The New Foot Traffic Reality
At Storetraffic, we’ve always stressed the importance of understanding one’s business data—notably foot traffic and conversion rate. In-store traffic numbers are critical. They enable retailers to calculate their exact conversion rate, which in return tells them the story of their business’s ability to optimize customer experience and to turn browsers into shoppers.
We also highlighted on numerous occasions how traffic follows recurring patterns. Overlay a store’s traffic curves for a couple of years and, indeed, the peaks and valleys will line up. Despite an overall year-over-year decrease in traffic in recent years, one could still predict in-store traffic quite accurately based on these recurring patterns, to better target their efforts and drive conversion rate up when needed. Easier said than done, yes. Nonetheless, this was the way to achieve better business results.
Improving the conversion rate is, in fact, less costly than getting more traffic in stores or trying to change traffic trends. Still, many people invested considerable sums in marketing to get more customer visits—this strategy gives a feeling of deliberate action. With the COVID-19 pandemic, we’re looking at months, perhaps years of decreased traffic.
So what’s the major takeaway? Henceforth—and for an undetermined amount of time—retail revenue and profitability will be very much tied to conversion rate performance.
How to Forecast the Real Value of Your Sales
As a retailer, if you didn’t measure your traffic before, and resorted to sales figures to assess your performance, you were missing out on key insights to grow your business. Yet, if enough buying traffic was coming in, you might have been satisfied in the end. Now, with much lower traffic, the value of every person coming to a store will be much higher. Knowing your foot traffic numbers will be more critical than it’s ever been. Likewise, monitoring your occupancy numbers in real time will help you control traffic flow and comply with on-and-off social distancing regulations.
Non-essential service retail stores are slowly reopening as we speak, in several states and provinces. If you’re a store owner or manager in apparel, jewelry, shoes, electronics, beauty products, or other service-sensitive specialty retail categories, you’ll want to plan by establishing best- to worst-case scenarios. If you’re already a Storetraffic T.M.A.S. user, remember to leverage our Retail Equation tool to forecast your performance quickly and accurately according to different projections.
The Retail Equation will let you see your sales through a different lens, providing you with a much more accurate and honest picture of sales performance. You could call it your Sales Value. The formula? Sales= (Traffic numbers) X (Conversion rate %) X Average Sales. Want to grow your sales? Improve one of these variables. If one variable goes down, the two others should go up to compensate.
We already know that in-store retail traffic will go down. By how much, it remains to be seen. Get your data for May 2019, for instance. Was that a good or bad month? Now consider your foot traffic for that month and cut it in half. If your conversion rate stays the same, and the average sales number doesn’t change, what is your new Sales Value? Is this a viable situation for you?
Create different scenarios. Play around with potential numbers. Increase the conversion rate and enter a realistic estimate of average sales, considering the current state of things. This will highlight where you need to focus, so you can break even or be profitable.
If you’ve archived months or years of traffic and conversion rate data, leverage these pieces of information to your advantage. As stated earlier, your traffic likely follows patterns, connecting with events, seasons, and even days of the week. If there were recurring peak traffic periods previously, there’s a good chance that the coming months will follow similar trends, albeit at a lower level of traffic overall. Using this precious data will provide you with insights to concentrate your efforts—it may also offer some comfort, knowing you can plan ahead.
Converting to the Conversion Rate Metric
Undoubtedly, COVID-19 will accelerate the pace at which e-commerce steals market share from traditional brick-and-mortar retail. Numbers we would have seen in five years might already be upon us. If Customer Experience was already the watchword for brick-and-mortar businesses, now it’s quite simply mandatory.
For the next 18 to 24 months, retailers will face the challenge of having to ensure everyone’s safety—staff and customers—while still providing a compelling customer experience. These will be challenging times, for sure. But I believe retail stores will come out stronger in the end, with a clearer vision and a more well-defined purpose, that ultimately fosters a positive synergy between brick-and-mortar retail and e-commerce platforms.
In short to medium term, retailers will need to double down on efforts to convert customers walking into their stores. People will continue to be careful when going out. Authorities will also pursue health and social distancing measures. As well, both your customers and your employees will be expecting you to provide a safe and confidence-inspiring environment. Monitoring and controlling live occupancy in your establishment will prove valuable to comply with orders and build customer trust. If you’re a non-essential service retailer, pick up on the best practices implemented by essential retailers during the peak of the crisis.
Remember: in the coming months, if people are going to wait in line, deal with restrictions, or even worry about being in a public venue, they’ll do so because they have the firm intention of making a purchase. Retailers will have to provide people with a reason to come to their stores, offering a Customer Experience that meets or exceeds expectations.
Time to turn a challenge into an opportunity. Time to make the conversion rate your most important performance metric.