Archilogic helps office providers promote and sell office space through 3D floor plans, office design simulations and property data insights. Here we look at the digital disruption of the retail industry; who were the winners, what CRE sales leaders can learn and how they can prepare their sales strategies for the digital disruption of real estate.
The way we shop has changed drastically. Between 2000 and 2018, the US saw a reported 50% drop in department store sales and a 300% increase in online purchases. While many retailers powered through the first few years, ‘staying true’ to their traditional models, the digital transformation of retail over the past two decades has seen many casualties. Other industries should be taking notes – digitalization is sure to shake things up across the board.
In some ways, the real estate industry has already adapted to the changing digital world, but the real pinch is just beginning.
Millennials, with digital-native expectations, are now of an age where they are ready to enter the property market. Not just for residential properties but for commercial too: many now hold decision-making positions in the workplace. Previous generations may have accepted meetings with agents, physical viewings and mountains of paperwork as the norm, but tomorrow’s buyers will be less accommodating.
To avoid retail’s devastation being replicated in real estate, companies must learn from that industry’s winners and adapt as quickly as possible.
Online-only companies such as Amazon dominated during this transition – Amazon is expected to cater for 50% of all e-commerce sales in the US by year-end. Even traditional bricks-and-mortar stores that embraced these changes saw great rewards: Nordstorm’s online sales now account for 34% of total sales.
Looking at the retail industry as a whole, the common factor that contributed to the success of leading brands was the logistics set-up for an omni-channel experience. The customer wanted choice and rewarded brands that gave it to them.
Retailers still sell the same physical items but now give the customer more ways to engage with them. Buyers can search, review, buy and try items without stepping outside their front door. If they prefer, they can mix it up: research from their laptop, order from a mobile app, pick up in-store and return via a local drop-off point. Offering as many ways to engage as possible means snaring the most customers possible (and eliminating their excuses not to buy). That’s the key lesson for property.
Retail has shown us that digitalization is a must. At this point, it’s fair to assume every property seller is taking advantage of the web by promoting properties online. But digital listings are just the tip of the iceberg; future customers will expect far more. Here are a few ways to future-proof your real estate strategy by giving the buyer more choice and flexibility.
1. Give them as much information as possible online
Give the customer the power to filter through properties with their own criteria and find out as much as they can without physically being there. This isn’t just good for them; it will eliminate any time wasters and make a real estate broker’s day much more efficient.
2. Take advantage of 3D floor plans and visualization tools
Don’t underestimate the buyer’s need to see the property and get a feel for the size, space, and layout as part of their online research. Remember that 99% of millennials start their search online.
Of course, photographs are important and provide a sense of reassurance for buyers. NAR research shows that 87% of US buyers find photos very useful, but already 80% of buyers found virtual tours useful in their search. By offering an opportunity to virtually enter the building, buyers can see the property from more perspectives than those shown in photos, exploring at their own pace. These tools give real estate companies a real advantage compared to retail. It is much more difficult to provide a meaningful online testing experience for a vacuum cleaner or a pair of shoes.
Even better, 3D floor plans can help tell a story that is not possible with photographs. Take an empty office for example or a new-build apartment. With 3D visualizations these spaces can come to life and be altered for whichever use case fits the buyer.
3. Keep everything connected and up to date
Online information about a property should be the source of truth. Any changes or updates to a property’s status needs to be immediately available online, or there is a risk of losing the buyer’s trust at stage one. Just like in online shopping, they expect fully up-to-date information on availability.
4. Agents should be there whenever and wherever the buyer needs them
As mentioned above, the key to success for many retailers has been providing the customer with choice through omni-channel logistics. Some property buyers may want to do 90% of the work online and without any human interference until they have made their decision. Others may like to spend a short time researching the area and then work directly with a realtor, be it over the phone, by video call or face to face.
Digital transformation does not mean companies need to fire all local agents and become fully automated real estate sales engines. They should take advantage of the technology being developed and use it to adapt to their customers’ changing expectations. For instance, by allowing viewing appointments to be made online and out of office hours, proving 24-hour human support, or offering virtual experiences through digital floor plans.
Be wherever the buyer is, with the latest information, at a time that suits them. Clicks and bricks is the formula that worked for retail, and it will be crucial for real estate too.