CBRE Global Investors develops tool to measure impact of e-commerce
CBRE Global Investors has developed the e-RISC tool (e-commerce Rental Impact Simulator and Calculator) which allows its asset managers to assess the potential impact of e-commerce for each of its assets.
The tool analyses the company’s portfolio for three factors that result from the increase in online shopping across Europe:
• Online share of sales by country and overall market share
• Sector impact in each country
• Price competition based on the retailers’ business models
The current and potential online share of sales is important as this is still evolving at different speeds across Europe. Strong markets such as UK and Germany are levelling off in terms of growth but those with less online activity today such as Belgium, might achieve similar market shares to neighbouring countries by 2020.
There are patterns for sectors impact across the region, particularly for consumer electronics or goods that can be digitalised such as books and music. However, the impact for different sectors needs to take into account culture and shopping habits, adoption of new technologies and availability of mobile devices.
Consumer electronics and fashion currently have the largest shares in online retail, but other sectors such as leisure, including toys and sports goods, are showing strong growth.
The final element included in e-RISC is the risk for each retailer indicated by their exposure to price competition. This is done by looking at the percentages of multi brand versus integrated and brand stores within each asset. Integrated stores have full control over the distribution and pricing of goods whereas multi brand stores face competition with other stores and online. Brand stores often have their own stores and limit distribution in other outlets.
The results of the e-RISC analysis are then combined with the traditional asset-specific factors such as type of retail, dominance and catchment profile.
“Introducing this new layer of analysis can give us meaningful information on where we stand today with our portfolio on the risk from e-commerce. It adds another dimension of information for our asset and portfolio managers to enable us to refine and develop retail strategies that will benefit our tenants, our customers and our investors,” says Marije Braam-Mesken, senior analyst retail, CBRE Global Investors.
Florencio Beccar, director of retail investments EMEA, says: “With the changing face of retail, it is imperative that we are fast on our feet, particularly as some retailers have been quick to embrace the opportunities that e-commerce brings but also to mitigate the risks for our investors. The e-RISC tool has enabled us to further assess the winners and losers in our centres, protect income by choosing tenants that have seen the digital revolution as an opportunity and by monitoring the retail mix. We believe we are also giving our customers a better shopping experience.”
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