Living, Stores and Sports

Left to live  

Much of the public rhetoric on the Housing Crisis revolves around ‘greedy developers’ setting prices too high for local people to afford. Those in the property industry know that it isn’t as simple as that. Most sites are sold prior to development.

The purchaser is inevitably the highest bidder, and the price they pay dictates a need to create value from the end sales. So what can be done about this? Government intervention, either through land taxation, planning controls, or the release of their own land for less than market value is an option. Another is to bring down the costs and specification of the product to be able to sell at a lower price point whilst preserving margin.

As operators such as Lidl have proved, bringing down costs, doesn’t need to mean bringing down quality. Rather you need to have a view on which costs add value to the consumer. IKEA are well practised at this in their furniture business and are now using similar techniques to do the same in their resi JV with Skanska, ‘BloKlok’. In their first UK outing BloKlok has secured consent for an apartment scheme in Worthingunder which 30% of units will be affordable and 70% will be priced at a ‘left to live’ affordability model. This involves a calculation of what a typical resident can afford to offer based on typical mortgage pricing and living costs. They achieve this in part through a pre-fabricated design process, which brings down the unit costs and abbreviates the build to just a single day per apartment. In turn this allows them to target a wider demand segment, which takes some of the risk out of the sales.

 Convenience and experience

One of the appeals of the online store is its functional convenience. You can browse the store in seconds and effect your transaction in a similar amount of time. For a consumer this makes it a very efficient experience.

However, with efficiency comes some trade-offs for the retailer. Firstly, purchases that are arrived at in this manner tend to be priced at a well-researched level. Secondly, a very directed search doesn’t leave a lot of space for serendipitous / unexpected purchases and upselling, which is often where the higher margins are earned. This is an area where a well laid out store still holds a competitive advantage.

Unlike in cyber space people need to move around stores, bumping into products that might not match the algorithm. However, the online environment is evolving.

Last month fashion blog Man Repellerhas launched its own e-commerce site using a gamified web interface. Rather than being an efficient sales journey, the site deliberately meanders through interactive / sensory experiences that allow customers to discover products rather than move straight to an intended purchase. Take a look here.

As both the physical and digital worlds start to compete on experience, the bar is lifted for the consumer, and the difference between the two channels starts to fade. The opposite end of this telescope is the high street retailers using technology to improve the efficiency of the in-store experience. This includes navigation apps such as Target’s floorplan-based app that guides you towards sales items, and the now ubiquitous in store iPad which allows you to browse the full stock range.

Game, set and match  

Most of us know someone with an encyclopaedic knowledge of sports results. However, in the modern age of big data is this person becoming redundant?

Historic sports results are now catalogued and openly available; and large data models are used to predict match results based on specific player attributes. For instance, tennis players are analysed on factors such as service consistency, ability to hold break points, and unforced errors on each surface type. That’s obviously helpful for bookies, but the same systems are now reportedly being used by the players to gain advantage.

Analysis of past performance for instance allows this year’s Wimbledon contestants to know when to play to the backhand, when to hit a topspin return, and when to lob a serve-and-volley attempt, with a different strategy for each opponent. Meanwhile, not to be outdone, the All England Lawn Tennis Club has some enviable data of its own. In a typical year, spectators drink 303,277 glasses of Pimms, whereas players eat 2,195kg of bananas and 166,055 portions of strawberries and cream are sold, each costing £2.50. This price, which has not changed since 2010, compares with an increase in the prize fund over the same period of 148%, making them the best-served treat any weekend.

Richard Pickering Head of Futures Strategy  Cushman & Wakefield

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