Ethan Chernofsky, VP of Marketing at Placer.ai, joins Terry to dive into data-backed trends for retail, mixed-use and office. They revisit Ethan’s bold prediction for 2022 and discuss how consumer behaviors are shifting in 2023, from return to office, to experiential, and inflation. Plus, what retail concepts are primed for success and how Placer.ai is used to make informed business decisions.
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Terry Montesi: Welcome to Leaning In, the commercial real estate podcast hosted by Trademark Property Company. Join me, Terry Montesi, CEO and founder of Trademark, and other Trademark leaders as we talk to industry experts about the future of retail, multifamily, and mixed-use real estate. Thanks for checking us out. And now it’s time to lean in.
Today, I’m joined by Ethan Charnofsky, Senior Vice President of Marketing for Placer AI, a leading provider of retail and real estate market data and intelligence. We’re going to discuss trends that Placer is seeing so far in 2023, while also checking back on some predictions he made in 2022. We’ll also talk about the data that Placer is analyzing on a variety of topics, including the current state of return to office, the success of experiential concepts, and the evolution of omnichannel retail, and the impact that online retailers have had. Let’s get to it.
So, Ethan, you and Placer track just about everything in the retail and consumer space. What trends are you seeing so far in ’23? And do you have any data that things have been changing very recently?
Ethan Charnofsky: So, when we look back at kind of the start of the year, there’s a few things that stick out when we’re thinking about the big overarching trends. And the first, and obviously, you almost can’t have a retail conversation without discussing it, is inflation, these wider economic headwinds. And inflation is obviously the big one. But elements like the continued pull forward of demand for segments like home improvement, the drying up of that surplus money, that’s also having an impact, and it’s exacerbating the effects of inflation. So that is something that we definitely are seeing.
And the interesting thing is, it’s not like everything is dropping dramatically, but it’s having an impact on behaviors. And I think the really fascinating piece here is what we’re seeing is return of what we called during the pandemic mission driven shopping, so people making fewer trips but spending more time when they make those trips. So, each visit, essentially, meaning more than it did in the past. And this is something we’ve seen reflected in some earnings calls with kind of grocers who are saying look, you are saying our visits are down, but our revenues are up. And that totally makes sense because we think those correlations are something that we’ve seen shift, depending on what’s going on.
So, consumers are looking to accomplish more with each trip, we have this impact of inflation, and I think those two things combined are actually giving us a pretty unique environment, as if we need like a new unique environment, from what we experienced the last few years.
Terry Montesi: Last year, you made a prediction that 2022 could be a great year for malls. Was that accurate? And what is the sector looking like so far in ’23?
Ethan Charnofsky: I think great might have been a slight exaggeration, but definitely good. And I think there’s a couple of pieces to that. So, we did see, obviously for an extended period, mall visits were up year over year when we look at our mall index, which tracks 100 top tier malls throughout the country. Then we saw visits down. But throughout that period, we saw this kind of same pattern where visit duration was up year over year. So again, slightly fewer visits, but more impactful visits when they go. And I think that speaks to a few things.
One, again, last year, we had high gas prices, we had inflation. So, we had those same patterns that we’re seeing kind of continuing to ’23. But we also know that within top tier malls, this is one of the reasons we remain really bullish on what malls are going to do in the near future, is this shift to a more holistic experience. So, it’s not the same percentage of apparel and beauty. It’s more experience oriented. It’s more restaurants and dining. And that’s going to lead to these longer visit durations, even if there aren’t as many visits.
And we saw this with mall groups like Simon announcing 5% increase year over year in revenue in their earnings call, even though we know the visits were down. And so that combination to us is really interesting. And I think great would be visits are up, revenue’s up, and things are glowing. I think so it ended up probably not quite there, but it ended up very good.
Terry Montesi: And so, in your view, if Simon’s sales are up 5% and inflation is up 6 or 7% during that year, are sales really up?
Ethan Charnofsky: It’s a fair point. But let’s say inflation is up 7%. Let’s say they’re down 1% year over year when we know there’s widespread inflation, we know that stimulus has dried up, we know that gas prices are higher. I do think we need to have this context of we are in a difficult economic environment. And in a difficult economic environment, the expectation can’t be overperformance the way you’d see in a really amazing economic environment. And so that’s the way we view it.
And I think the comparison we’ve given in the past is you have an NBA player who scores 32 points a game, and then the next year they score 29 points a game. Are they playing badly? No, they’re playing great. They’re just not hitting this unique level of strength. And I do think we saw that massive surge with malls in ’21 in the end. And so, to see that kind of come down a little bit, considering this economic environment, makes sense.
Terry Montesi: Now that makes sense. So, it’s like my contractor says, when something’s going to be expensive, it’s complicated. It’s complicated. So, you recently released your q1 retail foot traffic recap. What are some of the major takeaways from your findings?
Ethan Charnofsky: So, I think the overarching takeaway is that things are down. Things are down almost across the board in retail. They’re down in superstores, they’re down in grocery, they’re down in home improvement. There are a few exceptions, but overall, retail saw visits down compared to q1 in 2022. And that’s kind of the starting point. But those drops are relatively small. So, we’re talking 3, 4% for some of these categories. And group size was larger last year with Omicron. So, people aren’t going to school, so we know we had that phenomenon in January. So that has an impact. So, we’re seeing relative flatness year over year, which all things considered, is a solid place to be.
Now there are places that were hit much harder. So home improvement, consumer electronics, that pull forward of demand impact was significant. And I think it affects home improvement more because the end of q1 is the beginning of their high season. So that February, March, April peak for these retailers, they’re going to feel it more. Though, even there, we were seeing, as the quarter progressed, that visit gap was shrinking every month. But at the same time, there were over performers. So we saw continued success from fitness. So, way up q1 year over year.
Now, part of that is Omicron in January because we saw drops in visits for that segment. But they were up year over year in February and up year over year in March, which is really significant for the category, but also, it’s almost across the board. So it’s budget oriented chains like Planet Fitness and Blink, and it’s more premium chains like Lifetime. And so that success is really significant. Less surprisingly, discounted dollar, QSR, off price also saw visits really strong for their categories. And I think the last one that for us was really interesting was Target outperformed for most of q1, which is impressive, not just because continued strong performance in this environment, but it outperformed most of the rest of that superstore category in a really significant way and speaks to the unique positioning of that chain.
Terry Montesi: So what about full price F&B?
Ethan Charnofsky: So, it was hit harder. I mean, there’s no question. But we are seeing the signs of rebound. Certainly, as we got into April, fast casual visits were picking up and those visit gaps were declining. Full service was picking up and those visits were declining. In this environment, I mean, by the way, January was up because you’ve had the closures in 2022 because of Omicron. So, we have those dynamics coming together. I do think full service is still not where it was, but it’s getting better.
Terry Montesi: So, I was with a friend that owns a chain of restaurants who meets with other Texas based restaurant owners; these are all regional, not national. And he said that, like they get together monthly, and he said, like say two weeks ago was their first meeting that they had where everybody in the room saw visits down. It’s actually in Texas, in Dallas and Houston that it was the first time in a long, long time where visits are down. And this is not- some of them are, but they’re not all highfalutin white tablecloth, but they’re full price like Mexican places and American places. So that may be something you’re going to see here in the next few weeks.
Ethan Charnofsky: I mean, I do think this context of it’s a tough environment right now is really important to kind of speak and speak regularly because it is, and we need to keep that in mind when we’re trying to analyze performance.
Terry Montesi: How are we doing versus the context, the economic context versus just how are we doing period?
Ethan Charnofsky: Yeah, 100%.
Terry Montesi: So what can you share with us about return to office? I know you guys have been tracking that. It feels like we’re not nearly all the way back. How close are we? Does the data show that the pandemic has made some semi-permanent shifts in how we work at home versus our office? And then I read an article the other day about how that is impacting suburban shopping because people are working from home, more people are working from home, and so they can go shopping for a couple hours during the day in suburban environments.
Ethan Charnofsky: So, we’re 100% seeing that. I think when we look at, we have about 11 cities that we cover with an office index, where depending on the city, it’s anywhere between 40 to 70, 80 entities that we’re looking at that we clean specifically for an office perspective. And what we’re seeing overall nationwide is that things are about 60% of where they were pre pandemic in terms of return to office, which kind of makes sense. It’s like two thirds of the time. And interestingly, it’s a consistent pattern that we’re seeing in almost every area.
Now, there’s variation there. New York is closer to what it was. San Francisco is further away than what it was. But the interesting pattern is when those visits are taking place. So, Monday and Friday have seen a significant decrease to their proportion of visits to those same entities. And Tuesday, Wednesday, Thursday have grown. So people are choosing to come in less frequently. And they’re coming in midweek and less on that Monday, Friday.
And I think what’s fascinating there and kind of apropos to the point you were making about kind of suburban retail’s opportunity is we’re thinking about this within the shift of modes that the consumer is in. So, if pre pandemic, we primarily had two modes, it was workweek, weekend. So, I had Monday through Friday, I went to work, I commuted in, I commuted back. I had the limitations on what hours I had free. It took me 45 minutes to commute, I got out of my house at 8:15, got into the office at 9, left at 6, home by 6:45 to 7, and then if I have to go to the grocery store, I rush out in the evening. I want to do more restaurants because I can’t be bothered. And all those visits need to take place either in the evenings or on weekends.
Now we have three modes – weekend, weekday from home, and weekday from the office. And weekday from home is fascinating because for those of us who are doing it about two thirds of the time or that two days a week, there’s a really interesting pattern that you mentioned. We have times available to us that weren’t available in the past. So, I can kick off my day and start working at 8 o’clock, at 10 o’clock, take a break and go run out to the grocery store. Am I less pressured? Am I feeling a little bit more like oh, I can think about what I want to order, I can go through my list a little bit more carefully? That’s an interesting change of perspective.
And we see it with grocers of when their visits are coming. It’s more in that middle of the day. We’re also seeing it with coffee. If you look at coffee chains, their proportion of visits between 11 and 2 has gone up in almost every chain we’ve looked at. And that’s a really interesting pattern because it’s not going to be a 180. It’s not like no one’s going to work anymore, and we’re all going to the coffee shop in the middle of the day. But there are small but significant shifts where more people are going to be doing that. And that’s an opportunity, not just for, again, that grocery visit at 9 o’clock or that coffee shop visit at 2 in the suburbs.
What happens if I have that hour back that I was spending on a Saturday or Sunday afternoon? What am I going to do now with that time instead? And I think that’s a really interesting potential kind of waterfall effect that this core change happens, and then it has all these wider ramifications.
Terry Montesi: Placer recently shared a white paper on the evolution of out of home entertainment pre and post pandemic. What shifts have you seen, Ethan, with movie theaters and entertainment, other entertainment type concepts? And will these types of experiential offerings continue to drive value for mixed use developments?
Ethan Charnofsky: I’m always worried about being overly narrative driven. Like there’s a unique environment, like hey, we’re post pandemic, we can go have experiences again. So that drives people to things like eater-tainment. But I don’t see how that- maybe there’s a little bit of a bubble effect where it’s like we’re overdoing it because we couldn’t do it. But it just seems like where the world is going, like we appreciate experience more, we want to get out of the house, why not have the place that can provide the food and the event, so to speak, as well? So, I think the answer there is yes.
With theaters, I’m much more skeptical because I think there’s a foundational problem. So theaters, we are seeing obviously a recovery. And what’s interesting is that recovery is very driven by specific movies. If it’s a Marvel movie, if it’s, I don’t know if there’s going to be a third Top Gun, but the movie industry might need it, if it’s a big blockbuster, you see a major spike. If it’s not a big blockbuster, you see visits down.
And that speaks to, I think, two fundamental issues within the movie theater space, which is the experience needs to evolve, and/or the content needs to evolve. Because I think what we’re learning is there are some movies I want to go see in a movie theater. I want the big screen, I want a big jug of popcorn, I want to be around other people. And there’s some movies I want to watch on my couch on Netflix in my own house. And that, to me, says the experience needs to evolve. So how do I make it more premium and exciting and interesting for all of those types of content experiences? And then, two, I need different types of content. I want to see the theater that is showing live- we’re in the midst of the NBA playoffs, and the NBA playoffs are getting the highest ratings they’ve gotten in years. Why are we not showing games at movie theaters? How do we not create some sort of package where we can get fans together during an away game at local movie theaters and stream these things? Because you want to watch that with a crowd. And so, I think that content problem is fundamental.
There was this conversation a couple years ago about who was going to buy AMC. Was it going to be Amazon? Was it going to be Disney? And I was really excited about Disney because Disney owns the rights for so many sports. I think that could be really exciting in the theater environment. But I do think experience and/or content needs to evolve for them before I get really excited about what the future holds for that segment. Otherwise, it’s got strengths, but they’re a little limited.
Terry Montesi: In one of your recent white papers, Ethan, you commented on how stores need to be a great place to shop versus a great place to buy. Can you give us some current examples of concepts that are creating ideal shopping experiences?
Ethan Charnofsky: Yeah, I think this is a concept that really fascinates me. And I get to sharpen it by having conversations with really smart, experienced people like you. But it’s this difference between experience and experiential that is really fascinating me at the moment. So, we talk about experiential retail, and we think about climbing walls and basketball hoops at House of Sports for Dick’s Sporting Goods or whatever it may be. But I think experience is really where it’s going to happen for most.
And experience can be centered around a few things. It could be a fundamental reason to visit the store. So, think like Bath and Bodyworks or Buff City Soap where going into the location, smelling things, getting to make your own soap, if you’re at Ulta, trying on the makeup, that is something that you can’t do at home, and it improves the buying experience. So, there’s an experience element within the store that just makes the purchasing process better, more likely that I end up with the thing that I want.
Then there’s experience from the sense of I want to feel like I’m getting what I- like a special thing. And I steal this from Billy Talman, who kind of, I’m stealing this idea from him. And you walk into Rolex, and they put down the mat, and the guy’s wearing a suit, and he’s calling you sir, and he’s treating you fancy, that is part of the experience of buying that product, and it’s exciting. It’s an element of it.
And then I think the last bit is experience in the sense of really understanding how do I help customers get what they want and be more successful. I think grocery, if you think like a great grocery store, they are helping us do that process within the location. Target I think does a really brilliant job of bringing me into the store even though they have a great online option or BOPIS option, because I can find all the things I’m looking for in a really kind of cohesive manner.
So, I think experience is really about understanding what your in-store process provides. And in some cases, it is just discovery and search, in which case, I’m less concerned how much you purchase and I’m more concerned that you get in there and I get you to kind of fall in love with the product, touch and feel, find your right size, whatever it may be. But I think that spectrum of experience to experiential is fascinating. And there’s a lot of opportunity in understanding those differences.
Terry Montesi: That’s a very complicated answer, but it is a complex subject. So last time we talked, Ethan, we were just starting to learn about potential challenges to mobile data intelligence gathering with all the enhanced privacy features on mobile devices and even government pressure regarding privacy. Any new developments on this? And have you guys had to modify your collection practices? Are you feeling any threat from this? And is privacy going to be a continued challenge for your business?
Ethan Charnofsky: So, the short term answer is no. Because, and I think, again, we’re not that old of a company; we only launched in late 2018. So we were built with GDPR and CCPA in mind. And we’ve always had a clear sense of where we want to be on the privacy spectrum. And I think as a result-
Terry Montesi: Okay, I have to interrupt you. GDPR and CTDPP, whatever, I’m guessing most people out there don’t know what that is. Will you clarify?
Ethan Charnofsky: Yeah, absolutely. So GDPR is kind of the landmark European legislation that restricted what types of data could be used. CCPA is the version that made it’s way to California. But that legislation was really important because it gave some guidelines of what was okay and what wasn’t okay. And so, you’re able to build around that and get a sense of where things are going.
Now, to be honest, I think if you’re focused on the proper practices, if you have the advantage we have, and we came along later, and we were able to build our infrastructure around it, then in some cases, we’re in a slightly better situation than those online because the online data players, and that’s Facebook, Google, etc., they were built when none of this existed. So now they’re trying to pivot. And it’s a difficult challenge. And I think it’s actually going to bring more value to the brick and mortar environment when you can’t do targeting the way you did it online in the past. And I think the key, though, for us, is how-
Terry Montesi: And I think that’s a big deal. The way they were doing the online targeting, it was kind of scary and uncanny. But it definitely violated my privacy. So, I think people are paying too little attention to that. I agree with you completely.
Ethan Charnofsky: The honest truth is I feel like the more we have make sense regulation that is really about protecting the basics, understanding where we want to get to, and finding that bit of balance between enabling businesses to bring good services to customers, we’re going to be in a really good situation. Our goal is just to really strictly adhere to privacy and ensuring that we stay on the right side of that line.
Terry Montesi: Well, it has been amazing to watch y’all and your growth since 2018. I mean, just becoming market dominant so fast. So, kudos to you and the rest of your team, many of whom I know. Speaking of your business model, what are some of the new or enhanced features that you guys have offered since we last visited in ’22? What’s new and interesting? And how can my listeners use it to enhance their business?
Ethan Charnofsky: So, I’ll give you a few that came out just literally in recent weeks. So, we launched our first full site selection tool where you can plug in certain parameters and find the ideal location for your business. We launched a retail sales tool in a wide range of retail segments that leverages third party that does transaction data, group size, and layers that on top of visit data to give estimations on sales to retail locations across the country. And it’s the first that can actually account for elements of cash deals. So, because we’re using foot traffic and not just credit card data, we’re able to bring in other perspectives and give this a slightly more nuanced sense to some of these estimates.
Terry Montesi: I want to pause for a second. So we used to use you to, like if we’re looking at a deal for Whole Foods, with traffic, we could say that’s the 11th out of 40 Whole Foods in Texas. But now you actually can estimate sales for all those stores, not just traffic?
Ethan Charnofsky: So, one of the things that we did about a year, maybe two years now, we launched a marketplace, which was essentially allowing us to leverage other datasets and other data partners to bring more visibility within our system. And so one of those partners does transaction data. And by partnering with them and using their kind of industry leading capabilities, leveraging our visit data, we can bring those together to bring that level and layer to our platform. And I think it’s exciting.
And then we have development plus, which is a more enhanced way of looking at what’s coming within an area. So what’s being built around you? It’s not just asking what’s already there, but what’s going to be coming in the future. And then we have some really exciting things that we’re going to be launching at ICSC and shortly thereafter. But it’s all about, I think, we’ve been working really hard the last few years to build a really strong foundation that our customers can rely on, build upon, utilize. And we’re really focused now on how do we create more solutions, bring a little bit more robustness to the platform and address gaps that were there. So, we have a lot of things that we’re really proud of that are going to be released just in the next couple of months.
Terry Montesi: Yeah, so AI, really hot topic worldwide in technology, pop culture, big data. How’s Placer intending to use AI to enhance and expand its offerings? And how has it folded into your existing platform? I think the first time I ever heard AI used was by you guys maybe four years ago, would that be probably right?
Ethan Charnofsky: I mean, it was, we were part of a wave of companies that were starting to leverage AI on the data side. And so, I think that’s the area where there’s the most impact thus far from an AI perspective. And it’s how do we handle massive amounts of data and get it to insights faster? And so that’s one of the big elements that powers our platform is these advanced algorithms that can sort through massive amounts of information and turn it into something usable.
Where I think we’re going is enabling, is leveraging AI advancements, so think things like Open AI, where it’s essentially a super advanced form of search that allows you to converse with your search engine, more rapidly source information, and engage with digital resources. How do we use that within our platform? How do we take this generative AI concept and enable it to power better functionality within our system? We are working very hard on a few very exciting things, some of which we will already be looking at ICSC in just a few weeks. And so it’s a very, very exciting stay tuned because we’re working through some exciting projects right now.
Terry Montesi: One trend that you guys have commented on and you and I’ve talked about is the digitally native set of brands that are beginning to build, not really beginning but are accelerating building more and more brick and mortar stores. As they’ve all discovered, and we’ve all discovered that omnichannel is the distribution model that’s going to survive, how is online traffic generating brick and mortar sales? And do you think this trend is here to stay? And are these retailers seeing success in brick and mortar?
Ethan Charnofsky: I think the answer is 100% yes, it’s here to stay. They are getting value from a sales perspective. They’re getting value from a marketing and brand perspective. They’re getting value from a discovery touch and feel. Even the operations side, like the ability to handle returns, returns are much more expensive online as opposed to being able to drop it off in a store. BOPIS, again, being able to buy online and pick up in a location, that’s a much cheaper form of convenience for the retailer to offer.
But even this concept of the store as a platform, so think we talk about retail media. When you go and search to find a great hotel in Hawaii, every time you go on Facebook, you’re seeing tons and tons of other hotels in Hawaii, even though you already got back from your vacation, so you’re not looking for a hotel anymore. The interesting thing of kind of online advertising, it’s very much saw you did something, hey, you want more of that thing? When very often, no, we don’t, we already made that purchase.
The cool thing about the store platform is it’s well geared for discovery. So, if you go online to nike.com to buy a new workout shirt, you go online, you go to the website, you find the shirt you want, you buy it. If I was like, hey, do you also want a pair of sneakers, you’d be like no, I just want the shirt, let me get it and get it to my house. If there’s no reason to get it, you’re probably not going to do this onward discovery. If you walk into the Nike store to get that same shirt, and you see the shoes, and you’re like, you know what, I could just try them on, your chances of trying that pair of shoes on is much higher in the physical environment. That’s a big piece of it, this idea that the basket size can be larger. The CEO of Albert said this, 150% larger basket size when someone visits a store versus when someone makes their first purchase online.
I do think, though, there is a question of how big can it get? And that’s still undetermined. Because we’ve seen the Warby Parkers and the Allbirds, who have these larger expansions. But we don’t know yet if that’s going to take for the majority of them. So are we going to have a lot of chains with four or five or ten locations? Or are we going to have more of them that break that 50 to 100 threshold. And that’s going to depend on sales, on ecommerce uplift when they launch a store within a region and on how different more kind of variable tactics like pop ups work, because I think these brands are going to be geared towards efficiency. And if they see that stores- they know they need stores. They don’t know how many they need yet. And so I think that’s the big question.
Terry Montesi: Let’s look into the future. What type of retail concepts do you consider being on their way up? And are there any that might be struggling as you look out into the future?
Ethan Charnofsky: I’ll start with the struggling. I’ll work into the way up. I think, and I’m still struggling with the Bed Bath & Beyond closures because I felt like they had a turnaround potential, and clearly I was wrong. I think retailers who don’t understand what makes them different, if you are everything for everyone, and you’re not really sure who you’re for, I think you have a problem. Because it means you’re not differentiated in an environment where differentiation is key.
I think in terms of segments that I think are exciting, there’s one that didn’t surprise me. And there’s kind of the spectrum. So start with the one that’s least surprising. I think the coffee space is super fascinating because a lot of the retail, even the big ones we look at, Starbucks, Dutch Bros, their expansion potential is enormous. If you look at where Starbucks announced they’re going to be launching new locations, their saturation compared to their top markets is low. There’s a lot of room for coffee growth in the US. Convenience stores were really interesting. Seeing how strong they’ve been even though commuting is down. The shifts many of them have made to QSRish food offerings is super fascinating and I think speaks to a sector that is getting more and more sophisticated, which at least was surprising to me when I was looking into it. And then the last one is-
Terry Montesi: You are aware of Foxtrot? So you just basically just talked about them.
Ethan Charnofsky: It’s really interesting. It’s every region has their version. And it’s kind of all expanding. And then what we call discount 2.0, so pOpshelf, Five Below launching kind of a slightly more expensive offering. I think that’s fascinating because it’s essentially a super successful retailer that’s just embarked on a massive expansion saying, how do I continue to expand, I can’t just launch, I can’t cannibalize my own locations. But I can go up market. And that’s super interesting. And if they succeed there, I think there’s a lot of success to come for that segment.
Terry Montesi: As you know, we’re developers of mixed–use properties. What are some of the high level takeaways you could share with us about using data effectively, using Placer effectively to develop or redevelop effective mixed use assets? How can data help us decide the right mix of uses, the right sites, et cetera?
Ethan Charnofsky: I mean, I think it’s always a question of what- it starts with what does this area need? And therefore, what’s this area made up of? So, I think right now, we’re in this really interesting period where there’s a lot of people in this wider real estate landscape that are saying, has the area that I knew so well, how much has it changed in the last few years? And some areas have changed not at all. And some areas have changed in a pretty significant way. Like there’s new audiences there, there’s new opportunities, there’s first time demand within a suburban environment that wasn’t there for a while. So, I think that’s a starting point.
The next thing is to say, once I understand that audience, how do I find other places? Like essentially, what is data doing? There are really talented people working in retail real estate and all the wider commercial real estate and residential, etc. You’re looking to give those individuals information that’s going to help them make smarter decisions. They still have to make the final call. But how do I say, all right, here’s an audience that I know I have. How do I find that audience somewhere else and look for a successful shopping center and see what their mix is? I’m centered around a specific anchor tenant. I’ve lost two tenants. How do I look at good tenancy, co tenancy, to figure out who would fit really well in that open space now?
So I think a lot of it is, if you know the audience, can you find other examples of it, and for us, it’s all about using tools like void analysis and site selection. And I think the last bit is, and we talked about this a little bit, it’s being really focused on benchmarking. We have been experiencing, what, a three, four year period of fundamental volatility, just crazy things one after the other. In that environment, it’s very easy to make a bad decision because visits are down or visits are up or they’re kind of vacillating in a really significant way. It’s super important to benchmark performance. So, if your center is down in visits 5%, but your visit duration is up and your sales are basically flat with inflation, look at what other centers are doing. Because if they’re down 10%, and you’re only down 5%, that says something important in a very difficult environment. If you’re up 20%, but everyone else is up 50%, that says something really important. So I think contextual understanding of data is as important as data usage in itself.
Terry Montesi: Peer group analysis, that’s super important. Are y’all finding ways to apply Placer to the multifamily business yet?
Ethan Charnofsky: So interestingly, yeah, it’s something we’re playing around with quite a bit. We’re looking at how areas are changing. So, are there demographic mix changes in certain areas? As we see kind of virtual work take off, do we see retail changes in specific areas? And what does that indicate about what the potential could be long term for multifamily? Development plus is a big piece of this. If you know certain things are coming up, what does that mean for what it will demand in the immediate environment? And so, it’s definitely where we are- I would say we are keenly aware that we have a core audience. And our goal is to prioritize that core audience. So, retail real estate, the wider commercial real estate environment, that’s where we are going to launch the bulk of what we do. We are definitely trying to figure out more and more how do we serve different tangential audiences.
Terry Montesi: So, anything else about the retail real estate business, retail business, or Placer you’d like to share and talk about before we wrap, or anything you want to ask me?
Ethan Charnofsky: I mean, we can do it, Terry, because I think we talked about this before, it’s kind of an obsession of mine. And so, we can talk about retail media. I think this is- retail media is an online media concept. And it is struggling online. And more of those dollars are coming into the offline environment. And there are really exciting opportunities for retail and retail real estate if you understand that your physical space has critical advertising value. And it’s not just the brands that are selling within your locations. So it’s not just the CPG companies within the grocery store. It’s non endemic spend. And so there are a lot of organizations that are trying to find effective ways to reach specific audiences.
And that targeting is coming to the world of brick and mortar partially because of tools like ours and because of new kind of advertising innovators, think companies like Cooler Screens or Terra Booster, Grocery TV that are creating these spaces. And it’s a win-win because it’s an increase in revenue that can be shared for the players involved. And I think that is a hugely important topic that’s going to have- you’re going to see the roots of it over the next year or two, but then it’s going to expand more and more as we go on.
Terry Montesi: Well, thank you very much for your time. I know it’s late where you are, and I’ll let you go a little early. And always really fun to talk to you, Ethan. You guys are just doing such a great job helping our industry use data to do a better job at what we do, and I really appreciate it.
Ethan Charnofsky: Thanks so much, Terry. It’s always great to be here.
Terry Montesi: Thank you for listening. Be sure to subscribe so you don’t miss the next episode. To learn more about Trademark Property Company and to see how we elevate the every day, visit trademarkproperty.com.