two data centers earn the Energy Star building certification and was named an EPA Energy Star Low Carbon IT Champion in 2012.
Target took the following actions:
• Installed variable frequency drives (VFDs) on air conditioning units: VFDs allow fans to run at lower speeds by controlling the frequency of the electrical power supplied to the fan motor. Fan power consumption is proportional to the cube of fan speed, so a decrease in fan speed can lead to extraordinary reductions in fan energy use.
• Reduced temperatures on generator heaters: The temperature of generator heaters could be lowered from 140 to 110 degrees Fahrenheit because each was located within conditioned space.
• Installed timers and efficient lighting: Timers were installed to turn lights on at 6:00 a.m. and off at 4:30 p.m.
• Turned off unloaded transformers: Two unloaded power distribution units (PDUs) were taken offline at the Elk River data facility, where the computing load was not yet completely built out.
Target’s data center retrofits led to the savings of more than 5.8 million kWh annually (more than $500,000 in savings) and, on average, paid back in 1.4 years, including utility rebates. The annual carbon emission reduction achieved through these efforts is the equivalent of taking 800 cars off the road.
Steve Ryan, EPA Energy Star, Robert Huang and Allison Bard, Cadmus Group
Lighting Focus: LEDs and Controls
From LEDs and controls to rebates and incentives, lighting presents retailers with a myriad of opportunities for savings. Chain Store Age spoke with Regency Lighting’s Judah Regenstreif about lighting trends and the potential for savings, in new stores and existing locations.
What are some of the major trends Regency is seeing in retail lighting?
The biggest trend in lighting right now is LED technology. LED lighting used to be very expensive, but it has reached the point now where the price point, return on investment, color temperature, lumen output and quality are all ready for many retail applications.
As an incentive, EPAct legislation provides tax benefits for switching to energy-efficient lighting. In fact, some legislation has also put efficiency standards in place that make some traditional lighting products obsolete. Additionally, rebates have increased this year from $4.5 billion to $6 billion for switching to LEDs.
What are some of the most common mistakes retailers make when it comes to lighting maintenance?
One of the biggest mistakes a retailer can make is to aim a fixture improperly. It sounds crazy, but pointing a fixture in the right direction can make a huge difference — it will determine whether or not you are lighting your merchandise or lighting an aisle!
Another important consideration is choosing a maintenance company that actually knows and understands lighting. All too often we hear of a maintenance company going into a retail store and/or restaurant and incorrectly installing/replacing fixtures, lamps and ballasts.
Additionally, wattages and Kelvin temperatures (colors) can get mixed up, creating a space that is inconsistent in appearance and that deviates from the original design intent. Regency has an advantage in these cases in that we started off as a lighting distribution company first, developing our expertise specifically in understanding all facets of lighting.
Why is lighting consumption so crucial to retailers’ efforts to conserve energy?
For retailers, the majority of their electric bill comes from their HVAC system and their lighting. If you’re trying to save electricity, you have to target your lighting usage to be able to save.
If you could give retailers one piece of advice with regard to their lighting, what would it be?
Don’t ignore the legacy stores. It’s very easy to be focused on new construction and making new stores more energy efficient. But switching to LEDS in just the legacy stores alone can produce savings of seven figures. We use a database of rates and rebates to show our customers where the optimal opportunities are so that their decision to retrofit is strategic and profitable.
Are retailers taking advantage of lighting retrofit opportunities?
We are doing more retrofits every year. The cost of LED technology was too high initially, but over time it decreased drastically. Now the cost of retrofitting has significantly decreased and the quality has significantly improved, which has doubled our number of retrofit customers in the past year.
How is technology impacting lighting?
Within the lighting industry, apart from LEDs, controls seem to be the next great frontier in lighting. I believe the real future is in connecting devices together over the Internet and providing mobile applications to simplify what we do every day — and eventually lighting manufacturers are going to figure that out. I think it’s only a matter of time before people find a way to blend all of these new technologies together. The four words that we keep hearing are: connected, mobile, fast and easy. These words embody the focus of where lighting technology is going.
How can Regency help retailers with their lighting needs?
Our whole philosophy is to become a trusted adviser to our clients. We spend a lot of time studying the technical attributes of a product and where it’s going so we can provide the best solutions.
Lighting has become increasingly complex, so we understand that it can be confusing. We know that our clients want something that is proven, so we only do business with proven companies and technologies and spend time obsessing about the details so they don’t have to. It’s important to us that we slow the process down just enough to help our clients make the right choices by answering all of their questions.