You're never going to buy a suit online

June 2014

Last week I heard the funniest thing since the IT director of the now defunct Healey & Baker said ‘the internet is a solution in search of a problem’.

It came via a twitter exchange with the retail property analyst at one of the biggest surveying firms. Responding to comments that the @marksandspencer desktop website (newly rebuilt amidst great fanfare) was actually rather poor he wrote that it was good enough and that anyway ‘you’re never going to buy a suit online’.

Now the Healey & Baker comment dates from 1996, so at least he had an excuse. In 2014 though such wrong headed, ill informed, blinkered nonsense is not only inexcusable, it represents a damaging and dangerous mindset.

How so? Surely you protest too much!

Well no. And this is why?

You cannot understand how the retail property market is going to evolve without a deep understanding of how the online world operates. Who is shopping online? Why are they shopping online? What are people buying online? Which retailers are best at servicing this market? What fulfilment options are available, and what demanded? What are the tools available for bricks and mortar retailers to fight off the online challenge? And how will online retailers counter these?

Answering these questions will tell you:

Which retailers are likely to prosper
Which retailers are likely to wither and/or die
How the High Street will evolve
The future of distribution property
What’s next for out of town retail

And on top of that what marketing strategies are required to reach, engage and persuade shoppers to visit physical shops.

Recently the success of click and collect services has prompted property people to proclaim a victory for physical shops. An audible ‘told you so’ triumphalism has been rumbling around the commentariat. See, they say, you need shops to leverage the demand for click and collect.

But this is nonsense, and is looking through the telescope the wrong way.

For example take last Christmas at John Lewis as indicative of what is going on: Sales at its stores rose 1.2% in the five weeks to 28 December with online sales soaring almost 23%.

Spot the trend?

Shoppers aren’t using click and collect because they want to visit physical shops. They are using it because it is more convenient than staying in at home waiting for a delivery.

And as Planet Retail wrote this month ‘Despite the UK being a hotbed for click and collect, only two-thirds of the top 50 retailers currently offer the service. What’s more, only 14 percent offer more than one collection option (i.e. in-store collection, locker, third-party store).’

So imagine the scenario when online retailers crack either same day delivery (or even within a few hours in big cities like London) or delivery via enough 3rd party outlets that it becomes quicker and easier to order online than click and collect.

Then what?

The answer will depend on how alluring retailers can make their shops and the shopping experience. In this vein an explosion of technologies are being developed to enhance the real life shopping experience but these are for a different blog post.

The point is that this is a brutal battle, click and collect alone is no saviour, and technology will be enlisted as weaponry by both sides. To believe that ‘you’re never going to buy a suit online’ when the reality is that dozens if not hundreds of retailers are already selling tens of thousands of them online already is truly a damaging and dangerous mindset.

Who wins and who loses this battle will affect the value of property up and down the country and if you don’t get the importance of technology in this equation then your forecasts are liable to not be worth the paper they are written on.

Now, who wants the argue the point?

Antony

How is technology set to further shape real estate?

May 2014

Last night the London Business School hosted a conference which contained a panel on ‘How is technology set to further shape real estate’? As @emily39 couldn’t tweet as she was moderating the session, and @propertyshe (probably the No 1 real estate tweeter) wasn’t there, ‘sociability’ was not high. In fact no one else tweeted anything. This is after all the property industry.

So I thought I’d have a go at answering the questions the panel were asked. @lbs did not mention a timescale but I am going to base my thoughts on the next 10 years. After all we know that we tend to overestimate the speed of technology adoption but underestimate the impact over time.

So in the spirit of only fools try to predict the future, here goes:

1. How will technology change the way investors, occupiers, and managers look at real estate?
For investors I suspect the key point is that they will have much better data to work with. Through the internet of things the built environment will become a throbbing mass of datapoints and investors will know, in real time, the performance of their physical assets. How much energy is being used, how much is being spent on maintenance (and through predictive analytics how much future costs will be) and all other variables will flow through to cloud based software stacks that will guarantee hitherto unheard of financial and operational transparency.

Future datasets will build on the sort of ‘real’ information provided today by Telefonica’s Dynamic Insights group. They ‘collect mobile data, anonymised and aggregated, to understand how segments of the population collectively behave’. This sort of information makes traditional demographic analysis seem a very blunt instrument. This is what people are actually doing, not just guesswork as to what they might be up to.

Combine this data with availability and stock databases, and throw in Land Registry information (which will become open) and retail planning, for instance, starts to be much more a science than an art.

For investors technology will have a big impact. Though they may find themselves replaced by machines altogether.

For occupiers it seems clear that space requirements will change. Offices, for example are not going to primarily be places where you go to do individual work (for technology will/does free you to do that elsewhere). Rather they will be the place you go to colloborate with others. We are human after all and we DO feed off each others ideas, attitudes and beliefs. But you cannot brainstorm all day, every day; so for most people the office will not be your home from home 5 days a week. Seth Godin sums this up perfectly in his post ‘Goodbye to the office’.

The industry is currently awash with research forecasting ever greater requirements for office space but I cannot quite square this with the ‘Second Machine Age’ as written about by Erik Brynjolfsson and Andrew McAfee or indeed the report from the Oxford Martin School on The Future of Employment which predicts 47% of US jobs are susceptible to computerisation. Go figure….as they say.

For managers (I’m presuming this refers to property managers) there will be less of them (tech/robots WILL remove the need for many), but they will be better educated and better paid. Their job will be to run the technology and make their occupiers happy. Quite what that entails is hard to say but will revolve around removing the friction in day to day activities.

2. What have been the effects of recent online channels (including ‘Click and Collect’) on retailer’s property strategies?
Click and Collect HAS been a big success (British Land say 25% of all visits to their retailers relate to it) but I worry that the property industry is making a mistake in thinking this has let them off the hook and the future of retail property is rosy. I believe the reality is that SOME retailers really get it and know how to co-opt technology in such a way as to actually enhance their retail offering. One thinks of John Lewis or Burberry or NEXT. But many/most are pretty rotten at online, offer little that is not, or cannot be, commoditised and do not have the scale or skills to provide a retail experience that will endure in tempting people away from their smartphone or more likely tablet.

Conversely online retailers are getting better and better at providing stimulating, immersive, addictive shopping experiences. Only the best retailers will be able to compete long term. Maybe, perhaps inevitably, that will result in much better retailers but either way it most certainly will hit the economic viability of many and the knock on effect on the overall retail market surely will not be benign.

3. How is technology impacting the demand for logistics assets?
Not really my field but demand has to be growing, though perhaps not in the way many expected. With the rise of click and collect, the move of the supermarkets back into town in smaller convenience stores and the consumer demand for same day delivery (something Amazon are really gunning for) then I imagine logistics centers will pop up on the edge of urban areas instead of/in addition to a few massive ones dotted strategically across the country.

Whatever happens, expect for deliveries to be SAME DAY in the near(ish) future.

4. What are the impacts of flexible working practices (remote access, hot-desking, business lounges etc) and cloud technology on the commercial office sector?
This was covered above (do read that Seth Godin piece) but in essence mobile technology, in concert with cloud computing and ubiquitous connectivity mean everyone has the freedom to work whenever, wherever and in various ways that is what will happen.

In the world of TMT some of these ‘news ways of working’ are already manifesting themselves and developers like Derwent London say that such thinking is informing their developments, such as at The White Collar Factory.

Whether the attractions of hip, cool, naturally ventilated, high ceiling, tech enabled offices will be able to counteract the already huge rental increases seen in the likes of Tech City over the last couple of years remains to be seen.

Personally I think they will. What they won’t enable though is a start up wonderland to compare with Silicon Valley. This will be mature, knowing, moneyed hipster land.

—————————————————————————–

That’s enough guesswork.

What isn’t guesswork though is that between now and ten years time the key technology trends already underway will be transformational and will be highly disruptive. When it really kicks in I don’t know, but whilst I believe in the sunny uplands of technological progress I am certain that those who do not get to grips, as users, with modern tech are likely to meet a not so bright future.

Now who wants to know how to tweet?

Antony

Cycling, Property and the Digital Layer

Over and over again I’ve been banging on* about how important it is for the property industry to embrace modern technology. In particular I’ve talked about social media, location services, big data, the cloud and the internet of things. Often this has led to a degree of bafflement as in the abstract these things can be hard to get to grips with. Well, here’s a real world example to ponder.

And it involves the humble bicycle, much loved by property folk. Which is appropriate, as with the bicycle we can see how the physical and digital worlds are colliding. To everyone’s benefit.

How so?

Well first off you have your bike. And once you get started you find yourself drifting into ‘Planet Cyclist’ and before you know it you join a cycling club. And then your competitive edge kicks in and you sign up for an online club like Strava. And this allows you to track all your rides through GPS, and plot them all on real time maps (location services). And then you start to share and compare these with other Strava members (social media). And you do all this via an app on your phone (pulling data from the Cloud).

Without thinking much about it you’ve plugged yourself into an extraordinary digital network meshing together vast pools of information (big data) and massive computational grunt. You are now a digital human. And all you did was buy a bicycle.

In London you also use a Boris bike. And this tracks you via RFID (Internet of things) in order to keep track of the four thousand or so bikes whizzing hither and thither.

If you were visiting the Intel campus in Oregon you might even have seen the prototype Internet of Things enabled bikes they are developing.

So far this is all about you, your bike and your social network. But** with all this technology going on something else is possible, with much wider ramifications. By pooling all the data generated by the whole Strava community they now have access to exceptional insight into how cyclists move around various world cities, something which was never before possible. So they are now selling this data to City Planners, whose job is making a city more manageable and who need all the data they can get their hands on.

Starting off in Portland Oregon, London, Glasgow and Orlando have also signed up. The image at the top of the page is taken from the heatmap of their dataset which includes 77,688,848 rides and 19,660,163 runs representing about 220 billion total data points.

So there you have it. Social media, location services, big data, the Cloud and the internet of things working in real life. The Digital Layer in action.

And the big takeaway from this? The Digital Layer is rich, and thick, and with us now. It can transform everything from the daily life of an individual right up to the workings of our smart cities.

What can it do for your property? How can it excite, inspire and inform occupiers of your space or visitors to your estate?

Antony

* A phrase first used by the way in an advertisement in Punch in April 1936

** I often wonder whether it is acceptable to start a sentence with a conjunction. Seems it is.

Is the Property world getting 'a sense of place' all wrong?

April 2014

I’ve been reading the online summary of the ‘How to develop a socially productive place’ conference held at the RSA and sponsored by British Land on the 2nd of April.

And you know what? I think the property world has got ‘a sense of place’ all wrong. Or maybe not wrong, but distinctly out of date. Whilst the conference contained much of interest there was, as far as I could see, no mention at all of technology and the digital world we now live in. You’ve probably seen the image below but the property world seems to be stuck very much in the 2005 mindset:

In 2005 there were no smartphones and consequently one’s experience of the space around us was purely connected to the physical environment. In this case it was the inauguration of the Pope. Eight years later smartphones are everywhere and with us at all times. Our experience of the space around us is now as heavily influenced by that computer in our pocket as the physical environment we find ourselves in.

People want information, especially local, in the palm of their hand, and physical space has a past, a present and a future. The digital layer is about unlocking this content.

• I am here
• What’s going on?
• What happened here?
• What’s going to happen here?
• Are my friends here?
• What did they like?
• What should I do now?

It’s the smartphone that will determine how ‘a sense of place’ is experienced. Think about the questions above; they cover the variables that determine how successful a place is. At the human level, they are what all of us want to know. The place that helps us answer these questions will be successful. The place that informs, inspires and excites us will prosper.

Socially productive places will embrace this digital layer. And if they don’t then they will not be fit for purpose. You can talk all you like about mixed uses, high quality architecture, good urban design and sustainability (and the conference did) but if you do not expose the digital layer then your place is stuck in the past.

The property world needs to take technology seriously and accept that the physical and digital worlds have collided and are now one and the same. To discuss one without the other is a dead end.

You will not create socially productive places without getting the digital layer right. And that involves a lot more than just installing decent wifi. You need to understand how the internet of things, cloud computing, social, contextual and mobile technologies will effect how people work, rest and play. All of these will form part of creating a smart city, and the future of socially productive places rests within smart cities.

The world has fundamentally changed since 2005. And the way we think needs to change with it.

Who’s in?

Antony

Hey! You! Get on to my cloud.

March 2014

Well it looks like the time to prevaricate is over. Now that Microsoft have, at last, produced a version of Office for the iPad, you can be sure that The Cloud has well and truly arrived. Locally hosted software, be it programs loaded on to your PC or laptop, or hosted on servers in your office is now decidedly passe. Relics of the last century, of old world thinking, they represent a way of operating a business that is now dying fast. Besides going mobile Microsoft, under their new boss Satya Nadella, is even moving to a post windows world; their business-centric cloud based operating system Windows Azure is to be renamed Microsoft Azure.

Make no mistake that renaming is a HUGE thing. Under Steve Ballmer Microsoft was totally focused on windows, arguably helping them miss just about every big new trend in tech over the last ten years. By moving beyond windows Nadella is signalling a major shift. and that shift is up into The Cloud.

And if Microsoft move beyond windows and focus on The Cloud then sure as eggs is eggs that is where business IT will be going.

And that is a great thing, as finally business might en masse break with the comfort blanket of old tech and embrace the future. For this future offers so much potential for huge leaps in productivity as well as signalling the onslaught of some truly disruptive technologies. And disruption, whilst occasionally terrifying, heralds a better world; one where the advances in computing open up countless opportunities. Technologies that will transform healthcare, enable cities to work more efficiently and environmentally to the benefit of all of us, give people access to unparallelled services tailored precisely to their desires, redefine politics to allow true and widespread engagement with the populace, and finally end the scourge of third world disease. Just for starters:)

We are entering ‘The Second Machine Age’ as described by Andrew McAfee and Erik Brynjolfsson. The age of robots is fast approaching, along with computers that can win “Jeopardy”, that can pattern match with astonishing accuracy and learn from their mistakes. And all of this is driven by fast ubiquitous access to software and hardware residing in The Cloud. And by residing in The Cloud this software and hardware can, on demand, be scaled up to address the most demanding of requirements. This is a world where everyone can have access to the biggest and best available technologies. And the more people who have access to the biggest and best the more innovation will occur. Crowdsourcing the future…. is the future.

So what has this all got to do with the property industry? In a nutshell, everything. A wholesale move to The Cloud, powerfully pushed along by the new paradigm being followed by Microsoft will mean businesses will operate differently and require different things of their offices. With all business applications and information being available anywhere the tyranny of the fixed PC on a fixed desk with a hardwired landline will be over. People will work where they like. Not necessarily outside the office but certainly in a different configuration of space. Office requirements are changing fast. The Cloud just forces the pace.

Retail property will perhaps change the most over the next five years. As of today many in retail think they have seen off the challenge of online through upping their game in offering click and collect and other enhanced shopping experiences. They are wrong. As online tech develops, new services such as SnapFashion, which uses pattern recognition to curate personalised wardrobes for users and is the power behind westfieldeditme.com will make the online shopping experience more and more enticing. Only the best, most creative and technologically savvy retailers will be able to keep up.

How people use space will be dramatically affected as The Cloud gains momentum. Who will keep pace and offer the right product in the right place at the right price? I don’t know. I just know someone will, and many won’t.

Any guesses?

Antony