2018 was a pivotal year for retailers. From better serving their customers and reinventing their customer experience to ensuring their operations are as efficient as possible, many retailers faced challenges from both a real estate and a facilities management perspective.
Reinventing the Customer Experience
Some common challenges that our retail clients faced in 2018 were driving foot traffic and return visits to stores. In a market where consumers have so many options, it is hard to sustain foot traffic to stores using outdated concepts while other retailers are providing new services, expanded offerings, faster shipping, or additional value in ways others cannot.
A good example is how malls are pivoting to become more service-oriented for their communities. We see malls adding services like post offices, libraries, and community centers in order to attract more engagement from the communities they serve.
Another example is how retailers are looking at supply chain management and fulfillment. Many big box and national retailers are utilizing the space and products held in their stores as distribution centers for their online orders. As a result, retailers can better manage quick deliveries and same-day pickup for customers who want their items today rather than next week. This approach also adds more pressure to ensure each store has enough of the right products to fill orders and satisfy shoppers.
Real Estate Challenges
Retailers are facing challenges across the board when it comes to real estate. Retailers want to find the best locations with the best values. They are trying to become more efficient while still providing their customers with the best possible service. Retailers are right-sizing their portfolios and ensuring their locations are where their customers are.
Another challenge in real estate is the sheer number of closings, openings, moves, and mergers and acquisitions that have taken place or are planned in 2019. These changes create new issues around remodels, store opens, and keeping as many revenue weeks as you can on the books. While remodels are proven to help drive customer traffic, projects can be delayed or extended, causing locations to lose money. Retailers win when they open sites early and gain additional revenue weeks from a new store opening or a remodel.
FASB/IASB compliance is another challenge that adds pressure around leases – from real estate to equipment – that must be accounted for on the company balance sheet. To ensure compliance, both public and private companies must align their real estate, finance, and accounting teams in recording assets and liabilities on the balance sheet properly.
Operations in the retail business is where we see many facilities management professionals trying to reduce spend per site by upwards of tens of thousands of dollars. Key areas of focus include:
- lowering maintenance and repair spend at the site level
- controlling energy costs
- increasing the efficiency of PPM and CPPM schedules and work
Reducing maintenance and FM spend is an even larger issue when considering the technician shortage that so many businesses are experiencing. Many store locations are unable to find consistent and reliable maintenance professionals to close work orders, much less a partner to help the retailer bring down costs such as maintenance and repair spend per site.
Many standalone retailers are evaluating how to run their maintenance operations and if it is better to run their own maintenance department or outsource to a third party in order to avoid maintenance headaches. Some retailers who have made the choice to outsource are bringing their maintenance efforts back in house due to ballooning costs from outsourcing.
Real Estate and Facilities Management Lifecycle
Retailers are being bombarded on all sides of their business to continue to innovate for their customers, drive new revenue, bring down operating costs, and stay relevant in their markets. At Accruent, we pride ourselves on partnering with our retail customers to drive better management of the real estate and facilities management lifecycle.
If you are having trouble with any of these challenges retailers are facing – contact us today.