Dive Brief:

• Up to 197 J.C. Penney stores could be at risk of closing, beyond the 140 the retailer has already closed, according to an analysis from System2, a company that uses artificial intelligence and other technologies for big data analysis. The analysis was first reported by Bloomberg Technology.
• System2 said in the Bloomberg report that those stores have more than a 64% chance of closing, a figure it reached by collecting data around J.C. Penney's stores and applying machine learning to determine those most at risk. The collected data included foot traffic, the income of people who live nearby, as well as their home prices, and many other variables.
• The report suggests that a closer analysis of big data could help investors in shopping malls or mall-based bonds sort out potentially good investments from potentially bad ones. J.C. Penney declined comment for the Bloomberg report based on what it deemed industry speculation.

Dive Insight:

Data analytics is nothing new in retail. Retailers and their technology partners have been investing in various kinds of analytics programs for a while, but there is so much data and so many potential variables in play that there is always room for a new way to look at it. Any new approach to the discipline becomes increasingly important as retailers try to figure out why some stores succeed and others don't, why some concepts are a hit and others fall flat, and why some locations draw throngs of buying customers and others just don't.

System2 uses technology that is quickly becoming more common in retail — AI and machine learning — and applies it to a plethora of available data to help investors weed out potentially bad bets. However, this approach to data analytics could also be of interest to the retailers and malls themselves, as it could help retailers determine a particular store's success or failure. 

Mall owners would also do well to have as much data analysis in their back pockets as possible, as many of them set a course to re-conceive and re-brand their properties. If System2's speculations about J.C. Penney turn out to be right, we could see other retailers turn to big data analytics to determine whether their stores are operating under bigger risk than they thought.

System2 uses dual process theory in its analysis, but it isn't the only company applying that to the retail sector in one way or another. For example, Ipsos Marketing has created a screening solution that uses behavioral science and cognitive psychology to test marketing claims, logos and images among consumers, according to ResearchLive. A mobile, gamified solution, it presents participating consumers with a screen with two different words or images, and has them choose quickly between the two while measuring their response time. Within 24 hours, a retailer or brand could receive a set of recommendations based on the testing.

The solutions of System2 and Ipsos both have relevance for retail as the sector works harder to size up its potential risk, and continues to look for new ways to reap rewards.