Interesting fact: 75% of consumers have shopped or are open to shopping for secondhand clothing. How is this relevant to commercial real estate (CRE), you ask?
Well, it’s a consumer habit or ‘consumer insight’ that gives us a snapshot into consumer buying behavior in certain retail sectors.
To adapt and succeed in the CRE industry, you need a deep understanding of the people that live, work, and shop in your buildings. Understanding consumer habits or insights provides a 360-degree picture of your customers’ needs and wants.
What’s more, with geographic information systems (GIS) technology, CRE professionals can access a powerhouse of consumer insights all at the touch of a button (almost).
We’ve put together the following guide to show you how GIS can help you to understand and analyze your customers. Let’s dive in.
What Are Consumer Habits and Why Analyze Them?
Consumer habits are the typical shopping behaviors and buying preferences of people.
This includes where they like to shop and what they like to buy. It goes without saying that with 8 billion people on the planet, there will be billions of different types of preferences.
The magic comes in when you group people together who have similar habits, and use this information to inform your retail strategy.
Knowing about consumer habits helps with decision-making about store location, design, and amenities. Retail owners can learn what kind of products or services to offer to improve customer satisfaction. Customer preferences also influence decisions about ideal tenant types in retail centers.
In short, understanding consumer habits can help with:
• Ensuring that what you offer is what people want
• Using space efficiently
• Increasing tenant satisfaction
• Increasing foot traffic and revenue
• Using people's preferences to maximize profitability and sustainability
The Evolution of Consumer Insight Collection in CRE
Collection of consumer insights in CRE has evolved from traditional methods (surveys and interviews) to modern GIS-based approaches. Traditional methods offered limited insights and were often restricted by sample sizes and geographic coverage.
The shift to GIS has transformed the ability to analyze consumer habits using digital and mobile technology. AlphaMap is an example of a cloud-based GIS location insights platform designed specifically for CRE professionals.
GIS enables you to integrate geospatial data with an array of other insights. Consumer behaviors and market dynamics are but the tip of the iceberg!
Through GIS, stakeholders can visualize patterns and analyze spatial relationships. GIS-based approaches offer even more advantages, such as:
• Improved accuracy
• Real-time data updates
• Predictive modeling
• The ability to cross-reference or overlay diverse datasets
This can lead to more comprehensive analysis of consumer behavior, which in turn results in accurate targeting and strategic decisions in the competitive world of retail.
Integrating GIS with Other Consumer Insight Tools
Using GIS and other consumer insight tools together helps you understand consumer habits in greater depth. When you combine GIS with the following tools, you can learn more about the trends and preferences in specific geographic contexts:
Social Media Analytics
If you combine GIS with social media analysis, you get insights into regional sentiment, feelings, opinions, and influencers. This can help you create targeted advertisements for specific regions and customer types.
Customer Relationship Management (CRM)
You can use GIS to combine location-based information with consumer data. This helps you recognize patterns and understand how behavior relates to location. For example, by integrating GIS with CRM data, you can learn where different types of customers live and customize your offerings accordingly.
Demographic Databases
Using GIS with demographic databases can also give you more information about where your customers live, work, and shop. This helps you make data-driven decisions about market expansion and site selection.
You can also fine-tune your strategies to personalize consumer experiences.
Applying Consumer Insights in CRE
From site selection to strategic marketing, GIS helps to make data-informed decisions that match consumer needs and maximize success. Let’s take a closer look at a few applications of consumer insights in CRE.
Site Selection
GIS makes site selection in CRE easier and more accurate. Real estate professionals can use GIS mapping tools to identify the best locations for retail businesses. Use demographic data such as population density and income level to help determine which places are good for development or growth. Use foot traffic data to ascertain which areas receive the greatest number of shoppers of a particular demographic type. Using a GIS tool, like AlphaMap, you can run void analyses and trade area analyses.
Shed Light on Market Trends and Dynamics
GIS allows CRE professionals to see market trends so that they can make smart choices when buying or investing in properties.
A GIS location insights platform brings together layers of different types of data to give a complete view of market trends. It combines information about what people like and where they go. It also shows you where competitors are located.
With this information at hand, CRE professionals can learn valuable insights about changing market dynamics and even predict demand and future property values.
Tenant Profiling
Consumer insights from GIS are important for identifying and attracting the right tenants. A CRE broker looking to fill up some retail space might look to GIS to match customer demographics and preferences with tenant types. AlphaMap’s TenantFinder™ tool uses powerful algorithms to quickly identify which tenants are best suited to which locations. Essentially, analyzing consumer habits to help with tenant profiling helps to maximize occupancy rates for CRE owners, while also keeping customers happy.
Marketing and Outreach Efforts
When it comes to CRE marketing, GIS-based consumer insights allow you to better understand your target audience. When this happens, you can improve your marketing and outreach strategies.
Tailor your campaigns to resonate with the interests and behaviors of potential clients. This personalized approach can increase visibility and attract more people to your properties.
Overcoming Challenges in Consumer Habit Analysis
Human behavior is influenced by various factors, such as:
• Socioeconomics
• Culture
• Personal choices
GIS data may not fully capture all the nuances, which can lead to oversimplifications or misinterpretations. There are also privacy and ethical concerns related to collecting and using GIS data.
A multi-layered approach that links GIS data to socio-demographics, psychographics, and transactional data is helpful to overcome these limitations.
Best practices for analyzing consumer habits using GIS include:
• Ensuring data accuracy
• Using advanced analytics techniques like machine learning to find patterns
• Keeping consumer information private and anonymous
It's important to continually validate and improve the analysis by observing the real world and getting feedback.
Future Trends in GIS and Consumer Habit Analysis
GIS is getting better with the help of new technologies like augmented reality (AR), virtual reality (VR), and artificial intelligence (AI). These technologies create immersive, interactive environments which simulate the real world.
AI and advanced machine learning algorithms will help to process spatial data so CRE professionals can analyze where and how consumers behave. This will help with market segmentation and create more customized marketing strategies and products.
In real estate, AR and VR will revolutionize property showcasing. Prospective buyers will be able to virtually inspect properties, explore design options, and even walk through them. This will make the buying experience easier for both CRE buyers, sellers, and tenants.
AI-driven predictive analytics will be able to improve property valuation and more accurately predict market trends. All of this will help real estate professionals make better decisions based on data-driven insights.
Getting Started with GIS for Consumer Insights
There are several steps you can take to get started with understanding consumer habits using GIS:
1. Identify the specific consumer demographics and behavior data you need for analysis
2. Identify the data sources you need for your analysis
3. Import and organize the relevant data sources
4. Use a GIS analysis tool, such as AlphaMap, to create and analyze spatial patterns and correlations in the database
5. Use geospatial techniques such as spatial cluster, proximity analysis, hotspot identification, and so on, to uncover consumer trends and preferences
6. Use these insights in strategic planning to improve site selection decisions, targeted marketing, and consumer experience
7. Keep refining the process to adjust to changing consumer behavior and market dynamics
Remember to double-check that the insights you get from your GIS analysis are always relevant and accurate.
Final Thoughts on the Importance of Learning Consumer Habits
It’s essential for CRE professionals to consider what people want and need in an increasingly digital world, and to adapt their strategies accordingly. GIS and spatial analysis are changing how we study and interpret consumer behavior, for the better.
In the future, GIS systems with advanced AI might be able to predict market changes and give personalized options based on consumer preferences.
The big question is: Can the real estate industry take advantage of GIS while addressing the issues around ethics, privacy, and skills?
It’s a challenge which we’ll likely see evolving over the next few years (or sooner). One thing’s for sure, the time to get on the train is now. Don’t get left behind!
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