Using Data-Driven Innovation to Evaluate Real Estate Locations for Retail [Interview]

An interview with MasterCard Advisor Gary Kearns

At LTP, we strive to stay on top of innovative trends and resourceful solutions that will enrich the payments community. LTP had the opportunity to interview Gary Kearns, Group Executive, Information Services, MasterCard Advisors, to find out how data-driven innovation has helped develop their latest product MasterCard Retail Location Insights.

Though the retail industry continues to make strides in adapting to improvements in technology, retail stores are still one of the hardest hit sectors around. Closing vs. Coming Soon is not only a sign of the times but also a sign of what’s to come for the commercial real estate industry.

Traditionally MasterCard has been a conduit for safe and secure payments and is one of the most globally recognized symbols in the world. Powered by data-driven analytics, MasterCard Retail Location Insights is the first solution that provides insight and expertise to the retail and the commercial real estate industry.

LTP: MasterCard Retail Location Insights is a very unique product and it's great to see this innovation coming from MasterCard. Can you share with us how it came about? What were the considerations in designing and developing the product?

GK: MasterCard’s Chief Innovation Officer recently said, Innovation without execution is only ideation. This product is a great example of recognizing a void in the commercial real estate market and then having the transaction-based insights, the technical expertise and the wherewithal to deliver. The idea first came to light through Involve, an internal MasterCard innovation competition where teams of MasterCard employees compete for the chance to see their innovation developed into a MasterCard product and launched into the market. MasterCard Retail Location Insights was the winner of the first Involve contest. After it won, a cross-functional team worked tirelessly to commercialize the product. We wanted to create a product that was highly intuitive, incredibly visual, cloud-based and easy to use.

LTP: Was either the real estate community or the retail industry more concerned about insight on revenue performance? Do you think MasterCard will need to invest in making a market or is there already demand for it?

GK: Everyone involved in real estate can benefit from greater transparency. For years, the retail commercial real estate market has relied on inconsistent, self-reported or anecdotal figures to inform real estate decisions. With big money on the line, that’s just not fair. We launched the product in May at ICSC’s RECon, and we’ve already seen a significant amount of interest from various constituents across commercial real estate.

LTP: The component scoring and the data analytics behind it seems quite involved. How would you describe the secret sauce that powers this new system, especially for those in the industry who might not be fully conversant with the space?

GK: Using aggregated and anonymous transaction-based scoring and analytics, MasterCard Retail Location Insights will help those in the retail commercial real estate market assess the revenue performance of retail locations to validate, evaluate and benchmark properties. We provide revenue performance metrics—total revenues, traffic, growth, stability, ticket size and an UpFront composite score —down to the US Census Block level. For the composite score, we take all of the other metrics into account, offering an overall look at the revenue performance of a location.

LTP: Oftentimes consumers will visit retail stores to make returns or make a purchase towards an online order. When the revenue generated is counted towards a company's online transactions, how do these negative transactions contribute to data that is used in the scoring?

GK: The insights shared through MasterCard Retail Location Insights are based on all actual aggregated and anonymized transactions as they happen in real time. So our monthly scores, as well as the 36-month historical trends, reflect the total impact of both purchases and returns for that location.

LTP: With huge flagship stores like Toys R' Us and FAO Schwarz in New York City closing due to the rise in rent, how can the next retail tenants determine if these soon to be available locations will be a good fit for them? Does this product help in this scenario?

GK: Absolutely. Armed with insights down to the census block, a potential tenant could glean crucial insights that would enable fact-based decision making. They’d be able to understand if the location would offer them an upscale clientele, for instance, or a heavy volume of shoppers. This makes a big difference depending on who the retailer is and what they do. A location that offers incredibly high ticket sizes, indicating an upscale clientele, might be perfect for a luxury retailer but not the best fit for a discount shoe store. We want to empower those in the real estate market to understand if a location is right for them based on their particular needs and opportunities.

LTP: Does MasterCard Retail Location Insights have solutions for seasonal real estate investments for pop-up stores as well?

GK: Our stability score and historical view are a great way to gain insight into seasonal opportunities. For a pop-up Halloween costume store, you would want to look at scoring for months leading up to and including October specifically. A block that had the highest traffic in summer months due to an influx of travelers might not be the most advantageous.

LTP: Thank you for meeting with us and also giving us a live demo. There's surely more applications that you must be working on with this potent technology. What more can we expect on the roadmap?

GK: We are working closely with our customers to continually add product features and functions that enable them to make better commercial real estate decisions. We look forward to sharing more as we release enhanced versions of the MasterCard Retail Location Insights product suite.

MasterCard Retail Location Insights will be on display at RECon in Las Vegas. More information about the solution can be found here.

Gary Kearns

Group Executive, Information Services MasterCard Advisors

Gary Kearns is Group Executive, Information Services for MasterCard Advisors. He has global responsibility for leading efforts to directly monetize differentiated data assets, drive growth within core target areas and identify new revenue opportunities in emerging segments at MasterCard. MasterCard data assets encompass 2.2 billion cards issued by over 22,000 financial institutions and accepted at over 38 million merchants globally.

Prior to joining MasterCard, Mr. Kearns spent five years as President, Decision Analytics North America at Experian. In that capacity, he was responsible for leading B2B software, fraud prevention and predictive analytics businesses serving financial institutions, government agencies, asset managers, retailers, utilities and telecom companies. He also was Managing Director and Global Leader for Risk Solutions at Standard & Poor’s. Prior to that, he spent twenty years in the banking industry including positions as Deputy CEO and Senior Lending Officer at Bank Austria Creditanstalt USA and Executive Vice President at FleetBoston Financial Corp.

Mr. Kearns holds a B.S. in International Finance from the Georgetown University School of Foreign Service, and completed the Advanced Management Program at The Wharton School of the University of Pennsylvania. He is a visiting lecturer on innovation in the MBA programs at The Wharton School, The University of Chicago, and The University of California, Berkeley. He is also on the Advisory Board at Queen’s School of Business, Toronto, and a visiting lecturer in its Master of Management Analytics program.