Tailoring Strategies for Different Locations

Optimizing a portfolio isn’t done with a single strategy and can start in many ways, according to Dawkins. In one case, a large retail client needed to rationalize its footprint after acquiring overlapping assets.

“There were probably 2,000 stores that had some type of overlap,” Dawkins says. “You have to figure out what to do with that overlap and do it in a hurry.”

In another example, a retailer needed to free up capital to reinvest in its core operations. That meant evaluating the real estate portfolio, selling off surplus properties, and transferring ownership of certain locations.

Dawkins points out there’s no one-size-fits-all approach to portfolio optimization. Each location must be evaluated based on its value to the business. For example, one major retailer rates its stores on a scale of zero to five.

“A location rated as a five is so necessary, so important, that you want to protect it at all costs,” he explains. “A store in the two or three range —maybe you try to reduce rent. A zero means there’s nothing you could do to keep it, so it goes on the surplus disposition list.”

Another strategy is virtual downsizing, where retailers reduce rent to match the footprint they actually need without physically moving locations. “This strategy works particularly well when a retailer is aggressive on relocation and has a lot of legitimate authority in terms of leverage,” Dawkins says.

Analysis Brings the Full Picture into View

A key part of this work is rooted in analytics, particularly visual analytics.

“Customer profiling, geospatial data, competitor data, store-level performance—all those things need to come together,” says Dawkins. “When you can put it all in one place visually, you can make better decisions.”

These tools, along with an advisor’s expertise in portfolio optimization, will become even more important in the future due to shifting trends. Dawkins explains that today, you’re either a discounter or an aspirational brand. “The middle has been hollowed out—and that’s where many retailers are struggling.”

Discount retail also continues to grow, forcing other retailers to adapt. “The discount space is more prevalent now than it was five years ago,” says McColm. “These changes can impact everything from store relocations to landlord negotiations.”

Both Dawkins and McColm emphasize the importance of having an advisory partner, not just a transactional one. “Portfolio optimization is about managing what you have and identifying what you need,” says Dawkins. “Then you use the right data, strategy, and performance insights to guide the path forward.”

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