Technology has transformed how we function on a day-to-day basis and how we do business, making our lives easier. Take a look back at your week and you will have most likely taken an Uber to a meeting, bought a coffee with your phone, read a book on your Kindle or presented something using your iPad.
It is therefore no wonder the retail and leisure industry has come round to the idea of how technology can make everyday life easier. With Artificial Intelligence (AI) and algorithms in the news on a daily basis, are we seeing a shift towards accepting advancements in technology as an everyday necessity?
Yes, some argue – especially when it comes to how occupiers are reacting to and keeping up with the accelerating pace of technology in retail and leisure. Once the stuff of legends, brands on the high street and in shopping centres are embracing smart changing rooms, AI, cashless pay points and even, as one high street bank announced recently, robots.
And it doesn’t stop there. With the omnipresent opportunities presented by online, brands are reacting to greater pressures on physical stores and the need to stay relevant in order to retain custom. Experiential stores were the talk of 2017, boasting in-store cafés, running tracks, beauty bars – you name it. Customer retention has become the order of the day and peeling people off their sofas has become even more necessary as high street footfall struggles.
We also only saw last month restaurant chain Wagamama announce the launch of an app that enables customers to simply walk out of the restaurant once they have finished their meal, with payment automatically taken from their account. This enables customers to connect directly to a Masterpass digital wallet – with payment being automatically taken, without the need for the customer to tap a pay button.
Alongside technological advancements, and we have seen the leisure sector up its game in recent years in order to entice shoppers. Like retail occupiers, leisure operators and landlords have realised the need to monetise experiences for greater dwell time and spend, creating something that consumers return to several times. Long gone are the days of a mere cinema on the top floor of a shopping centre – we are in the era of trampoline centres, darts clubs, e-sports arenas and crazy golf concepts.
New ways to understand consumer behaviour are crucial for the modern brand to survive – especially in light of increased competition and the whimsical, ever-changing habits of the consumer. Until now, this is something that has predominantly affected the retailer however, we are now seeing how retail investors are upping their game in order to keep up.
In a world where investors have historically relied on a calculator and spreadsheets to work out the viability of a deal, we are beginning to see how increased technology is making life easier. The sophistication of computer algorithms means that we are able to use other methods to identify patterns and deduce answers from machines that do not require human input or maintenance. Whilst many argue that this newfound intelligence, or indeed tracker funds, heralds the start of something great, others will either err on the side of caution or seek outperformance from active owners/advisors using technology alongside “gut instinct”.
Nowhere is this truer than in the retail investment sector; retail is no homogenised commodity and should be handled with care – especially in an age where the sector is often viewed as volatile. Retail assets are complex beasts and require a level of instinct that computers do not provide. In-depth knowledge, tailored advice and on-the-ground expertise are all key ingredients for a successful shopping centre and these unique insights are what make for a successful asset. However, understanding detailed consumer-friendly habits and shopping patterns can help educate and inform investment decisions.
So, as we think about where technology might take us in the next five years, it is true to say that there is a place for such advancements, especially on an occupier level. But when it comes to the investment sector, we must realise that there is no direct replacement for instinct – nor for that beaten-up, trusty 15-year old calculator. Technological advancements are not something we can ignore, but we need to learn how we can best use them alongside instinct and experience to continue to deliver the best results for the industry.