Proptech and Retail: What’s in Store This Holiday Season?

The kickoff of the holiday shopping season has both brick-and-mortar and e-commerce retailers wondering if they will be seeing black or red on their bottom lines. 

Every customer-facing business from mall owners to mom-and-pop stores to online outlets, then, are looking to retail real estate-focused proptech to provide better insights into maximizing profits. However, though demand for technology may be increasing, its continued growth and measurable results leave room for improvement, according to proptech players in the retail field. 

“Many retailers today lack accurate and real-time insights on brick-and-mortar shopper engagement,” Honghao Deng, CEO and co-founder at Butlr, a Burlingame, Calif.-based wireless occupancy sensing platform, said in an email. “Using artificial intelligence to gain a better understanding of how retail stores are being used — including trend data on foot traffic, occupancy, wait times, and customer engagement with products and employees — informs investments in commercial property, staffing, offers, design and layout.”

Speaking more specifically to Butir’s platform, Deng said, “You can gather these insights using the combination of AI and body heat-sensing technology that is designed to understand movements in retail stores without capturing any personally identifiable information.”

Proptech applications can aid owners and tenants in various ways, said Carla Hinson, vice president of North America solutions at MRI Software, the real estate software platform giant out of Solon, Ohio. MRI’s Agora Insights data and analytics platform, for instance, attempts to meet demand with products, such as MRI OnLocation, which uses visual AI to capture not just who walks by a store but also who steps inside.

“I do think that proptech is adding a lot, because what’s really become part of proptech is helping the retailers on both sides,” said Hinson, who oversees MRI OnLocation, which tracks pedestrian traffic in malls and other retail hubs. “So if they’re an owner-operator, they’re really [needing to understand] their foot traffic, what they’re going to be able to offer to a potential retailer coming in. Then, on the retailer-tenant side, they can actually use things like our footfall analytics tool to understand capture rates and how that can impact them. 

“So I feel like all of that data has come together to really help with understanding client profiles, the foot traffic, and being able to forecast what their stores are going to do and how the performance will be much better.”

Still, retailers’ use of technology remains spotty, said Hinson. “There’s a lot of adoption, but it depends on the product.”

Beyond the prominent demand for foot traffic data, MRI also tries to address energy, staffing, leasing data and other retail owner and occupier needs, Hinson said.

“Obviously, there’s ESG,” she said, referring to commercial real estate’s focus on sustainability in particular. “A lot of times, on the retail side, when you’re looking at that, you’re looking at it from a cost perspective. So really understanding the type of energy you’re using can also tie over to your footfall traffic. That whole foot traffic pattern tells you when your prime operating hours are. So it can impact your staff and labor costs. We’re starting to branch out and see a much more holistic picture of what’s happening in retail using proptech.”

That goes beyond managing leases for tenants and landlords, Hinson said. There’s also the increased use of AI to scan leases and absorb them into management systems. 

“And then the other place where proptech is really helping is around the actual management of the location — the maintenance side of things — making sure that everything’s in working order so that there is a good client experience,” she said. “We’re using these tools now to manage planned or preventive maintenance by giving them a little bit more bargaining power in certain regions. So, if they know that they’re going to replace the roofs in a particular region, they can work with a provider and get better pricing for that as well.”

Proptech efforts to meet the needs of retail owners and occupiers saw another product introduced last week by Mallcomm, a U.K.-based software platform for commercial property management.

Mallcomm’s AI-powered data insights platform claims to collect, analyze, measure and forecast shopping center sales and operational data in real time. The platform enables property owners to collate and integrate data on sales volumes and densities on a monthly, weekly or daily basis, in one digital process with thousands of occupiers. Owners then can have a sweeping view of their holdings, including across brand categories and individual tenants.

“We’re seeing a lot more adoption in real estate, and particularly in retail real estate, around technology and the use of data and analytics to help support long-term strategies, including building communities,” said David Fuller-Watts, CEO of Mallcomm. “And, of course, the use of AI is kind of fundamental now. Everyone is talking about it and how to get the best use out of it.

“One of the things that we’re finding with real estate at the moment is it’s important for automation to be taking place,” Fuller-Watts said. ”There’s so much more that can be done. Not just in automation, but data-driven and insight-led automation. It’s not really an excuse anymore to have somebody report a leak in their store and then it takes two weeks to fix because somebody just forgot to phone the engineer. So a lot of the things that we’re doing with our new data and insights platform is really starting to understand how property performance can be better, how it can be more easily managed, and how we can create that automation from insight.”

As the holiday shopping season begins, proptech providers are keenly aware of the unique nature and needs of the sector, said Fuller-Watts.

“The good thing about retail seasonality is it’s the same everywhere,” he said. “Pretty much the holiday periods happen at the same time no matter what [U.S.] state you’re in or what region you’re in across Europe. So we can be pretty accurate when it comes to predicting, not just based on a week-to-week or day-by-day comparison, but actually looking back over different periods and even post-COVID to see what impacts sales had on it during that period. And, then, also analyzing, predicting and building models that will help take that into consideration, which is also really difficult for landlords and asset management teams to do at the moment because they’ve got to do quite a lot of analysis to be able to get access to that information.”

The use of technology in retail is changing the perspective on what was once only seen as a rivalry between e-commerce and brick and mortar, said MRI’s Hinson.

“What’s interesting between e-commerce and brick and mortar is that we thought they’d be in competition, especially during COVID,” said Hinson. “But what we’ve also found coming out of COVID is that there is experiential shopping that is still there. So what e-commerce has done is allow companies to expand their reach further than before.”

The result, for example, is tracking — and pitching — customers who sign up for rewards or sale notifications in a store after they leave, she said.

“It’s interesting to me to see how e-commerce and brick and mortar will actually work together a little bit more, and it’s the tech that’s allowing it to do that.”

Philip Russo can be reached at prusso@commercialobserver.com.