Luxury-focused companies are increasingly relying on data analytics to drive decision-making, including about real estate, as competition increases and organizational cultures shift. In the past, luxury brands and conglomerates have made decisions based more on creative priorities, according to a CBRE report.
Companies that continue to make real estate decisions based on intuition risk falling behind the market, while those that use data to actively track consumer trends and develop expansion strategies that align online and brick-and-mortar sales will be set up for success, said CBRE. To that end, the luxury goods industry has increased its hiring of data scientists by 56% since 2019, LinkedIn data shows. Retail data scientists and software development roles are expected to increase by 20% by 2032, which will make those roles the fastest-growing department in the industry. Data-focused executive hires and new chief data officer roles among luxury goods providers, including LVMH and Canada Goose, reinforce this growing priority.
The use of data analytics in real estate decisions with the luxury goods industry is driven by three main factors, according to the report. These include increasing omnichannel sales, increased capital restraints, and new digital-native entrants bringing luxury online, said CBRE.
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“These drivers have bolstered a more sophisticated relationship between retail tenants and investors, leading to longer negotiation periods, greater lease flexibility and larger concession packages when transacting in high-street markets,” said the report.
CBRE noted that more concentrated market demand and the increased cost of opening retail in tier one markets have resulted in new brands opting for smaller stores while established companies are going for a larger, high-street presence.
“CBRE expects continued evolution in both the use of brick-and-mortar locations and the terms of retail lease transactions,” said the report. “Established luxury companies will identify expansion markets with greater precision, capitalizing on their proprietary consumer demand data. Retail lease terms and deal structures will be increasingly linked to sales revenue with greater analytics of omnichannel revenue tied to brick-and-mortar presence.”
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Kristen Smithberg
Kristen Smithberg is a Colorado-based freelance writer who covers commercial real estate, insurance, benefits and retirement topics for BenefitsPRO and other industry publications.
