Retail foot traffic analysis is a valuable tool for commercial real estate investors that helps with making well-informed decisions.
In this guide, you’ll discover how counting your customers helps with choosing store locations, enhancing marketing initiatives, influencing shop layout, and so much more.
What is Retail Foot Traffic Analysis?
Foot traffic refers to the number of people visiting a store or commercial space within a certain period. Retail foot traffic analysis is the process of collecting and interpreting this data.
Footfall statistics can give retailers enormous insight into customer behavior and shopping preferences. CRE investors can use the data to inform their investment decisions and optimize their existing property investments.
Some ways CRE brokers and investors can leverage foot traffic analysis include:
Evaluating Investment Opportunities
CRE investors can use foot traffic data to assess the performance of a retail property before making a purchasing decision.
High foot traffic can be an indicator of a potentially profitable investment. Low foot traffic may signal the need for further investigation or reconsideration.
Choosing Great locations for New Stores
Foot traffic trends help to identify potentially profitable areas for a specific kind of retail store.
Depending on the retail strategy, most investors would be targeting locations where the levels of foot traffic are high.
Attracting and Keeping Quality Tenants
A location with high foot traffic potential will be attractive to retail tenants. Property owners and brokers can use foot traffic analysis to market commercial properties. This can attract better quality tenants.
Foot traffic can even be used as a bargaining tool when negotiating lease terms. For example, a property owner could use high levels of foot traffic to justify a rent increase.
Where Does Foot Traffic Data Come From?
Retail foot traffic analysis requires collecting from various sources. Both traditional and modern methods can be employed to gather this valuable information. Here's a list of some common sources:
- Manually counting the number of people that enter and exit a store.
- Counting mats placed at store entrances that detect footfall through pressure sensors.
- Surveillance cameras with AI facial recognition.
- Customer surveys that ask customers about their shopping habits and preferences.
- Tracking in-store point-of-sale (POS) transactions.
- Mobile GPS tracking devices, like smartphones.
- GIS analytics tools which use mobile tracking data to create detailed foot traffic insights.
Key Foot Traffic Metrics to Analyze
When analyzing foot traffic data, certain metrics provide insights into customer behavior and store performance. Some key metrics to consider include:
Foot Traffic Volume and Trends Over Time
Track the number of customers visiting your store over specific periods of time. These could be hourly, daily, weekly, or monthly intervals.
Identifying patterns in foot traffic can help you predict shopping trends. This in turn, helps retailers plan for peak periods, allocate resources, and adapt strategies to customer behavior.
Customer Demographics and Preferences
Examine the demographics of the people visiting your store. You might analyze the typical age, gender, and level of income of the customers that visit at specific times.
These statistics can help you customize your marketing efforts and store layout to better cater to their needs. You can look at foot traffic data alongside customer surveys or sales history to get a clearer understanding of your store’s main audience.
Cross-Visitation and Customer Retention
Look at how often customers come back to your store and whether they also visit nearby stores. If you notice a lot of cross-visitation, it might mean customers are comparing prices or products among different stores.
If you don’t have many repeat customers, this could signal you need to improve your customer service or give your store's offerings a makeover.
Rankings and Comparisons Against Benchmarks
Compare your store's foot traffic data against industry benchmarks or other stores in your franchise. This will help you gauge your performance relative to competitors.
You can use this information to see where you’re succeeding and to identify areas that need improvement.
How to Perform a Retail Foot Traffic Analysis
To analyze retail foot traffic data, follow these steps:
1. Collect Foot Traffic Data from Various Sources
Gather data from a variety of sources, such as:
- Manual counting
- Counting mats
- Customer surveys
- Mobile GPS tracking devices
- GIS analytics tools
Using a combination of data from several sources ensures a clearer and more accurate understanding of foot traffic patterns.
2. Clean and Preprocess the Data for Analysis
Prepare your data for analysis by cleaning it and ensuring its accuracy. This may involve removing outliers, filling in missing values, and standardizing data formats across different sources.
3. Identify and Analyze Key Metrics and Trends
Determine the most relevant metrics for your business and analyze trends in foot traffic over time. To gain insights into customer behavior and store performance focus on metrics like:
- Foot traffic volume
- Customer demographics
- Customer retention
4. Visualize Data Using Maps, Charts, and Graphs
Present your foot traffic data using maps, charts, and graphs to better understand patterns and trends. Visual tools can help you identify correlations between foot traffic and other performance indicators like sales, marketing campaigns, or weather data.
Final Thoughts on Retail Foot Traffic Analysis
In today's competitive retail landscape, measuring foot traffic has become an indispensable tool for retailers and commercial real estate investors alike.
By using modern ways to collect data, particularly analytics tools, you can learn important information about how customers behave and how well your store is doing.
Start analyzing foot traffic data today to make data-driven decisions that will keep you ahead of the competition and set your business up for long-term success.