Are your information systems telling you what is REALLY going on in your stores, or do they hide the truth from you? Can indicators like UPT, Average Sale, Sales, Transaction Count increase, while masking serious performance problems at the store, region, or chain level?
I have heard many retailers say “No… not with my system….” Retailers, especially in the last five years, have spent millions of dollars upgrading systems, becoming better informed and providing the tools to make better, faster decisions. The big question is has it been enough? Do conventional systems provide all the crucial information for decision-making in today’s competitive retail climate?
Consider the following case… A Record Store, (part of a major national chain with very sophisticated information systems), posted a 10 percent increase in sales, well above the chain average for the period. Average Sale was about the same as last year, as was UPT. They were completing slightly more transactions than in the previous year, which was attributed to a speculated increase in store traffic. Sales per staff hour were down, because, it was thought, the store manager had substantially increased the number of staff hours used over the previous year.
Concerned about the wage to sales percentage, executives immediately wanted the store to reduce its payroll. Based on all the information they had been given by their MIS department, this would appear the proper step to correct the problem. However, looking closer at what was really happening in the store will lead to different conclusions. They had not included traffic counts, the actual number of shoppers visiting the store into their analysis.
The store had installed a traffic counting system for a pilot program about 18-month prior, which had not been integrated into its total reporting package at the time. Traffic in the store had actually increased more than 25%. With this one piece of data, the interpretations of the results entirely change. The 10% increase in sales, while more than the company average, paled in comparison to the 25% increase in traffic, or opportunity. Reducing payroll would have eroded service levels in the store, thereby potentially affecting UPT and average sale value because less service would have been available. The decision to increase staffing was the correct one, but the staff that were added were not sufficiently trained, hence the resultant drop in sales per staff hour.
Most importantly, the store manager, who, at the time was chastised for making a bad decision as to her use of staff hours, was correct in her actions. Because stores so often complain about not having enough staff, her complaints literally fell on deaf ears. She had to take a risk in order to do the right thing in the face of overwhelming data from the existing MIS to the contrary.
In another case, a store that is outperforming it’s traffic growth it is equally difficult to identify using conventional systems, and hence difficult to reward, understand and model. A Ladies Ready-to-Wear store, (again, part of a very large national chain, with very impressive MIS capabilities) was located in a mall, which was, for a period, under renovation. Based on previous experiences, the company had expected a small drop in sales due, they believed; to aq small decrease in traffic. However since the mall was open for business as usual, with most of the construction-taking place outside of store hours, no significant changes in budget were planned. Average Sale, UPT, were unchanged over the prior year. Sales per staff hour were off slightly, and were thought to be the cause of the decline in sales.
The store was losing 10% to sales of the previous year, and management, concerned with this, decided to look deeper into the store’s data. Again, a traffic counter had been in place in the store for over a year. They found that traffic was, in fact, down more than 40% from the previous year. In holding the loss of sales to only 10% in the face of the 40% decrease in traffic, the store manager and her team should have been praised for doing so well in the face of such a significant decline in traffic. The company’s executives had the data necessary to challenge the mall on its ability to draw traffic, and perhaps negotiate some sort of compensation.
These are only two in a variety of ways that current retail information systems create information “blind spots.” Traffic data adds a whole new perspective to the results that your info system generates. Measuring and comparing your performance to potential makes your system complete.
Traffic data takes away guesswork, builds confidence in the data and paves the way for faster, more accurate decision making for virtually every aspect of your business. It will eliminate excuses for poor performance and make all the data you collect easier to interpret.
For almost all retailers, gaining more sales involves one or both of the following two strategies:
Bring more traffic into the stores, or do more with the traffic you get into the stores.
Regardless of the strategy you choose, in order to evaluate the success of your strategy, traffic counts are a must. In recent years, many retailers have outfit their all or many of their stores with traffic counting systems. These include GAP, Pier 1 Imports, Office Depot, Zales, Future Shop, Tiffany, Guess, Nike, Circuit City, Maurice’s, and many others. Retailers are placing traffic counting systems into their stores by the tens of thousands every year, making traffic counting one of the fastest growing technologies in retail today.
The benefits of counting store traffic are many. They extend to expense control, especially in the areas of payroll, (staffing the store more efficiently), evaluating the power of external media to draw additional traffic into the store, to leasing, merchandising and more. Staff, and management at all levels become more accountable for their performance and contributions when a reliable traffic counting system is in place.
Recent developments make store traffic counting more accurate and affordable than ever before. Some of the most sophisticated systems can be leased for as little as $30.00 per month per store. Software developments provide the tools for store managers and executives to make faster, more informed decisions than ever before. Some traffic counting applications go so far as to provide a store manager with hourly detail and action plans to best take advantage of the store’s opportunities.
Retail is becoming more and more scientific daily. Traffic one of, if not the most important components to a store’s success. The time has finally arrived when reliable, affordable traffic counting can be easily integrated with sales information to yield a complete picture of how well the store has taken advantage of its opportunities. The need for speculation, where traffic is concerned has finally passed
Keith Bagley mailto:kbagley@storetraffic.com is a veteran of more than 20 years serving, managing, and owning stores in a variety of retail sectors. His experience with store traffic management spans 15 years and he has developed programs for and worked with some of North America's most respected and influential retailers. Currently, he is the Director of Marketing at St. Michael Strategies. For more information; please visit their wed site at
storetraffic.com
