Getting Aggressive with Traffic Counting
The quickest, surest and most cost-effective way to increase store sales is to improve each store’s conversion rate.
It’s estimated that more than 50% of North American specialty retailers have installed traffic monitoring/counting systems in some or all of their stores. But many retailers have failed to take advantage of the fact that the data these increasingly sophisticated devices generate can help them improve performance and capitalize on sales.
"Most retailers have not used traffic counting data very aggressively. Even the people who are successful using it often only tap into a fraction of its potential to impact sales," said Michael Bunyar of SMS Store Traffic, Chambly, Quebec City, which provides traffic-counting equipment, software and services to stores around the globe.
Traditional wisdom says that the quickest, surest and most cost-effective way to increase store sales is to improve each store’s conversion rate, and that is still true, according to Bunyar.
"Retailers often focus on increasing the volume of shoppers they bring into stores, when they should be paying more attention to the results obtained from shoppers already in the store," he explained. "If you currently sell 20% of your traffic, increasing the conversion rate by 1% can increase sales by 5%. It’s not a stretch to say a store could increase sales by 20% by maximizing how they use the traffic data to drive up conversation rates."
Experts agree that how a retailer applies the data gleaned from a traffic-counting device is key to fully tapping into its potential.
"The selling point is not the traffic-counting device. It’s the solution," said Eric Champagne, VP IT and logistics at Liz Claiborne/Mexx Canada from 1997 to 2011.
Champagne was an early adopter of traffic-counting technology. During his time with Mexx (and later Liz Claiborne after it acquired Mexx), he succeeded in doubling his chain’s conversion rate over a three-year period using a traffic-counting solution from SMS.
"By working with SMS, we developed much more knowledge about how to use the system and how to use the key performance indicators to really drive sales up to a new level," Champagne said. Initially, some store managers felt wary about the system, worrying that it had "Big Brother" overtones.
Champagne, however, was convinced the new tool could help double sales.
Introducing store managers to the benefits of the system began with a discussion about what they could change, and what was out of their hands as it related to increasing store sales. Ultimately, according to Champagne, the managers came to understand that they could directly affect their closing ratio and average dollar per transaction using information provided by the system, which provides combined traffic and sales information they can use to guide their sales efforts.
The SMS program identifies key traffic patterns at each store on a daily basis. The patterns, according to Champagne, vary from store to store, but are very consistent on a week-to-week basis.
"Within a few weeks of collecting data, you can forecast how many people will come into your store on a Wednesday afternoon at 2:00," he said.
Once the patterns are identified, managing the stores to increase sales becomes much easier and more effective. In most cases, the answer lies in providing more effective customer service during the key traffic periods identified by the software.
"When we are able to forecast incoming traffic, we can get the store ready and staff it accordingly. That’s how we were able to increase sales dramatically using the numbers," Champagne said.
This can occur in a number of ways, from altering staffing to providing more consistent customer service, to training, to setting more specific performance targets and standards. Another example is to ensure the top-selling associates are scheduled during the peak traffic periods.
By presenting the data generated from the traffic-counting devices, "You can show your top salespeople that if they work these specific 16 hours each week, they are going to make more commission for working the same amount of time," SMS’ Bunyar explained.
At Liz Claiborne, this translated into an increase in closing ratio from 8% to 16%, despite the same amount of traffic.
The quickest, surest and most cost-effective method to increase store sales significantly remains improving each store’s conversion rate.
Affordable Care Act: Labor Strategies
As an industry with one of the largest populations of part-time workers, retail stands to be hit the hardest by the changes required by the Affordable Care Act. Yet as retailers start planning, many of them simply don’t know how to comply, and what the long-term effects will be. Unfortunately, there is no "one-size-fits-all" solution, and employers will have to carefully select a strategy that is right for them.
At first glance, the new law seems to be a no-win situation: Many companies find themselves hard-pressed to offset the rising costs involved with the ACA without triggering such negative outcomes as employee turnover, poor customer service and, ultimately, a loss in revenues and profits.
But there is good news. By using workforce management technology, retailers can improve workforce efficiencies that can help with more effective execution of their ACA strategy. They can achieve compliance, minimize the costs associated with the act and even focus on initiatives that can improve their business.
Today, improving the customer experience is a significant opportunity for retailers. In the customer’s eyes, overall "value" now represents a combination of price and their personal experience while shopping.
Research shows that customers are now willing to pay 13% more for a good experience, which explains the recent trends of showrooms and other premium services. Remember that your workforce is largely responsible for delivering this experience, so retailers should make every effort to keep the employees who deliver it best.
No matter what strategy retailers select to meet the requirements of the ACA, they will face new costs and other potential business challenges. Yet by focusing on the workforce, and the frontline employees who can actually influence results, retailers can do more than just survive ACA — they can thrive.
While retailers have many choices when it comes to ACA compliance, most have indicated that they will pursue one of three options:
• Continue to provide healthcare coverage for all of their optin, full-time employees. But in doing so, they expect their costs to rise.
• Choose to not provide coverage and elect to pay the government’s penalties for non-compliance.
• Alter the mix of full-time and part-time employees. Many retailers will attempt to alter the mix of full-time to part-time employees in a manner that produces an acceptable cost profile. (The average retail employee works an average of 31.6 hours today, which could make changing this mix difficult without losing productivity or causing the entire organization to suffer.)
No matter which option retailers choose, workforce management technology can help them minimize the costs and deliver better business results. Specifically, it can help in the following areas:
• Time and attendance: By automating time and attendance processes, retailers can reduce labor costs by enforcing pay rules — consistently and accurately — across the entire organization. Also, time and attendance solutions can help retailers examine past data to determine employees’ full-time or part-time status based on average hours worked per week.
• Scheduling: Effective scheduling solutions enable managers to create the "best-fit" schedules that align labor with demand, while still complying to all applicable regulations. For compliance, scheduling solutions enable retailers to make intelligent scheduling assignments based on their ACA strategy.
For example, if the company is trying to maximize the use of part-time and full-time employees, they can use scheduling to optimize the workforce — both for their business needs as well as to strive to comply with the ACA’s 30-hour threshold.
• HR and payroll: With HR and payroll solutions, retailers can automate benefits administration and gain real-time insight into employee benefit eligibility, improving compliance and reducing financial penalties. These solutions also apply rules, policies and regulations consistently across the board, simplifying complex processes and helping to ensure compliance with the ACA. They also can generate a complete audit trail to provide evidence of compliance efforts.
• Workforce analytics: The right reporting and analytics tools can help retailers monitor the workforce by analyzing schedules, time records and benefits enrollments in real time.
Additionally, to help determine the right ACA strategy, users can perform "what-if" scenarios to select the right course of action — provide benefits, pay fines or examine employee hours — going forward.
Liz Moughan is director of the retail and hospitality practice group at Kronos Inc. (kronos.com).
By using workforce management technology, retailers can improve workforce efficiencies that can help with more effective execution of their ACA strategy.
From the Editor’s Desk
Welcome to the new and improved Chain Store Age! We’ve changed the size of our magazine (yes, the pages are bigger — it’s not your imagination), and updated the style and size of our type fonts with the goal of making CSA more reader-friendly and allowing us to incorporate more visuals going forward. We’ve also introduced a new logo, one that better reflects retailing’s omnichannel environment.
Our print redesign is part of a larger update of CSA’s brand identity that is reflected in our digital products as well. Our website is now incorporating more video — including, most recently, a terrific series of interviews with the nation’s leading real estate developers that were conducted at the annual RECon show in Las Vegas — along with such regular features as Store of the Week and Hot Concepts.
CSA’s e-newsletters have been revamped, with enhanced coverage and more photos. The daily has a new name, CSA DayBreaker, and the mix of news has been expanded to include technology coverage. Given the huge impact technology is having on every single aspect of the retail experience, we felt it crucial to incorporate technology into our daily news coverage. More than ever, DayBreaker is a must-read for busy retail executives who want to stay on top of the news and ahead of the competition. (And speaking of technology, veteran retail tech reporter Dan Berthiaume has joined our staff as a senior editor. Don’t miss his TechBytes column online and his expanded tech coverage in print.)
Our real estate newsletter, SiteTalk, has been renamed OnSite, and our store planning & design, construction and facilities newsletter, SpecsTalk, is now called StoreSpaces. New, exciting features have been added to both. We’ve also changed the name of the corresponding sections in the magazine to reflect their digital counterparts.
We hope you like the changes, both to the magazine and our online products. As always, your feedback is very welcome!
It’s hard to believe, but we’ve hit the mid-year point already! I thought it would be interesting to take a quick look back and see what articles initiated the most interest among our online readers. Here are chainstoreage.com’s 10 most viewed stories of the year to date:
①Johnson out as CEO of J.C. Penney; Ullman back
②Retail Store of the Year: And the winners are…
③Top 10 Most Innovative Companies in Retail ④13 Hot Trends for 2013
⑤Macy’s to close six locations, open nine others
⑥Walmart in line to open 500 Neighborhood Market stores by fiscal 2016
⑦Reinventing Retail: Hointer, Seattle
⑧Dick’s to open 40 stores in 2013 and debut Field & Stream format
❾Five Below to open 60 stores in 2013 and expand into Texas
⑩The J.C. Penney Debacle: Five Lessons Learned
It’s not surprising that J.C. Penney bookends the list. From Ron Johnson’s exit to Mike Ullman’s swift return, the company remains the biggest and most fascinating story in retail. It will be interesting to see how the next six months play out. So here’s a request for more feedback: After all that’s happened so far, how do you think Penney fare going forward?