Believe it or not, cows and shopping centres do have something in common!
Cows CONSUME grass and PRODUCE milk (easy to value). Shopping centres CONSUME services (like leasing, marketing and managing) and PRODUCE “experience” (hard to value).
According to the stock market, this produce isn’t as valuable as it used to be – about 40% less than its peak in June ‘07. That’s because someone else is nabbing its customer-base. Somebody is selling better quality milk, and worse, it costs less. These “GM’d Jerseys” take the form of supermarkets who know precisely what the shopper VALUES right now. Over many years they have managed to build their entire businesses around the customers needs so that they perform whatever the weather. They’re a truly brilliant business that manages performance so, so well. Especially Tesco.
Judging by the spending trends, the man in the street is valuing what the supermarket does for him above what the high street and the shopping centre does for him. It’s obviously SO MUCH more joined up as an experience – free parking? Tick. Quick? Tick. Safe? Tick. I could go on.
Here’s a quick fact for those of you who, like me, prefer numbers to understand where best to invest their time and money. If the cost of keeping a customer is, say £1.00, then statistically the cost of winning him back, after you’ve lost him to a competitor, is £1.40. The message is clear – a stitch in time saves nine.
(And for the moment at least, you can forget about acquiring new ones: they cost £2.40).
Supermarkets are grabbing shopping centre market share and here’s how they do it.
1. They deliver a superior customer experience – whether its web, catalogue or store.
2. They have a customer demand-driven supply chain that produces highly differentiated, frequently refreshed products, that consumers are prepared to buy. And they are supplied to them at the right price and at the right time.
3. They know how to drive operational excellence. They provide their decision makers with the right information to make the right decisions, to develop plans and to measure the results of those plans.
These are machines that measure and monitor their own performance in real-time, and immediately act to correct the second they spot an issue.
In spite of the BCSC’s ‘06 advice on the pressing need to defend market share, our industry is learning the hard way that we need change to the way we operate our shopping centres.
But here’s a strategy you could adopt. Begin with a customer retention plan that is communicated to your entire team: develop a focused and customer-centric push to defend net-income by investing time and money more wisely and by measuring individual and team performance against plan. Then, once market share is stabilised, a customer win-back and acquisition plan will galvanise your tenants, your staff and your suppliers so you can rebuild long-term asset value. But again, it’s essential to measure performance against plan.
Oh dear, I’ve turned into a numbers man haven’t I? Not entirely….
Making your customers HAPPY will add value to your business no matter where you sit in the shopping centre customer supply chain. “Survive + Thrive” is a phrase Jon Doughty of Coverpoint kindly passed on to me, and it perfectly sums up the performance strategy most owners should be employing right now. (Net income + long-term asset value).
This will only be possible when everyone who benefits from it – and this includes its occupants – understands that an individual shopping centre must never be seen as being the finished article, as being complete. See it differently. See it as an unfinsihed symphony; a masterpiece in the making; a dynamic ever-changing place with engaged customers who help you build and fashion it into a living entity which contributes to their quality and experience life. A dull, dusty and tired place is usually a place run by dull, dusty and tired thinkers so inject some oomph into your doing and breathe some life back into your shopping centre. Your investors will reward you for doing so.
Whilst it’s probably not possible to get a cow to yield more milk by feeding it the same AMOUNT of grass, I wonder what would happen to its yield if you fed it BETTER grass.
Mike.
P.S. Will there ever come a time when shopping centre assets get valued like dynamically responsive retail assets – instead of static property assets? Do please comment – register and post online. It’s easy – honest.
