Foot traffic plays a significant role in the retail sector of commercial real estate. Typically, the more foot traffic you get, the greater your revenue.
Yet, for CRE investors and brokers, analyzing foot traffic data can help with a whole host of key decisions such as where to locate your store, for example.
We’ll explore the concept of foot traffic in retail in this guide. You’ll also learn how to effectively measure and optimize it to enhance business performance.
What is Foot Traffic in Retail?
In retail, foot traffic is the number of people who enter your shop over time. Foot traffic can be measured by the hour, day, or longer periods of time. Analyzing the data helps retail store owners to understand specific customer trends.
Foot traffic can be determined using digital methods, such as cameras and tracking software, or manual methods like counters.
It can also be quantified by capturing mobility data from mobile networks.
There are both internal and external factors that can influence foot traffic numbers. The ones you should know about are:
Location plays a significant role in your level of foot traffic. Is your store near to a transport hub such a bus stop or subway station? If so, people might walk into your store while commuting to work.
Are you located in a bustling street or shopping center where there are lots of people? Are there nearby complementary retail businesses such as restaurants or entertainment spots that encourage people to visit the area?
These possibilities will influence the number of feet that walk through the door of your shop.
Store Layout and Design
Does your store provide a good shopping experience for customers? If your store is well-designed and visually appealing to shoppers, more customers will be compelled to walk through the doors.
They will also likely stay longer, and hopefully buy more! Good quality signage and inviting window displays can also help to capture the fascination of passersby, attracting them inside.
What is foot traffic driven by in terms of marketing? Have you recently run a big discount promo?
Targeted online and offline advertising campaigns are an effective way to attract more visitors. Think of how the Black Friday sales attract such high volumes of customers!
Local Events and Seasonal Factors
Big events such as a festival or a sporting event will bring an influx on visitors to a specific area.
Seasonal events such as holidays and weather changes also impact foot traffic. You’re unlikely to have many visitors during a snowstorm, for example.
Retail Industry Trends
Your foot traffic will inevitably be impacted by general retail industry trends, like ecommerce. Investment bank UBS forecasts that 50,000 of retail outlets will close by 2027.
This is based on the continued adoption of ecommerce, tighter credit, and cutbacks in consumer spending. This does not mean that physical retail is doomed! You can still succeed if you are aware of the outside and internal forces that influence in-store foot traffic.
Why Monitor Foot Traffic?
There are many reasons CRE investors and brokers should want to understand footfall, including:
Making Better Investment Decisions
Many of the decisions commercial real estate investors need to make, have high stakes. It’s important that decisions about purchasing and leasing retail properties are backed by research and data.
Areas with high foot traffic counts are often more attractive to retail tenants as they yield higher profits. In turn, properties in these areas might provide a better return on investment for the investor.
Calculating Accurate Property Valuations
What is foot traffic's impact on property valuations? Higher foot traffic usually correlates with higher property values.
It’s an important metric for brokers and investors to consider during the property valuation phase, and can be a key factor in determining the overall value of a property.
Finding and Keeping Good Tenants
A good understanding of foot traffic patterns in a retail location, helps a property owner to create a complementary mix of tenants. Successful retail tenants are more likely to stick around for the long haul.
You can even use foot traffic data as a bargaining chip during a lease negotiation. For example, a property owner might use high foot traffic counts to justify a higher rental.
Identifying Potential Issues Early
Changes in foot traffic can be a strong indicator of a potential issue in an area. For example, a new competitor store, or the closing of a nearby train station could lead to a decline in customers.
What is foot traffic data telling you in these situations? It’s a clear signal that it’s time to adjust your retail strategy to counteract any negative effects these changes might present.
How to Measure Foot Traffic
Fortunately, you don't have to personally count every person who enters your store to determine foot traffic. There are several excellent tools available to help you calculate and gather foot traffic data.
A few ways to determine how many people visit your retail store in person are:
Solutions like Dor, Kepler Analytics, ShopperTrak, and Aislelabs can automate the process of collecting foot traffic data, making it easy for you to analyze trends. Your budget will determine how sophisticated your foot traffic tracking software will be.
Use existing or install new security cameras to record customer movements within the store. More advanced solutions apply video analytics algorithms to create heat maps and analyze in-store activity.
Sales data alone can't provide the total number of store visitors, but it can be compared with foot traffic data gathered by other methods. You can use it to track conversion rates and check staff performance during peak and off-peak periods.
Tally or clicker counting is a low-cost, traditional method of tracking foot traffic. While not as accurate as more sophisticated methods, it can serve as a starting point for small businesses on a tight budget.
Mobile Network Data Analysis
You can gain insights into who visits your store and when by analyzing mobile network data. This is probably one of the most reliable foot traffic data collection methods.
Some real estate location insights platforms, like AlphaMap, track foot traffic using mobile network data. AlphaMap collects data from three of the leading mobile data companies across the US and aggregates the results into a combined estimation.
This allows for variations in collection methods between mobile providers. The result is much more accurate foot traffic data.
How to Increase Foot Traffic
Retail store owners can use a number of strategies to increase visitors to their brick-and-mortar businesses. Most retailers, these days, use a combination of physical and digital methods to attract shoppers.
Improving Store Layout and Design
An inviting and accessible shopping experience will bring more shoppers through your door and encourage them to stay longer. How you arrange your fixtures, displays, and products really matters.
Focus on aspects such as clear pathways, improved lighting, and strategically placed product displays. Sometimes small tweaks make big differences. As you make changes, watch your foot traffic numbers, and keep adjusting according to customer feedback.
Keeping Up with In-store and Online Marketing
Use targeted marketing campaigns, special promotions, and in-store events to encourage more visitors to your store.
Leverage your online presence to attract more customers by investing in local SEO, optimizing local search listings, and improving your social media engagement. Interacting with your audience online can lead to increased in-store visits and purchases.
Adapting to Retail Industry Trends
Stay up to date with retail industry trends, such as e-commerce, and find ways to integrate online and offline shopping experiences.
Consider offering services like buy online, pick up in-store (BOPIS) or curbside pickup to create a seamless shopping experience that not only increases customer satisfaction but also boosts sales and foot traffic.
What is Foot Traffic’s Role in your Business Strategy?
In today's highly competitive and constantly evolving retail landscape, staying informed about foot traffic and using data-backed strategies is key for maintaining a thriving brick-and-mortar store.
As a CRE investor, staying current with market trends and technology related to foot traffic analysis will keep you ahead of the curve. You can use footfall data strategically to improve your CRE business performance.
By monitoring foot traffic, you can make well-informed decisions and even use this information as a valuable tool during tenant negotiations.
Making use of modern technology, including user-friendly GIS analytics platforms, provides easy access to comprehensive foot traffic data for your property with just a click of a button.