In this episode, Ethan Chernofsky, SVP of Marketing at Placer.ai, joins Kevin Kessinger, President and COO of Trademark, to discuss data in detail.
Over the past six years, Placer.ai has evolved into an essential tool for real estate professionals seeking location data and insights.
Their conversation covers the nuances of data collection, like what makes it effective and how we should question it. Plus, what the numbers reveal about retail’s future.
Episode Highlights:
- The fascinating comeback of top-tier malls and its broader implications
- Insights from the Placer 100 Index: Metrics from top retailers
- Challenging the “death of the office” claim and current trends in commercial spaces, like movie theaters and malls
- Driving experiential retail forward: Leveraging proptech and digital out-of-home technology to enhance shopping center value
- Placer.ai’s meticulous approach to data validation
Subscribe to Leaning In for more insightful discussions with industry leaders, keeping you at the forefront of real estate developments.
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Transcript
Kevin Kessinger: Welcome to another episode of Leaning In. I’m your host, Kevin Kessinger, President and COO of Trademark Property Company. Today, we’re thrilled to have Ethan Charnofsky, Vice President of Marketing at Placer.AI, joining us for another enlightening episode. For those new to the show or to Ethan, Placer is a leader in location analytics, providing vital data that’s reshaping the world of retail and real estate.
In this episode, we’ll be bouncing between a few tech heavier topics and compelling retail trends. We’ll explore the latest in retail traffic patterns, dive into the evolution of Placer’s tools, and uncover how data is influencing everything from office spaces to lifestyle centers. Plus, Ethan will also share insights into exciting new features from Placer and their vision for the future of location analytics. Whether you’re deep into tech, a retail aficionado, or just curious about how data drives the industry, this episode has something for you. Let’s lean in. Ethan, welcome back to the show.
Ethan, you’ve been a guest a few times with us, but let’s make sure everybody is up to speed with who you are, what you do, and what Placer is all about.
Ethan Charnofsky: Sure. So, my name is Ethan Charnofsky. I’m the SVP of Marketing at Placer. Placer is a location analytics company. What that means in the very simplest form is people vote with their feet, and we show you how they vote across the United States. We do that by analyzing a panel of tens of millions of mobile devices very critically. It’s all aggregate data that’s been stripped of identifiers like NAITS, WEARS, GDPR, and CCPA compliant.
We then apply machine learning and AI algorithms on top of that panel to make estimations on visits to retail locations across the country. And we show that in kind of a wealth of different reports. The product is now used by over 4,000 customers across the country in a variety of different verticals to try and optimize decision-making when it comes to the physical world.
Kevin Kessinger: Got it. And when I hear you describe those methods and technologies that you’re leveraging, I have to think back to when I first heard Placer’s name, probably going back every bit of 10 years ago now, maybe not quite that long, but when you think about how you all do what you do now versus your earliest days, or even just a few years ago, what’s different? What could you point to that’s making your processes and your data so much better?
Ethan Charnofsky: So, there’s a few things that are there. So, the product launched in December 2018. And so that journey now of we’re coming up on a full six years of having the product out there, I think there’s a couple of things that have been really key for us.
I think the first is a recognition that the innovation cycle can’t stop. So, we need to move; we need to move quickly. But interestingly, the key to the move quickly has been recognizing that our customer base knows a lot more about the sectors they operate in than we do. Our CEO loves to say, we don’t innovate, we listen. I think that’s a key part of our ethos. We work with companies, Trademark amongst the very, very, very earliest of them. They come back to us and say, this is good, but you know what would be really good, if you could do this with it. Then we go to the drawing board.
The process that we’ve built is very much centered towards work closely with people, understand what works, where there are gaps, what we could do better, and then constantly push to try and deliver on that. So, I think those have been the key elements to what’s gotten the product to be as broad and deep as it is currently. And it’s something we hope is going to also take us to that next generation of development.
Kevin Kessinger: When I was preparing for this, I asked for some help from my team balancing our Q&A between the, I’m going to call it the geek out portions, which fascinate me, but also the retail trends that I know another large portion of our audience is really tuning into here. So, I’m going to bounce back and forth a bit in an attempt to not lose half the audience at any one point.
So, here’s our first pivot back to the retail trend side. So, you’ve been with us a time or two. It won’t surprise you that I’m going to start with just a broad 2024 snapshot, retail traffic patterns, mall, open air centers. Where have we been? Where are we now? Where are we headed?
Ethan Charnofsky: So, I think when we think short term, I think things are good. They’ve been really solid, especially when you think about top tier models and top tier open air centers. And we see that continuing and, in some cases, strengthening. There’s obviously interesting shifts because you see a peak in a different week than you would expect it because last year, Easter fell on a different week. So, the year over year trend will pop. You see different factors that will drive some value in some of these segments. So, a real pop in movie theaters in late June and July, it’s obviously going to drive some value to some of these malls that have those tenants embedded.
But I think that something that’s been really fascinating for us, especially when we speak to other folks who kind of look at the retail space more broadly, is how significant the success for top tier malls and top tier open air centers has been. And I think the interesting thing is more, if you’re talking to kind of the analysts and the folks who analyze the space and they’re being honest, they didn’t see this coming. There was this, we think about like the retail apocalypse narrative of that pre-COVID decade. And I’d say add an S to that because it was going on for quite a while, one of the prime targets was malls. Like, oh, this is a thing of the past. It’s, oh, what a cute nostalgia of the 80s and 90s, but it has no place in the modern retail environment. And I think what’s really fascinating here is that it’s absolutely defied those expectations.
And I think what’s important here is the why. So, a lot of people will look at it and say, oh, there’s good tailwinds, or they didn’t have headwinds, or kind of pushing these external factors on why a certain segment is doing well or less well. But I think what’s really fascinating about malls and open-air centers and fitness as well is that they’re doing well because they made really good decisions a decade plus ago. They looked at how the world was changing, and they recognized that these formats needed to evolve too. They shifted away the focus from as much apparel and beauty. They focused more on entertainment, they focused more on experiences, they focused on upgrading dining experiences. The result has been a mall that really resonates.
I think what’s especially important there is that there’s a waterfall effect. In a world where there’s more digitally natives that want to get into these malls, there’s more retailers, there’s more tenant types that want to get into these spaces, that means there’s less overall space for some of the traditional tenants of these places, which means they’re going to have to look for new homes. That’s going to open up opportunities in main streets, B-class malls. There’s this waterfall effect that benefits all of retail. So, I think one of the things we really need to do when we look back at this is just take our cap off and give a little bit of a clap to those owners of these malls because I think they made really good decisions that led to some really impressive success. And I think it’s redefining how retail is going to look over the next decade.
Kevin Kessinger: And you’re able to glean those insights and I’m sure more, it could be an entire podcast just on that part of it. But you’re able to glean those insights from what Placer leverages. When you think about for a minute maybe the more broad universe of, I’ll call them traffic analytics or shopper journey analytics, there’s a lot out there. Some people are leveraging Wi-Fi beacons, there’s still some old just simple counters when cars pull into a shopping center.
So, if there’s a buyer beware element here, what are some of the data points you’re seeing out there that might be infirm or outright misleading when others are reporting on traffic trends?
Ethan Charnofsky: So, I think the first thing that’s really important is to ask, well, what’s the data source providing? Because I think, not all- there are some data sources that are just not good enough, and I wouldn’t use them. And I don’t want to be like the negative person, but it is important to do that check. And some of them fit within that basket of the technology just isn’t there.
But in most cases, these datasets do have something interesting to say. It’s just usually limited. And even location data, which I think is amongst the broadest datasets that exist, there are things that we can’t show yet. That doesn’t mean we won’t be able to do that in the future. But it does mean that there are limitations to any data.
But when you think about kind of first party data sets, which are super interesting from a loyalty perspective, they lack context, very often there’s kind of flaws in terms of being able to extrapolate out what they mean. You look at other data sets where they get really deep, but they lack scope. So, think like Nielsen. Nielsen, kind of the standard for what we’re watching on TV in a country of hundreds of millions of people, is looking at tens of thousands of televisions. So, the extrapolation, the estimation out is always more of a challenge.
And so, you sit on these spectrums, and I think the most important thing for anyone who wants to consume data is to kind of poke at what does this dataset bring to the table that’s interesting and important? Where are the gaps? And when you think along that spectrum, you’re going to find the ideal ways to utilize it, because in some cases, it’s super predictive, in other cases, it provides really important color and information on the side, and in other cases, it’s not valuable for understanding what’s happening for that specific question.
Kevin Kessinger: Well, I promise I’m going to ask you about that future state to which you referred. I’m really, really curious there. But in the meantime, tell us a bit about your report, the Placer 100 Index for retail and dining. Again, what is it? What does it do? What are some of the key findings there?
Ethan Charnofsky: It was interesting. It was one of the things that we were hearing back quite a bit was, hey, we want one look at what’s happening in retail. We’d say, okay, we have this overall retail number. They’re like, well, overall retail is a little too big. Could you squeeze it down?
And so, we talked to some folks in the space, and they helped us shape this idea where we were going to look at 100 what we call tenants. So, it’s restaurants that would be in a shopping center, retailers that would be in a shopping center, and utilize that group to understand how things are looking in America from a retail perspective, but from the top level. And we wanted to be able to see it overall. We wanted to see it by different regions, so state or CBSA. We wanted to look at visits and visits per venue. So that visit per location metric, which is a good sense of same store sales as opposed to just someone expanded a lot.
I think the big findings from the initial launches of this tool – by the way, this tool is available for free at Placer.ai in our free tool section – the big takeaway was, one, the strength of retail from a visits perspective. And this is super important in its own right and I think it’s worthy of discussion, but then also how spread out it was. So, it wasn’t like we were seeing some areas that were really trailing and some areas that were doing amazing, a la that immediate post pandemic period, but a fairly even spread of success, which speaks to the role of the shopping centers and these retailers.
I think the visits piece, to come back to that original point, is so important because a lot of retail’s future- so much of retail’s past was asking, what does a visit mean in relation to a transaction? What’s happening in retail today is we need to think about the visits in terms of what they mean to the lifetime value of interaction with potential customers. And that means the retail media potential, so the visits as impressions. That means e-commerce uplift. So, visits to a store that no one ever buys something in doesn’t mean those visits weren’t critical and valuable. It means they gave huge touch points. And when aligned with online data, we can see if it drove sales in that area.
So, there’s this broader understanding of the values that a store can bring, and leaning into that potential is something that’s very important for retail success, CPG brands, and certainly the real estate industry.
Kevin Kessinger: It’s exciting to see that perspective getting more attention for a long time on the landlord side, we made the case that, hey, listen, if we do our job, bringing the shopper to you, it’s then on you, the retailer, to convert that shopper into a sale, or if it’s not a sale today, into somebody who uses your online platform or appreciates your brand more to come back. So, it’s exciting to see that leverage.
You also last week published your monthly office index recap for July. Another topic near and dear to me is I think about post-pandemic in-office trends, remote working, hybrid working. I have a very narrow view as to how I want you to answer this question, but is it fair to say the death of office as an asset class has been exaggerated? Can you point to anything from your study in the way of key markets that surprised you? Help me understand this pretty dynamic environment.
Ethan Charnofsky: So, I think it’s 100% exaggerated. And I think what we’ve kind of come to believe is that anyone who now says sector A is in demise, you should probably just assume they’re wrong. Because what happens is there’s a grain of truth. Hybrid work is a real thing. We see it in the data. Mondays and Fridays are down compared to where they were pre-pandemic. So that kind of long weekend mode clearly is having an impact. Visits aren’t where they were pre-pandemic yet.
But this idea that they were- so there’s that kernel of truth, something happened. But the idea that that somehow removed the need for the office, I think, was silly. So overall in our office index, we don’t look at all buildings. We really do look at top tier buildings, which skews towards the ones that are performing better. But we see, I think, it was 72% recovered. So, there’s still a gap, but I think that’s going to rise to about 75, 80% nationwide.
But what we’re seeing is that there is a role for the office. There are people who want to go back to the office, and the people who are going to back to the office less generally have a good reason for doing so. So, it’s a very rational process. So, for example, distance plays a huge role in how often you’re going to the office. Whether you come from an area over indexed for having family. So, if you’re likely to have a family living in the suburbs, you’re less likely to go to the office five days a week.
So it’s very rational, and I think what it’s telling businesses is you need an office, you know you need an office, you need a place for collaboration, you’re going to need a similar amount of space to what you had before because it’s going to be more than 40, 50% recovery, it’s going to be closer to 75, 80%. And so, it’s just about learning to deal with this flex environment, and how do you lean into that to maximize its potential?
Because what it should be doing, if I were running a company that’s sitting in a major city that is sitting in one of these top buildings, is I’m asking a few questions. One, how do I incentivize people to come back to the office? How do I make the experience better? And I think that’s something that’s going to kind of feel out so that it drives more value to those who upgrade the amenities in their office or around their office.
But I also think there’s an element of saying, hey, this helps me widen the scope of where I can pull talent in. Because if I have to go to the office every single day, I better live within a certain proximity to said office. If I need to go in three days a week, maybe I’m willing to drive a little bit farther. And as a result, I think there’s opportunities. Every challenge comes with opportunities. So, do I think we’re going back to where we were pre-pandemic? No. But do I think it’s going to- the office’s centrality has changed? Not that much, no.
Kevin Kessinger: Well, and when I think about it, there’s a parallel that immediately comes to mind when we talk about businesses that are recovering, and maybe they’re 70% or 80%, and maybe they’ll get back to where they were, maybe not, and that’s movie theaters. And so, we had a trend going up to the pandemic, and then we were all deprived of that experience for an extended period of time. And you had situations with streaming and blockbusters and content and everything else.
So, there’s another area where I’d love to get the perspective from your platform, movie theaters, the summer season 2024 versus 2019. Where are we?
Ethan Charnofsky: This is one of my favorite sectors because I think when you look at the data, you see both the promise and the challenge. So, in 2023, January 1st of every year, we put out sectors or brands that we think are going to do really well in the coming year. At the beginning of last year, we called out movie theaters. And we were not tuned into the Barbenheimer buzz that was going to come seven months later. And so, it proved to be pretty strong.
And one of the things we said at the beginning of this year was it’s going to be really hard for movies to, and movie theaters to achieve what they did last year. And the benchmark therefore is going to be more challenging. And so, what we really want to see, especially with kind of the writer’s strike and that delaying some content, what we really want to see is the strategic shifts going in the right direction.
And what’s been fascinating is if you look at the last couple of months, movie theaters have been buzzing. And so, Inside Out 2 drove a huge surge of visits. Then the Deadpool movie and Twisters drove continued more elevation of those trends. So, are things where they were in 2019 overall? No. That’s, to a large extent, because of location closures too. So, the overall visits are going to be down. But there are specific weeks that are above where they were pre-pandemic, which is really impressive.
And I think it tells us a couple of really important things. Thing number one is that movie theaters have a role. This idea that we’re never going to leave our house and we’re just going to watch Netflix forever or Disney Plus or whatever it may be is wrong. We want to leave the house. There are things we want to see big. There are things we want to experience with other people around us. But not all things.
And so, what needs to change in theaters is experience and content. How do we heighten the experience so that it is a better fit for fewer visits and that it leans into this idea of a thing I want to do around people and content. I think one of the big issues in the movie theater space is that the limitations are there on content.
So, one of the fun games we were playing, I don’t know if you remember, there were rumors about who was going to buy AMC – was it going to be Amazon or Disney? And I was big on the Disney train because Disney owns the rights to sports and Disney owns the rights to a lot of other cool things. And the honest truth is, imagine you’re living in a city and your team is playing in the playoffs across the country at an away game and gathering in your local theater to watch that game around 100 other fans. That’s a compelling offering. I think it takes into account the type of experience we want when we want to be around people.
So, I think there’s going to be a content shift. I think there’s going to be an experience shift. And so, there’s going to be fewer theaters, but they’re going to provide a more impactful experience for the right types of content.
Kevin Kessinger: I anxiously await the movie theaters figuring that out. I’ve long thought that an entire wing of a theater could be devoted to a college football Saturday with an Ohio State room and a Texas room and a Michigan room. We’re not quite there, but my fingers are crossed that it happens.
Ethan Charnofsky: Oh, I’m with you. Kevin, that can be the next startup. We can work on it together.
Kevin Kessinger: I’m there for you. So, one more, call it, real life data trend, and then I need to get back to some of the tech stuff. So, in one of your recent white papers, you took a deep dive into what you call migration hotspots. Can you tell us the hotspots, the draw factors, some high-level takeaways that would matter to developers like Trademark and others?
Ethan Charnofsky: So, I think there’s some really interesting things. And it’s an extension of what we saw happening during the pandemic where there was this move of specific audiences to other areas of the country. And so, everyone was talking about Tampa, and we were talking about Raleigh, North Carolina, and Austin, Texas, and Phoenix, and those were super exciting spots.
And so we wanted to do this check after things had started to level out and see what are areas that are popping. And so, one of the ones that really stood out for us was Fort Myers. Florida was one of them. But another one was Boulder, Colorado.
Boulder, Colorado, to us was fascinating because it speaks to so much of what drives these migration trends and what creates the opportunities around them. So if you look at the prime areas where Boulder, Colorado, was pulling from, especially out of state, this isn’t just I was living in a nearby city, and I moved kind of one CDSA over one degree of separation over, but they were pulling from places where there was a higher cost of living to a lower, and Boulder had a lower cost of living, where the places according to niche scores, which scores areas based on fit for families and the caliber of schools, where the caliber of schools was higher, where the fit for families was better, they were moving to cities that offered them more for less.
That tells us some really interesting things. One, it tells us that the millennial generation is growing up and finally doing that move into the suburbs. And I think it’s really exciting because I think it says, here’s an audience that’s been in cities, kind of holding on a little bit longer than other generations to that city urban dream. And then they move into these suburbs, and they move to places where they’re more likely to buy, where there’s a lower cost of living, where in many cases, the cost of renting was more expensive than the cost of purchasing, from like a regular ongoing basis.
And so, you now have this audience who has more space, potentially more money to spend, and they have first time demand because they’re moving into this suburban environment. So, if I’m a retailer or I’m a retail developer, I’m looking at these areas and getting really excited because this is the chance to build an ongoing relationship. This isn’t an audience that’s going to be gone in a minute. They’re going to be there laying down roots and there for a while. And the ability to kind of establish within those spaces and become part of those routines I think is very, very exciting.
I would also argue that the flip side is exciting. So, any place where we see positive migration into, the places where people are leaving from, it might take a beat longer to develop, but there’s going to be an opportunity there as well. And so, there are these fascinating trends of like older couples moving out of the suburbs back into cities. And if I’m a retailer, I’m excited about that. I think it’s really important to understand a lot of the changes we’re seeing in retail through that lens of it’s not just changes in audience demand. Very often, it’s changes in where audiences are. Understanding those patterns can unlock a lot of analysis into where the opportunities may lie.
Kevin Kessinger: It’s the most exciting part by far of what we do at Trademark, understanding those trends and the corresponding needs to develop not just centers, but actual neighborhoods and actual communities, whether it’s in the suburbs or infill or urban locations to just understand that based on those demographics and based on those moves, what the community is looking for and having integrated retail, multifamily, and other amenities.
So, okay, as promised/threatened back to some of the tech stuff. So one of the things I think we spoke about last time you were on the podcast were some of the challenges for mobile data, when we have enhanced privacy features on our devices – latest developments there and how it’s impacting what you do.
Ethan Charnofsky: So, we are lucky both in terms of what our approach was very early when it was less popular, and kind of the when we launched. We launched when GDPR and CCPA were already a thing. Privacy was part of our approach and focus from the day we got started, which meant that we were developing around this from the beginning, we have a clear orientation to privacy, we invest in it tremendously.
And so, from our perspective, we haven’t seen an impact. And we very strongly believe that so long as we remain committed to being a privacy by design company and to taking the steps, even when they make revenue more of a challenge, but taking the steps to align ourselves with privacy is the right way to build a data business.
Kevin Kessinger: So, if you think then that that’s been ingrained in your business essentially since you started, makes all the sense in the world, I suspect if I asked you whether AI has been integrated in your business from the start, maybe not as much. You’re in nine different verticals now as a company, you’ve got enhanced features and offerings. This is the part where I’m going to ask you to flex to the future and the aspirational.
So how are you leveraging AI? Are you thinking about what Placer looks like three years from now, five years from now? Let’s hit the fast forward button, Ethan, and tell me where things are going.
Ethan Charnofsky: Yeah, so I think it’s interesting to look at this in the AI lens and the short-term lens and maybe a longer-term lens. So, if you think about it from the AI perspective, yeah, we’ve been doing this for a long time, and AI is a very valuable tool for a company that’s dealing with massive amounts of data to utilize to make that processing more effective, more efficient. It’s super challenging, but it’s something that we’re really proud of. But it’s definitely very back end for us in terms of the way we’ve approached it until now.
I think the next phase of our engagement with AI that’s newer, so if we think it’s less about how do we process massive amounts of data, do it quickly, do it accurately, get to these estimations that we feel confident in. The next piece is to start leveraging its capability to enable a conversational, engaging component within our product. So, as a product becomes broader, it becomes more complicated, there’s more you can do, and AI presents us with this powerful opportunity to allow our customer base to engage with the product, to start really speaking with the product, conversing, driving this conversation that allows them to get from question to answer so much faster. And so that’s a big piece that is guiding our vision, and definitely watch this space because we have exciting things that are deep in the works and going to be launching in the near future.
I think when you when you think about short term, or even longer term, there’s kind of guiding principles for the way we’re developing. And you talked about this, we have a lot of verticals we’re operating within, constantly identifying new use cases. And so, there’s this desire to essentially do three things simultaneously. One is expand. So how do we make the product valuable for more people? So, if you’re a CPG company, how do I build tools for you? If you work in merchandising and retail, how do I build tools for you? If you’re in multifamily or office real estate, not our traditional retail space, how do I help you find value? At the same time, we want to deepen the places we’re in. So, we’ve been working in the retail real estate space since the very beginning. We’re not losing sight of that audience. We want to keep on building more and more products, tools, and features to empower them to do better work.
And then the last bit is simplifying. So how do we get to a point where we have more A to Z solutions? So, site selection within our platform, void analysis within our platform. There’s a lot of things in the works that allow us to go take a process that we’ve become familiar with, that we understand how our customers are using our product to engage and make it a click of a button so they can get there fast. Because time is your most precious resource. And the more time we can give back to the really incredible people who make up our customer base, the more exciting things they can do. And that’s really a huge focus for us.
So, in the last year, we’ve launched tools that allow you to better plan your advertising, measure the impact of campaigns, geo-targeting tools, Map Studio, which allows you to very quickly create these advanced maps that will show off kind of for brochures or what your shopping center brings to the table or the reach of your true trade area and key audiences. We launched Short Visits. This was a massive undertaking to get Short Visits rolling. It’s something we worked on for years to get right with several partners with source of truth data. And so that launch was a massive step forward for us. We’ve launched products out of home and retail media, things about sports stadiums.
So, I think the exciting thing about Placer is, for those of us inside and hopefully for those who get to use it, you do get the sense that there’s this almost endless potential to do more. And so, for us, it’s like at the end of the day, make sure we get a good night’s sleep and get back in the office because there’s just so much more to do.
Kevin Kessinger: Well, and when I think about the way I’ve leveraged Placer, I’ll admit, and it’s ever increasing, the learnings from the data that comes in as to what did happen is fascinating. I guess I’m a bit curious, are predictive analytics – I should know this, I don’t – are predictive analytics a part of what you’re already doing? Is it something to which you’re moving? It’s one thing to know how my campaign did work. It’s another thing to say, I wonder how it’s going to work. Help me out on the predictive side of the business.
Ethan Charnofsky: So, the answer is yes, we are absolutely working on this. But there is also an element to- Look, we take accuracy really seriously. It’s a key part of it. We are really constantly focused on finding ways to get better. So, for something that’s predictive, you want to make sure that you’ve thought through as many of the problems as possible.
So, we take a beta process where we work with certain customers to try something out before it’s launched more widely. We take it really seriously. We do it when it’s literally investing tons of just human capital to do it ad hoc, so that when you build out the product, it’s as efficient and effective as possible and as accurate as possible. So, a lot of the stuff is in the works and some of those things we’re going to see in the very near future. But we feel a real responsibility to ensure that when we deliver something, it’s something that our customers can use and use with confidence.
Kevin Kessinger: Can’t wait, can’t wait to see it and fully understood on the accuracy part. Earlier, you made a comment to the effect of Placer listens and maybe that’s how you innovate or that you don’t innovate, you listen. But I want to flip that script with you, and I want to learn from you. I want to listen to you.
So, as a developer of mixed-use properties, what are some high level takeaways you can share with us about effectively using the data to develop or redevelop effective properties, help us decide on the right mixed uses? I’ve got one more question, but help me out on that part of it first.
Ethan Charnofsky: So, I think it’s interesting. I think Trademarks definitely been a power user, always amongst the more creative users of the data too. I think that’s one of the pieces that really matters – do you know the questions you want to ask?
I’ll give you this one that’s silly, but who is actually your audience? The number of times we would speak to a group that owned some real estate center, some shopping centers or retailers themselves, they would say, we know who our audience is. And in some cases, they were right. And then in some cases, they were completely off. And that’s why expansion strategies don’t always work. And that’s why entering new markets is such a challenge, because if everyone knew their audience perfectly, they would never make the mistake.
And so, I think that one of the things we can really do is just at the starting point, help challenge assumptions, help you really ask who your audience is, help you identify other factors that drive success beyond the ones you’re thinking of.
I’ll give you one of my favorite examples. I had been working at Placer for only a very short period, and there was a company that came in and said, okay, you want us to sign? Here’s your exam. We have done very well in state X. We just launched in state Y, and we’re not doing well. And even worse, in the stores that we’re doing well, we have no idea why. It’s completely stumping our models. Go figure it out; we’ll sign it.
And they went back, and they found that the best indicators for their success in this new market were proximity to competitors and demographic factors that were completely opposite from the ones that were driving success in the other region. And look, there was a different dynamic in this market. There were certain dynamics they hadn’t accounted for. And so, we were able to help them understand this process that was fundamentally new. And it changed the way they viewed their expansion process.
And so, I think that the starting point that I always like to start with is always challenge the underlying assumptions, and the data helps you do so and helps you do so quickly. So, it’s not this costly endeavor. Because when you do that, you’re going to identify very likely opportunities that you otherwise would have missed.
And so, when you take that type of critical thinking, that first party thinking of, oh, can we figure out something that other people haven’t? Or can I find other areas of the country that look similar? Now that I’ve identified what my mix is, can I find a place where someone else has already done something and it’s working? And then I can minimize my risk. Ooh, in this area that looks a lot like mine, when they combined a fitness chain and a health tenant, wow, look, the success was demonstrable. Should I apply that model here even when it wasn’t one I was thinking of before?
So, I think the ability to essentially travel the country in seconds, look at anything anywhere is such a gift. And when you think about the costs associated with a mistake, taking that extra beat to say how can I make this a little bit better can change the trajectory of a shopping center and, in some cases, a company.
Kevin Kessinger: And I love the democratization, if you will, of that data. I’ve been in this business long enough to remember the times when the gap between what a landlord knew about a target customer versus what a retailer knew was so big. They had the benefit of customer loyalty programs that provided them insights well beyond what we could do. And with the advent of Placer and some similar technologies, the fact that we as a landlord can start to help them see a target better has been just really fun to watch.
And I mentioned there was at least one other element where I want to listen to you and grow. You’re probably in a position to see a bunch of the neat prop tech stuff that we like. And despite my inbox getting flooded with various proposals, are you seeing anything neat out there that a landlord should be thinking about on PropTech that maybe we’re not already thinking about?
Ethan Charnofsky: So I think there’s a few things that get me excited. Anything related to retail media I’m really in on and physical spaces. I think out of home is seeing this really interesting comeback. I think digital out of home allows a degree of flexibility that wasn’t there before. I think thinking of space differently is a big opportunity in terms of understanding that I can draw people to my center, I’m bringing lots of people value, how do I optimize for it?
An idea I heard of that I thought was so cool was charging stations that promote deals within the shopping center. So, I choose to go to Shopping Center X because I’ve got a Tesla and I need to charge it. And then it’s like, ah, if you walk into our local coffee shop, you get 50% off that blueberry muffin when you get a coffee. It’s like, all right, well, I’m already here charging my car, maybe I’ll pop in. Then I walk out, I see there’s another store. So, this idea of using these elements as like levers, first of all, they’re revenue generating already. But then using them as like levers to actually drive more value to the shopping center to me is really exciting. That’s one that I like a lot.
I’ll kind of roundaboutly answer your question. I think one of the other areas that’s really important to focus on is frontline workers. I’ve been in the tech space for a while. I’ve seen the overhypes of blockchain and just walk out and metaverse and name whatever kind of technology you want to throw in there. Sometimes there’s not enough focus on what’s actually going to move the needle for the customer.
I think one of the craziest things is just empowering frontline workers to provide better service. That’s a huge thing. And with that, coming back to where we talked earlier, is starting to empower and enable what I call like true omni channel of a seamless experience that carries through because the store provides a lot more value than we give it credit for. Very often, we don’t give it credit for it because we can’t measure it. So, if I walk into a store, and I try on a shirt and I buy one shirt, are you measuring the fact that six months later, I bought five more? Or if I go in and I walk through a store and I spent 15 minutes in your location, are you engaging with me and trying to understand what happens later? Am I trying to look at what was the impact in the immediate area? What was the impact in the trade areas that that store pulls from? Did I see more online purchases?
Because one of the things that we see so often is that the physical resource gets underutilized because it’s undervalued. So, they don’t realize the distribution potential from a store and how that can bring down costs of return or last mile fulfillment. And so, all these technologies that kind of better leverage assets that we’re already spending on, those are the things that get me really excited.
Kevin Kessinger: And we’re getting, it feels like on that last point, we’re getting closer to it almost in kind of the negative way of analyzing it. We look when a store closes in an area and what happens to their online sales, and it becomes pretty obvious that the physical store did matter, and we try to draw conclusions from that. I really liked your comment on the frontline workers and making sure they’re empowered. It really resonates with some of the recent shakeup at Starbucks, for example, in terms of making that experience better.
So at least one more area I want to make sure we touch on is public service. Trademark, through its Make a Difference Foundation, takes these initiatives very seriously. We are full believers in the notion that people do their best and hardest work when they’re working for others. And I know you all have the Data for Good initiative. So, I’m sure, this is a super proud moment, and I’ll try not to get misty, but it sounds like a unique collaboration. Give us some examples of what you’re doing with Data for Good.
Ethan Charnofsky: We were really lucky early on to get to work with some amazing groups that were finding ways to use the data to serve the public. So, Blood Centers of America, figuring out where better to place their mobile locations so that they could provide the life changing resources that were necessary.
I think areas where we also see it, and you talked about this before of like this democratization, so much of that starts with education. So, we’ve always had a freemium version of our product. We have lots of prospects that will come through and say, hey, how much does it cost? And we’ll say to them, too much, so don’t use this. Use our free tool. That’s why it’s there. It’s there to help kind of a mom-and-pop shop and empower them with data, even when they’re not in a position where they need the full set of tools we can offer. We have programs that we’re working on with universities to start educating students and provide this data because it can be such an asset to a young person entering the job market and giving them a skill set that might otherwise be lacking.
And so, for us, we try to lean into who we are, and I think, in the end of the day, we see ourselves as a data company that can bring a level of visibility that wasn’t there in the past. And so, the question then becomes how do we use that same identity to provide value back into the communities that have been so supportive of us? So, whether it be work with academia, work with special organizations, it’s something that’s really important to us and we hope to continue to expand.
Kevin Kessinger: Got it. Well, we’ve taken a good chunk of your time away from listening and innovating. But maybe to close here, Ethan, anything else about Placer or retail or retail real estate business you’d like to share or talk about before we wrap up?
Ethan Charnofsky: Yeah, I guess the one thing is this. I came to the world of online data. And so, when I came to Placer, it was like, oh, my God, look at all the things, you get to show the 85% of retail spend that’s actually happening offline, not online. And what I found when I got into the space was, I don’t want to, you don’t want to make it over exaggerated, but like a somewhat less confident than it should have been physical retail environment, where the retail apocalypse was the dominant narrative and people were trying to explain how they were going to cope with the rise of digital channels.
And I think we’re seeing this really incredible transition from retail apocalypse to retail renaissance. And to make that happen, it’s about recognizing how powerful physical spaces are for businesses, how important shopping centers are and the role that they play, and expanding our viewpoint of what happens in physical retail and how that can be leveraged to drive better businesses moving forward. I think we’re experiencing a really exciting moment, and the more we lean into this wider value, more opportunity, the more effective we’re going to be as an industry.
Kevin Kessinger: Totally agree. Such an exciting time to be in retail with the market dynamics coming around to growth that we haven’t seen in a long time, to think that we can do it now with data and tech and knowledge well beyond what I certainly would have dreamed of when I started in this business makes it a pretty exciting time to be in this space. So, Ethan, really appreciate the time today. Thank you so much.
Ethan Charnofsky: Thanks so much. It’s always great to be here.
Kevin Kessinger: That wraps up another great episode of Leaning In. A huge thank you to Ethan Charnofsky for sharing his insights and expertise with us today. If you enjoyed this discussion and want to dive deeper into trends shaping our industry, be sure to check out the Leaning In podcast for more thought-provoking conversations. Visit us at trademarkproperty.com for more information. And don’t forget to subscribe and join us next month for another episode. Thanks for tuning in and we’ll see you soon.