Case Study | June 23, 2008
Count Customers, Increase Sales
Source: Integrated Solutions For Retailers Magazine
Traffic counting is a relatively new, albeit foundational, concept in retailing. In 1980, very few retailers had even heard of a traffic counter. Today, close to 30% of major chains collect store traffic data in some capacity, and annual sales of traffic counters in North America are in the ballpark of $50 million and growing quickly. By most accounts, the tight economy has had a positive impact on traffic counting solutions vendors, as retailers endeavor to implement sales improvement strategies that feature low cost-of-entry.
Counting traffic is important for a number of reasons, some basic, others quite sophisticated. At a minimum, it’s imperative to know how many people are in your stores if you’re interested in determining conversion rates. Knowledge of conversion rates is the first step toward improving them, a sound growth strategy in an unstable economy. Michael Bunyars is CEO at traffic counting solutions provider St. Michael Strategies (SMS). He says that once traffic trends and conversion rates are calculated, retailers can make an immediate impact on improving sales by adjusting labor accordingly. “Most retailers staff their stores based on sales or transaction patterns, but that’s not necessarily the best practice,” he says. “Traditional thinking is that, if Saturday sales are double that of Wednesday’s, double the staff on Saturday. But if store traffic on Saturday is actually triple the traffic on Wednesday, doubling your staff on Saturday will in fact give your best customers of the week less customer service than they’d get on Wednesday,” he says. Staffing more strategically based on traffic rather than sales, he says, will result in a bump in sales.
It’s important to note that this pure conversion methodology is most effective in retail environments where consumers tend to shop alone, which is why SMS has found considerable success in the specialty soft goods market, counting the likes of Liz Claiborne and Macy’s among its clients. But in grocery and hard goods, Axis Communications VP Jumbi Edulbehram cautions that ‘shopping units,’ or clusters of people shopping together but only represented by one buyer, can throw your conversion rate off. Axis integrates people counting and traffic analysis into its CCTV/DVR technology. In the grocery and big box segments, Edulbehram says more immediate value can be found using traffic monitoring to analyze merchandising and promotion effectiveness.