How foot traffic benchmarking helps with successful store network expansion

(Source: Bigstock.)

The secret to a successful brick-and-mortar store can be summed up in three words: location, location, location. It’s a cliche for a reason, because it’s true, but choosing the right location is easier said than done. 

Multiple factors can affect a store’s ability to attract passing foot traffic, such as the relative position of doorways and physical structures, and occupancy costs are often misaligned with the volume of traffic, which can impact a store’s profitability. 

Having access to the right data is key to successful store network planning and optimisation, says David Mah, co-founder and managing director of Kepler Analytics, but many retailers rely on aggregate data, which is far from accurate. Kepler Analytics has a better solution.

“The Kepler approach is unique as we use extremely localised sensor and store performance data to forecast sales for the exact sites retailers are considering opening new stores at. This is made possible by our network of more than 14,000 locations in Australia and New Zealand,” Mah explained.

“Very often we will be using data from stores within 30 metres of the actual site being considered,” Mah explained. “This means that the Kepler forecasting method tends to be more accurate than most other techniques in the market that only use shopping centre or precinct level aggregate data combined with ABS.”

How it works

Kepler uses sensors that measure customer movements via passive radio frequency energy emitted from mobile phones. Since more than 97 per cent of the adult population carry a phone with them, it’s a highly accurate method of traffic measurement. 

The range of each sensor is up to 100 metres beyond the store where it’s located, and it can be calibrated to measure traffic inside the lease line and passers-by up to 10 metres outside the store entrance. Staff devices that generally linger in the store longer than customer devices are automatically removed from the data to provide a more accurate count of customer traffic.

Retailers can use this information to: 

  • Benchmark how much rent they’re paying per passerby across their network for rent negotiations. 
  • Benchmark their stores vs other stores in the same centre. 
  • Assess long-term location viability using centre traffic and sales trends.
  • Forecast store sales at potential new sites using data captured via the Kepler sensor network. 
  • Assess other sites in the same centre for a potential store move.
  • Rank potential sites against their existing store network.

In addition, Kepler’s hardware is very simple to set up, with stores under 500sqm only needing a single sensor to capture most customer traffic and behaviour metrics. 

“Most existing solutions in the market are video camera-based, which is much more complex to wire up and install, and would require many more devices to measure the same level of in-store metrics,” Mah said.

Another benefit of the sensor system is that privacy laws don’t apply to it, since Kepler doesn’t collect any personal information. It can also be used in scenarios where cameras aren’t permitted, such as fitting rooms.  

Beyond foot traffic, the sensors can measure additional metrics, such as dwell time and the customer journey in-store.

Why it’s important 

It’s never been more important for retailers to take a more data-driven approach to store network planning and lease negotiations. Consumer behaviour has changed significantly since the Covid-19 pandemic, and many of the old assumptions have gone out the window. 

“Even though shopper spend is going back to stores, shopper behaviour has evolved to become much more targeted during in-person shopping than pre-Covid,” Mah said. 

Today, the average shopper goes into 20 per cent fewer stores when they visit a shopping centre, but they spend 30 per cent more time and 20 per cent more per transaction in the stores they do go into. This presents a big opportunity for those retailers that are able to successfully draw customers into their stores, and a pitfall for those that can’t. 

“In short, retailers need to capture more passers-by foot traffic into their stores to shift spend away from their competition, and provide shoppers with a customer experience and options that encourage a higher spend per visit,” Mah said. “They have to make every shopper count, now more than ever.”

For more information about how Kepler Analytics can help with this, click here