Keeping the Competitive Advantage
To succeed in today’s competitive environment, retailers need to know how many people are moving through their stores at any given time — and which ones make purchases. Armed with this information, they can align staffing to accommodate traffic peaks and valleys and determine the impact of their marketing and merchandising efforts on traffic and sales.
New Balance certainly recognizes the importance of this information, especially as it expands. The Boston-based athletic wear manufacturer and merchant opened several flagship stores in 2012 and plans to add between six and 10 outlet stores in the coming year.
“That real estate investment is pretty big,” says Stephanie Smith, vice president of North American retail. “We need to make sure the stores are profitable” — especially as the company enters pricier urban areas like New York City and Boston.
New Balance has been using Experian FootFall to ensure that the company’s investments in new locations and promotional efforts remain profitable. New Balance uses Experian’s FootFall Interactive online portal to capture data on key performance metrics like visitor and customer traffic at the store, region and chain levels across different time periods.
The software works with traffic cameras that can tally the number of people walking into a store; some retailers use additional cameras to capture customer movements once they’re in the store. By analyzing the data assembled from FootFall Interactive, retailers can accurately assess and forecast store performance and adjust staffing, promotions and inventory levels accordingly.
“We help retailers improve their store performance by helping them understand how people are moving through their stores,” says Roseanne McCauley, vice president of the Americas for Experian FootFall.
Once they have this information, the first change many retailers make is to better match employees’ hours with peaks and valleys in customer traffic. Doing so tends to be a low- or no-cost means of boosting conversion rates and average transaction values. “Typically, retailers don’t need more staffing,” McCauley says, “but just need to shift it around.”
Along with scheduling, a common area for modification is in merchandising, as retailers often test the impact of different displays on traffic and conversion rates. If it becomes clear that it’s necessary to drive more traffic to a particular location, many retailers will take a closer look at marketing efforts.
An eye on conversion
New Balance management uses the information it obtains from FootFall to measure traffic at its stores on an ongoing basis and during in-store marketing events. Management also looks closely at conversion. “Even a 1 percent change in conversion is [equal to] multiple millions of dollars across all stores,” Smith says.
Moreover, the ease with which customers at New Balance’s bricks-and-mortar stores can pick up their phones to check out deals elsewhere makes it critical that every potential purchaser receives excellent service. That means ensuring that staffing levels reflect traffic. “Every dollar counts,” Smith says. “You’re paying so much in overhead, rent, labor, so you have to convert [browsers to customers] in the store.”
New Balance measures its store managers in part on their customer conversion rates, Smith says, so merely making managers and sales associates more aware of this metric helps. They know the importance of, for instance, greeting potential customers when they enter the store.
Based on its clients’ experiences, FootFall has found that the average transaction value increases 5 to 6 percent, McCauley says, while the average conversion rate jumps about 4 percent. As a result, most retailers experience payback on their investments in less than two months. “It’s because it’s not just software or hardware,” she says. “It’s the retail intelligence and the combination of pieces.”
In fact, even as many retailers are struggling to boost store sales, New Balance’s numbers have edged steadily upward, with in-store sales up 6 percent this year, Smith says. A September release from the company announced that it had seen year-over-year increases for 24 straight months. “With traffic counting, we’ve had incredible success,” she says.
New Balance has been using FootFall’s traffic analysis tools for several years. Smith says she and her colleagues are now interested in testing a newer solution from FootFall called Site Analytics. The cloud-based analytical platform can assemble and analyze data from a range of sources, including customer traffic numbers, a store’s POS system, the company’s marketing expenditures and the employee schedule.
By working with such a range of information, the solution can show when different types of people are making purchases; whether a rise in costs within a department is accompanied by a rise in sales; how the average transaction value changes as traffic fluctuates; or the impact of queue waiting times on conversion rates.
FootFall has signed up several 1,000-store chains for pilots of its Site Analytics solution, and several other large chains are migrating from pilot projects to full rollout. New Balance is likely to be among the retailers using the product, and Smith predicts that the first benefits will come from more targeted employee scheduling and identifying how to most effectively use the company’s marketing dollars.
She points out that many retailers have tended to throw multiple marketing ideas against the wall to see what sticks, but that’s no longer effective. At the same time, few retailers can afford to hire dozens of data analysts just to pore over reports of traffic counts, conversion rates and the like, Smith says: They need software that provides this information in a usable format, which Site Analytics promises to do.
When launching the Site Analytics solution, FootFall typically outfits several stores in a pilot run while leaving several comparable stores unchanged. After about a month, FootFall works with the retailer to determine what changes in staffing, marketing or other functions should help boost sales or traffic, based on the information gleaned from Site Analytics. Once these changes have been in place for a month or so, the retailer examines any differences in performance between the two groups.
Gilts Cowan: telling stories in a unique ways- like stilettos by state where they used sales data to report avg heel height by state. #GRC158 hours ago
Gilt's Cowan: What matters for Gen Y? It's about taking old retail themes but rethinking in the context of digital. #GRC158 hours ago
- 3 web design mistakes that are costing your e-commerce site money
- ‘Eyes Only’ Visa Document Says PIN is Safer Than Signature
- The Benefits of Global Trade for U.S. Retailers, Workers and Their Customers
- Career and family: You can have it all in Kentucky
- 7 questions about America’s credit card system answered