Store traffic is down and it may not come back. What should retailers do about it?


By any measure, empirical and anecdotal, the number of people visiting retail stores is down. There are plenty of theories about why: it’s the mass movement of shoppers to online; it’s changing consumer preferences; it’s the weather; it’s those pesky, hard-to- figure-out millennials who would rather hunt for Pokémon than bargains at the mall.

As someone who has studied brick-and-mortar store traffic trends for more than 20 years, I know it’s not unusual to see year-over-year store traffic declines of 5%, 10% and even 20% or more. When you put this in absolute terms, it can be startling.

My team of analysts and I analyze store traffic from thousands of retail stores across North America monthly. We recently analyzed the store traffic data from a 600-store specialty retailer. If their trend holds, there will be some 3 million fewer people visiting this retailer in 2016 compared to 2015. Ouch.

I agree that declining store traffic is a real concern and that cauterizing the traffic hemorrhage may be difficult, if not impossible, for some retailers to do. However, there’s a lot retailers can do to improve their results despite lower store traffic.

Store traffic and sales: correlation vs. causation

All retailers know that store traffic and store sales are connected. But store traffic is only one piece of the retail sales puzzle. While store traffic and sales are correlated, a decline in store traffic does not necessarily cause lower sales.

Retailers that don’t have traffic count data are literally flying blind. Or worse, they use sales transaction counts as a proxy for store traffic so they think they know what their store traffic is when they actually do not.

Transaction counts vs. traffic counts

There is a profound difference between transaction counts and traffic counts. It’s mind- boggling to me that, in the data-savvy world we live in today, many retailers still do not get this simple concept.

Store traffic is a measure of all the people who visit the store, including buyers and non- buyers. Transactions only account for the number of buyers.

Using transaction counts as a proxy for store traffic will lead to wrong conclusions; wrong conclusions lead to bad decisions; bad decisions lead to poor results. It’s wrong and reckless.

Productivity – making the most of the traffic you have

Retailers are always talking about how they plan to deliver better financial results by improving ‘productivity’ in their stores. Here’s the catch: you can’t calculate conversion rates or traffic productivity unless you actually count store traffic.

If you’re one of those ‘the earth is flat’ misguided retailers who still use transactions as a proxy for traffic, forget about everything you just read because you don’t have the data to create these important insights.

There are many things that influence productivity: inventory/merchandising, promotional activity, and labor/scheduling. Yet, retailers today are rightly hyper- sensitive to wage expense.

Excessive wage costs will kill profitability, but understaffing and/or misaligning labor can be even worse. Not having enough staff at the right times impacts conversion rates and immediate sales that can add up to many millions in lost sales annually. It also creates a lousy in-store experience that can turn a once happy customer into a social media terrorist bashing your brand, leaving a permanent digital scar.

Declining store traffic is a serious. However, it is hard to have sympathy for retailers who squander their store traffic. These are self-inflicted wounds resulting from ignorance or arrogance.

Even in a retail world of declining store traffic, there are a number of things retailers need to do – the five most important are listed below.

Five things retailers need to do to thrive in a declining store traffic world

1. Gets serious about measuring traffic in ALL of your stores. If you don’t have traffic counters installed in all your stores, install them now. Having traffic counters in only some of your stores and extrapolating results across your chain is imprecise.

If you use sales transactions as a proxy for store traffic, stop it. It’s just wrong and reckless. If you have traffic counters installed in your stores, but you don’t believe the data or the data is sketchy, clean it up and keep it clean.

2. Understand your sales drivers. Map performance of every store by breaking results into the underlying drivers: traffic, conversion rate and average sale. Without breaking them out, you’re guessing and very likely to make the wrong decisions.

3. Focus your store and district managers on driving conversion and average sale. Store/district managers don’t control store traffic, but they absolutely influence conversion and average sale values. Provide your managers with easy-to-digest insights on traffic/conversion/average sale results, train them on what to do with the insights and then hold them accountable for results.

4. Stop understaffing your stores. What’s the point of driving traffic to the store if you don’t have enough staff to service it? It’s pointless. Make rational allocations of labor for each store based on the traffic volume it receives. Establish optimal staff to traffic ratios and then staff accordingly.

5. Rationalize your store base. Review long-term traffic trends and conversion/average sale productivity of every store. If you have stores that have significantly less traffic opportunities, either invest marketing dollars to try to drive up traffic or close the store. High productivity won’t matter if you have no traffic.

Mark Ryski is the author of "Conversion: The Last Great Retail Metric and When Retail Customers Count" and CEO and founder of HeadCount Corporation.


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Tech Bytes: Four Tips for Pre-Holiday Prep

BY Deena M. Amato-McCoy

The back-to-school shopping season has barely ended. The east coast is still experiencing a smattering of 90-degree weather. The top trending Halloween costumes haven’t even been confirmed yet. But consumers don't care — for them, preparing their holiday shopping strategies are priority one. Note to retailers: it’s never too soon to follow their lead.

Industry observers are already predicting a 3.2% year-over-year (YoY) lift in holiday sales —a jump that will be driven partly by a 14.9% increase in YoY sales through digital channels, according to data from RetailNext.

That said, any retailer with an eye on their slice of this holiday pie shouldn't waste time getting their operations in order. Unsure where to begin?

Following are four projects sure to bolster any holiday IT prep list:

Improve Network Connections. With RetailNext predicting that digital sales could climb to 16% of total retail sales this year, unreliable retail networks are the fastest way for an unprepared brand to end up on the “Naughty List.” It is time to consider retiring legacy-based landlines, and future-proofing operations. The result: increased bandwidth and more secure information flowing through the pipeline. To achieve these goals, some brands will begin running networks in the cloud.

Attracted to its agility and low total cost of ownership, cloud-based networks enable companies to maintain traditional network functionality and services, including connectivity, security, management and control. The only difference is all capabilities are delivered as a service — a move that drives efficiency and lowers operating costs.

Adopt Unified Commerce Platforms. Customers have made it clear they want to channel-hop across a brand’s touch-points as easily as Santa’s reindeer can fly. This requires retailers to eliminate omnichannel back-end barriers once and for all — a move that enables them to deliver a holistic customer experience across the brand.

Expand Mobile Strategies. With the Rubicon Project’s “Holiday Consumer Pulse Poll” predicting that one in three consumers plan to shop on mobile devices this holiday season, retailers must be ready to service them. While mobile apps and optimized mobile Web sites are pre-requisites in a mobile strategy, brands must remember to leverage devices to personalize the shopping experience. This includes paying more attention to beacons and geofencing, personalized mobile-specific promotions, and maybe even Pokemon Go!-inspired in-store scavenger hunts. All efforts will further boost customer engagement.

Feature Flexible Fulfillment. Gift-givers have no intention of disappointing their loved ones this holiday season. This puts brands in the hot-seat to get merchandise into shoppers’ hands in a timely manner. Gone are the days when a retailer can operate a single warehouse or network of distribution centers dedicated to fulfilling omnichannel orders.

The unified shopping experience requires flexibility, visibility into customer demand, and immediate access to inventory. This is prompting retailers to step up “click-and-collect” efforts that leverage stores as fulfillment facilities for digital orders — a move that gives shoppers more flexibility in shipping time, product availability and reduced shipping costs.

Ready or not, the countdown to the 2016 holiday shopping season kick-off is underway. Rather than be left out in the cold, retailers need to pull out their holiday IT prep lists, and check them twice, if they want to compete for wallet share this holiday season.


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Casto’s focus shifts to urban projects

BY Al Urbanski

Casto has been successful building shopping centers in Ohio for 70 years because it’s not afraid to shift with the times, Don M. Casto III said in yesterday’s edition of the Columbus Dispatch.

The company has increasingly joined forces with other developers on mixed-use projects and turned back to its roots of building residences and retail buildings in downtown Columbus, the paper reported.

Resilience is the key attribute of a developer, according to Casto. “If you like people; if you like puzzles; if you like risk, this is an exciting business. It has all that,” he said.

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