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Optimizing Co-Tenancy With Cross Shopping: A Data Deep Dive

Zohar Bar-Yehuda
July 9, 2019
Optimizing Co-Tenancy With Cross Shopping: A Data Deep Dive

Few elements can drive success for a shopping center or retailer more than having an optimal tenant mix in a specific location. For many, tenant mix has been about creating a diverse experience centered around anchor tenants that allow consumers to accomplish as much as possible in a single location.

But is that how we really shop?

Cross shopping reports are a critical measure of brand affinity that shows the likelihood of a consumer to connect with two different retailers. This information enables retailers, shopping center owners, brokers and beyond to create an ideal shopping experience that can increase the pie for all tenants in a specific location. 

Which retailers fit best together? How do consumers really approach their shopping? Which anchors have the strongest pull for other tenants?

While cannibalization, void analysis, competitive intelligence and beyond all play a critical piece in developing the perfect tenant mix, we’re going to shine a light on some of the key findings from the key cross shopping perspective. In this case, the percentages shown reflect the number of visitors for a retailer that visited the other retailer on the same day - making it one of the strongest indications of overlap and affinity. To do so, we took cross shopping reports from New York, California, Florida and Texas from January through May of 2019.

Dream Anchors

Unsurprisingly, no matter which state you analyze there are two retailers that rise above all others - Target and Walmart. Where strong daily cross shopping can be anything above 1.0%, Walmart and Target can drive cross-shopping opportunities in the low teens! 

For example, in Texas, 13.0% of Hobby Lobby customers will also visit a Walmart Supercenter on the same day as will 12.9% of Ross customers. Target sees equally impressive numbers in Texas with 8.9% of Home Goods customers visiting a Target on the same day and 8.0% of Marshalls customers doing the same. 

Even more interesting is the types of brands that these two anchors best serve. Taking New York cross-shopping, Target sees 5.4% same day cross shopping from Bath & Body Works customers and 4.8% from Bed, Bath & Beyond visitors. These numbers are 25.6% and 108.7% higher than Walmart’s cross shopping with the same brands in NY. On the other hand, Walmart sees 115.8% higher same-day cross shopping with Home Depot and 55.1% more cross-shopping with Kohls.

And these differences can be enormous for a shopping center or retailer looking to maximize opportunities. A behavioral focus on Walmart or Target customers can create a customer journey that enables a shopper to accomplish more on each trip, thus increasing their overall spend in a center. Even more, it helps define the ideal customer profile from a marketing perspective to help improve targeting.

Grocery Partners

Beyond Target and Walmart, there are other classic anchors that can show tremendous value to their co-tenants. Grocers are among the most highly sought after tenants to serve as the primary focus of a shopping center. And, here too, there are key factors that can help define the most opportune mix. 

We analyzed Florida based grocers and found that there were significant differences in how the different brands complemented other top retailers. BJ’s Wholesale Club shoppers were 100% more likely to visit Aldi’s on the same day than a Whole Foods shopper and 214% more likely than a Trader Joe’s shopper. Yet, a Trader Joe’s customer was 73.7% more likely than a BJ’s customer to visit a Starbucks on the same day, and a Whole Foods customer was over 93.8% more likely to visit a Starbucks than a Costco visitor.

While all of these brands saw strong visit rates, the king of Florida grocery retail is undoubtedly Publix. 9.7% of Trader Joe’s visitors also frequented a Publix on the same day. And it wasn’t limited to one brand with 9.9% of BJ’s visitors, 9.1% of Whole Foods visitors and 8.7% of Costco visitors doing the same. This is particularly impressive considering that these should be rival brands and all of this cross shopping is happening on the same day! Instead, we uncover a hugely important factor about Florida grocery shopping - consumers are looking to complete the entire task and are willing to visit multiple locations to do so. 

Customer Journey - A Mission Oriented Customer

The idea of a single shopper visiting multiple groceries on a single day throws into question a prevailing assumption about shopping centers - that a mix of different types of tenants is the ideal way to create a complete experience. Yet, perhaps a different approach could unlock opportunities. 

Analyzing Cross Shopping shows that shoppers may not be looking for a comprehensive experience, but one that allows them to effectively complete a specific task. Looking at cross-shopping data from New York shows that this can be especially true in the area of home improvement. 6.5% of Lowe’s Home Improvement visitors will also visit a Home Depot on the same day as will 2.5% of HomeGoods visitors and 2.0% of Hobby Lobby visitors. The willingness of a visitor to travel between multiple centers to accomplish these tasks speaks a potential opportunity for these brands to sit in closer proximity in order to benefit from the full cross shopping potential.

The same trend holds true for apparel where 9.1% of UNIQLO shoppers also visit a Macy’s, 3.4% of Nordstrom Rack shoppers also visit a Marshall’s and 18.% of Old Navy shoppers also visit a T.J. Maxx.

The Lessons

Cross-shopping reports are a powerful way to analyze consumer behavior in order to build the ideal shopping center experience. The first key lesson is that Target and Walmart are truly the heavyweights of Brick & Mortar retail, providing major benefits to almost any brand that sits close by.

The second lesson is that not all Grocers are created equal and that different brands can have dramatically different levels of impact on other retailers and even other grocers. Surprisingly though, there are several grocery chains that not only see large shared audiences but could actually benefit from proximity.

Finally, there is room for a more nuanced conversation about the ideal customer journey. While there is certainly competition between brands in the same space, there is also a powerful opportunity for similarly focused retailers to benefit from close proximity. This takes into account a specific type of high intent shopper that is mission oriented on a specific day.

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