Q & A With Charles Wetzel
Shopping Center Business speaks with Buxton Co.’s president and chief operating officer about the benefits of demographics in retail.
Interview by Randall Shearin

To start off with, tell us a little bit about your history. I know you’ve been at Buxton for a while.

“I’ve been at Buxton for a little over 5 years now. I worked for Ernst & Young and their consulting services group. That was actually spun off to Cap Gemini. I worked there for about 7 years. Specifically there I worked in their consulting services group that specialized in telecom, media, financial services in the group of strategic advisory services, which really specialized in process structuring. I came to Buxton as their chief operating officer in 2003, and in December 2008, I took over as the president. So really, I still have the chief operating officer title, but the elevation to the president just allows me to oversee both the sales and the operational side. I’ll just have more hands on responsibility with the day-to-day sales.”

How important do you think it is for retailers in this kind of climate to look at demographics, even with existing stores?

“We’ve always said that if a retailer doesn’t understand who their customers are, where they’re located and the value back to them, then they don’t stand a chance in any market condition. They might be able to survive a little bit longer in an up economy, but in the economy that we have been experiencing, the focus on existing stores and existing locations is huge.”

What size retailer should be looking at examining their demographics?

“Any size. Anyone who has more than one location, and even one location is expensive, needs to understand their customers. And it’s really much more beyond just demographics. I think if the retailer solely looks at demographics, then they’re going to fail in this market. They need to look at customer behavior, lifestyle characteristics and purchasing behavior to really drill down who their customer is because that customer is changing very rapidly. You need to identify the segmentation of your customer and who they are, and what they do, and really, I would think that would go for anyone who wants to open a retail store.”

What are some of the benefits of examining existing locations? Retailers may not be expanding right now, but they may have 10 or 15 stores in a market and kind of worry whether some are going to perform. Can you judge performance by that?

“Absolutely. Everything that we build, whether it be from a real estate , marketing or a merchandising standpoint, it does two things С it allows you to value your existing network and to judge potential. Specifically for retailers that have, to take your example, 10 stores in the market, if they are not in growth mode, they’re either going to be in a repositioning mode, trying to identify specifically if they should have all those stores in the market, and if they don’t, then they’re going to optimize against them and identify which ones to close. More specifically, they’re going to figure out the individuals around those stores that they should market to. And, of course, the best customer to market to is your existing customer. So, by doing what we can do for our retail base, we are able to tell them not only who their customer is, but we are able to tell them their customer value, the retention rate, the cross-shopper analysis, what customers are buying what in their stores, what types of customers look at them, and a lot of times you can market to those individuals to identify new products and things.”

There are some retailers still expanding, especially the discounters. How can you use demographics to find the right locations for your stores if you are expanding?

“Well I think you look at your existing network, and you identify the variables that make a good location good and a bad location bad. You identify those variables, whether they’re a demographic or a psychographic. Then, you take that model and you scan other markets or other locations and identify where the next best place or places for that concept to be. What that does, is it leverages your customer profile, which is not demographics, and then it looks at demographics and it looks at personal behaviors and takes all of these components, 10 to 20 components are needed, to pinpoint a successful location.”

Does that also help in repositioning stores?

“Absolutely. If I look at my existing network, and I say that store should do $1 million, and it’s only doing $500,000, well why is it doing that? Is it because of the management inside the stores? Is it because of the competition outside the doors? Or is it just because we aren’t getting the message to the consumers?”

Can the demographics also help you to look at the competition?

“Yes. From a modeling standpoint, you’re going to look at competition in really two partsСwho hurts you and who helps you. If you look around, you’ll see retailers that have a tendency to pop up next to each other. They’re doing that on purpose. And so they might look like they’re being competitive, but in certain cases they actually might be helping each other, like furniture markets and things of that nature.”

What types of retailers are you helping right now?

“Right now, one of the most aggressive retailers under our belt is Sally Beauty. They actually use us not only from a real estate standpoint, but also from a marketing standpoint. So we’re identifying the locations they should have throughout the U.S. and specifically who they should be marketing to. They really have two types of buyers, a consumer buyer and a professional buyer. On the restaurant front, a restaurant that has probably an entry price of under $10 are using us a lot because they see this as a great opportunity to grow, as opposed to previous years when the cost of real estate was really high. The cost of real estate has obviously drastically decreased, so they’re seeing this as an opportune time to grow. In retail, a lot of retailers are looking at ways to make sure that their merchandise is in the right areas and the right trade areas based on who the buyers of their product are.”

What if a retailer does have to close stores? How easy is it to identify which stores should be closed through demographics?

“You look at your existing store forecast and the actual store performance. So if there is a large difference between the two, then you sit down with the retailer and you start going through certain questions. Is there a large competitive increase? Is there a decrease in population? Is the merchandise in the stores just not hitting home with the consumers in the trade area? Is it the management? In a lot of cases we found that the stores that aren’t performing to where we are saying they should be performing are because they don’t have store managers.”

How deep do you go? I know you mentioned some marketing and merchandising as well.

“On a cursory level, our company solves analytic questions for the public sector, healthcare, retail and manufacturers. In the retail sector, we really operate three bucketsСthe real estate side, the marketing side and the merchandising side. In the marketing side, it’s not only direct marketing, but also database management. In the merchandising side, it’s how the stores should be clustered to speak to the trade area and the people in the trade area better and what products should be in those stores based on what people are purchasing.”

Do you do any work with developers at all?

“We work with developers a lot on our public sector side where communities have teamed up with developers to bring retail to their areas. What we do with the developers is we help tell them determine who is in their trade area and then what retailers match that. We then create marketing packets that allow the cities and the developers to go and recruit those retailers based on the consumers that are living in the trade area.”

How do they use that in terms of attracting retailers?

“We basically create packages that mimic the real estate committee approval process that retailers use to see. So if a retailers looking 2 years out from a growth standpoint, our goal for that developer and that community is to really get ahead of that 2-year sight to say, ‘not only would this be great spot for you, but it’s a better spot than any of the other locations that you’re looking at.’ So we create a packet that they’re very used to going through, with not only demographics, but specifically who’s in the trade area and what they are buying.”

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