Follow the money
Published: 14 July, 2006
When mall parking's involved, revenue is never far behind. Whether you're a shopper or a car park operator, the price per park will be uppermost in your mind as a car heads for the entry barrier. If it's shopping that's the purpose of your visit, the price per visit will probably do much to colour your judgement of the trip, even though the sum will normally be only a small fraction of the total expenditure involved.
That at least is the view of many car park operators and shopping centre managers. Get the pricing wrong and if you're a shopping centre manager the chances are that you may watch your potential shoppers decamping to a scheme where parking is cheaper or may even be free.
From a shopping centre operator's perspective there is a fine line to be trod between turning a penny and pricing yourself, and the centre to which you are attached, out of the market. Peter Stickland, head of business development for the south at Apcoa, comments: "It's important that the parking doesn't detract from the shopping trip either in terms of time that can be spent, so a purchase is forced, or in terms of environment."
Practically, this means that pay-and-display systems are a last resort option. Stickland says: "Where it's going to be paid-for parking, pay-on-foot systems are preferable because it doesn't have to limit the stay. If it's pay-and-display, by definition the stay is limited. [With pay-on-foot] the retailer also gets the full benefit of the shopping visit."
In essence therefore, it's about making parking a car a seamless part of the shopping journey. A car park is of little use if you're wondering whether your time on the pay-and-display ticket has nearly expired and you are forced to leave just when you were about to reach for your wallet.
But ultimately, as Stickland observes: "Price is not the final arbiter in the decision-making process. If the car parking experience is horrible, they'll go somewhere else." Indeed they may and so one of the problems confronting the car park operator is how to make payment more straightforward: it's all part of the business of making parking less of a distress purchase.
One of the ways this can be achieved is through not having to pay money: at least not physically. Car park operator Q Park's Tony Tingle, says: "Cash payment at pay machines is not only tedious for users, but requires considerable operator resources that include collecting, processing and depositing the money."
But what are the alternatives and are they capable of making money for operators as well as easing the journey of the shopper? At the moment, a number of operators are looking at systems that are well along the road towards banishing cash payments from car parks. These include payment by debit or credit card, proximity cards, transponder technology (having a disk attached to the inside of your windscreen which allows a barrier to register car park entrance and exits and time stayed) and even payment by mobile phone.
Sounds marvellous, but there is a price to be paid and currently that is still considerably higher than putting a pay-on-foot machine into your car park. A degree of forward planning is also required as the majority of the new systems require shoppers to register to take advantage of the technology. There is of course an upside to asking shoppers to register for cashless payment - you have their data and can then market them with details of promotions in a shopping centre - thereby helping to cement the relationship between yourself as operator and the mall's management, if handled sensitively.
All of which notwithstanding, trials are in place. A transponder-based system is being used by Q-Park in the north of England and customers are invoiced monthly for their parking transactions.
Apcoa's Stickland says: "We've been trialling a magstripe ticket that allows payment to be made through a mobile phone." As well as the usual information about entry time, the ticket carries a number that enables payment to be made using a mobile phone, "if there's a queue at the checkout." Payment from the mobile phone is taken through a third party after the ticket is presented to the card reader at the exit barrier.
Stickland remarks however that the fly in the ointment is the cost of the systems now appearing on the market. It only really makes commercial sense to deploy this kind of technology where what might be termed high net worth customers are in relative abundance. This means long-term regular car-park users: in many cases occupying reserved car parking spaces. It also means that given the current purchasing habits of shopping centre visitors, it will not involve many people on a workaday shopping trip - they just don't visit often enough or stay long enough.
So what about the future? With the huge number of shopping centres that we are promised emerging from the pipeline over the next few years it seems certain that competition for shoppers will be hotter than ever. This would seem to point to competition for car park users also proving tougher than may have been the case up to now. The other point is that the longer a technology is on the market the cheaper it tends to become. This might indicate a truly cash-free parking future, but one in which the investment required to attract promiscuous car parking shoppers is greater than now.
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=== Churn 'em and burn 'em ===
Well not quite actually. From a car park operator's point of view churn is not about ripping off the unsuspecting customer, but about making the best use of what you've got. At its simplest, on a busy day a car parking space may be used three or even four times within a two hour period with each user paying to use the space for up to two hours. This presupposes a payment system that is simple, which does not create long queues, and at a price that the consumer regards as acceptable. Apcoa's Peter Stickland is succinct: "What you are really looking for is a higher average transaction value with a lower-end parking dwell-time."
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=== Parking as marketing ===
There is little point in dwelling on the price of car parking because it will always be more expensive than people want to pay - unless it's part of a deal that involves getting something for nothing. In Bolton's Market Place shopping centre, centre manager Rod Neasham has taken the view that parking can be a deal-breaker for shoppers, so if it's free they'll turn up. With this in mind he has decided to use the bulk of his marketing budget to finance free parking for shoppers visiting the mall who spend over £50 in its stores. The scheme has been in place since September 2005 (see Shopping Centre April issue) and following the initial trial period has been extended. The car park is run by Apcoa on behalf of the council, which owns it. This is an example of how revenue may come from a relatively unexpected source for a car park operator. It serves to illustrate how close co-operation with a centre management team can pay dividends for both parties - increased shoppers shopping for the centre owner, increased revenues for the car park operator.
