Simon Properties Group
Company: Diamond Technology Partners Customer: Simon Properties GroupThe shopping experience is undergoing a major transformation. A trip to the local mall or department store is no longer the consumer ‘s only shopping preference.
The convenience (access, selection, immediacy) and comparison functionality of online shopping is driving broader adoption of e-commerce alternatives. Simon Properties Group was concerned that many consumers were drifting away from their well-entrenched shopping habits. Furthermore, consumers are surrounded by technology. The Internet is becoming an integral part of their life and appliances like palm tops, personal digital assistants, cell phones and pagers are infiltrating the mall environment.The Situation: April 1999 found David Simon, CEO of Simon Properties Group, thinking ahead to the looming holiday season.
Simon knew that almost a quarter (500 million) of the 2.2 billion visits to Simon malls each year occurred during that two-month period. With online shopping emerging as a mainstream alternative, he knew there would be implications for traditional retailers during the Christmas season. Market analysts estimated that online consumers would spend around $4 billion between Thanksgiving and New Year ‘s Day — almost three times the $1.5 billion spent in 1998.Simon was also driven to explore opportunities because of pressure from investors, maintenance of its reputation as an innovator and continuance of its position as an industry leader.
Simon Properties Group is the largest publicly traded retail real estate investment trust (REIT) in North America, with a total market capitalization of $17 billion. Simon owns, develops and manages more than 250 properties across the U.S., ranging from the Mall of America in Minneapolis and the Forum Shop in Las Vegas to community shopping centers and mixed-use properties. Simon has more unique visitors (10.8 million unique shoppers per month on a pro-rated basis, excluding seasonality) than Amazon.com (9.9 million shoppers according Media Metrix, May 1999). Furthermore, Simon has strong ties to prime retailers across North America.In the new era of online shopping, how could Simon make the mall more relevant to the digital consumer? David knew he needed to change his company to respond to e-commerce. But how? What did the Internet mean to Simon and its businesses?Our Perspective: A focused Diamond team studied evolving Internet trends affecting in-mall retailing activities and Simon ‘s position in the marketplace.
The team soon realized that Simon ‘s strong relationship with its retailers, geographical presence, and access to customers presented significant e-commerce opportunities. They concluded that a demographically targeted marketing campaign in conjunction with an innovative use of technology could complement and enhance the current shopping experience, rather than compete with it. By employing the elements of both the physical place (the malls) with the virtual space (the Internet), Simon could create a unique retailer shopping experience for the 100 million plus unique visitors who visit Simon malls annually.Our Approach: Diamond ‘s solution for Simon Property Group was to create a platform that offered continuity for the customer by fusing the marketplace and marketspace (i.e. anyone, anytime, anywhere).
The strategy was built around two innovative solutions that would bridge the gap between the physical and virtual worlds, along with a branding campaign to give visibility to the offering during a holiday season that was characteristically filled with advertising clutter.The first solution was the creation of an open e-commerce infrastructure that is both scalable and extensible. This infrastructure would serve as a platform, enabling rapid prototype development of e-commerce applications.The second solution was the use of multifunctional barcode scanning devices that would allow a consumer to browse in the physical place and upload information into the virtual space at the completion of the in-mall shopping experience. The branding and marketing campaign drove home the advantages of the offering to targeted demographics: the Generation-Y teen and the time-constrained baby boomer.The first two business initiatives prototyped were FastFrog.com and YourSherpa.com. FastFrog.com is a teen-oriented cross-retailer gift registry allowing teens to create lists of desired products from a wide selection of in-mall retailers and online e-tailers. The lists are created by teens walking through the mall and using hand held scanners — “ZapSticks ” — to scan the barcode of preferred products.
When the ZapStick is turned in at a kiosk within the mall, the contents are uploaded onto the teen ‘s personalized FastFrog.com home page for review. The teens can then share their list with family and friends.YourSherpa.com is targeted at time-starved mid-to high-income level baby boomers who put a premium on convenience and would love to avoid waiting in check-out lines or carrying packages back to the car. YourSherpa.com provides them with the ability to shop with a radio-frequency-enabled (RF) personal digital assistant (PDA) scanning device.The PDA allows the customer to designate a product for purchase at the point of scanning. At the kiosk, the customer can designate the final shipping destination for the purchase.In addition to Diamond ‘s role in designing the initial branding and strategy, a complete venture creation effort was undertaken. The team took the concepts and built a business around them. A new company was spun off from Simon called Clixnmortar.com. Clixnmortar operates as a distinct venture creation firm — a means to incubate, develop and launch different products that bring together physical and online retailing.The venture creation involved disparate activities such as building a “Design and Experience Center ” to showcase the offerings to potential retail partners and developing a technology architecture. Business policies were drafted, financial systems established and positions were staffed to complete the organization. Eventually, the activities extended to both extremes of the value chain — from acquisition of participant retailers and their products on the front end, to design and delivery of a fulfillment system for consumers on the backend.The Bottom Line: Fastfrog.com and YourSherpa.com were piloted during the 1999 holiday shopping season in three Atlanta,Georgia malls. The strategy proved to hit a sweet spot with the consumers and garnered significant media attention. As one particularly happy consumer who used YourSherpa.com stated:”I just wanted to give you an unsolicited testimonial on how wonderful this service is. I hope you expand it soon! I used your service last night at FAO Schwartz in Lenox Mall.
Once I was registered, scanned my purchases, and went back to finalize my order, I easily saved a minimum of 20 minutes standing in line with grumpy parents and screaming children, something I always try to avoid. And not only that, but my purchases were gift wrapped and delivered to my home three hours later! Now that ‘s service! It was so simple and easy to use I couldn’t believe that it hadn’t already been done for all the stores. It’s definitely a great competitor to online shopping. I’ve had to return several things that I’ve ordered online due to the look or quality of a product. Just scanning a product and having someone else take care of all the work is fabulous.
It will make going to the mall much more bearable! I’m looking forward to seeing this service grow rapidly. The potential is unlimited.”The offerings successfully tied the tangibility of the in-mall shopping experience with the convenience and expediency of shopping online. FastFrog.com helped teens find the exact gifts they want and communicated their wishes to friends and family in a way that they never could before.
YourSherpa.com overcomes traditional shopping hassles of lugging around the bags and waiting in checkout lines.As the holiday season closed, the exciting prospect of scaling the initiatives loomed ahead. Simon had to decide which new markets to approach, how to enhance the user experience to gain exposure to more demographics, and how to respond to growing demand for aggregate profiling data? The ventures were quickly being recognized for their potential.The scanners captured shoppers ‘ shopping patterns, habits and desires, much akin to the power being realized in the virtual space of the Internet. The data could be leveraged to better negotiate leases for Simon, forecast demand for products and better design retailer showcases.How should these new opportunities be leveraged by Clixnmortar.com? Should it become the ACNielsen of the malls or concentrate on the provision of consumer services? Regardless of the direction taken, Simon has discovered new complements of place and space.