With the exception of sales – and perhaps other POS measures like average transaction value (ATV) and units per transaction (UPT) – there’s no more fundamental metric in retail than store traffic. Yet, at the same time, there’s probably no other metric that is more misunderstood, more controversial or more argued, both for and against, than store traffic.
Store traffic is an essential metric because it represents opportunity for retailers – opportunity to serve and opportunity to, ultimately, sell. But, believe it or not, many retailers don’t reliably or systemically measure traffic. In fact, my company – Chrome Industries – was counting traffic in stores a year ago by having sales associates do it manually, by hand.
That was then though, and now all of the Chrome Hubs locations measure traffic fastidiously. It’s a critical component to how we manage our business, because it’s absolutely essential to measure conversion (the percentage of store traffic that completes a purchase transaction).
However, when it comes to conversion, and the traffic foundation that it’s built upon, it’s best to consider the following three guidelines:
- Directional growth is more important than the number or rate
- Don’t get hung up on staff inclusion or exclusion
- Dig deeper into the numbers to identify opportunities.
Directional growth is more important than the number or rate
Simply put, every store is different – different locations, different markets and different circumstances all around. So, why would you want a standard, often arbitrarily set metric around conversion?
Flagship stores are very different than other stores, just as mall-based stores are different than standalone stores. At Chrome Industries’ HQ, our store gets the added “benefit” of increased traffic as corporate employees take a shortcut through the store to get their coffees. Traffic rises, but conversion falls.
Related to conversion, I think it’s much more important to identify opportunities for improvement, deploy tactics to seize upon those opportunities, and then measure to ensure that conversion is moving in the right direction and growing. It’s much more important – and realistic – to drive toward a three point increase in conversion, a 10 percent increase in conversion, or an upward trend in conversion rather than mandate each store should have a conversion rate of 25 percent or whatever.
Don’t get hung up on staff inclusion or exclusion
Some detractors of store traffic get hung up on the inaccuracies that present themselves because of the measurement of employees and its impact on traffic counts. Don’t be one of them.
First off, staff exclusion is made possible through the marrying of multiple retail analytics technologies. But, if you don’t have staff exclusion built into your analytics platform, don’t worry.
Remember, it’s not so important as what the conversion rate is as what direction the conversion rate is moving – up or down – and by how much. As long as a baseline measurement is created and the traffic counting methodology is consistently applied, the savvy operational manager will have the necessary data to identify opportunities for improvement and share success stories through coaching.
Dig deeper into the numbers to identify opportunities
Count traffic, determine conversion and other managerial metrics, and develop baseline measures for each and every store, by day of the week and by hour of the day. Then, dig deeper into the numbers and identify specific opportunities for improvement.
Peaks of traffic do not necessarily have to correspond with decreases in conversion. If you identify that traffic surges at 1:00, it’s common sense to adjust the schedule to ensure that your staff isn’t taking lunch breaks at that time.
Traffic and conversion can also lead to adjustments in the store’s hours of operations. Depending on the market, it might make sense to open or close earlier or later. And, it might be different depending on the day of the week. Let the data drive your decisions.
Lastly, look for trends in the data that lead to opportunities for training and development. By overlaying analytics data with scheduling data, I’ve been able to identify different levels of performance among staff members, leading to discussions about what’s working, when and for whom, and transferring those learnings to the rest of the Store Ops team.
I’ve found that emphasizing conversion and having it as a frequent topic of conversation really helps to “rally the troops,” and the result is that conversion becomes a priority. You get what you measure, and you can’t get to conversion without first establishing counts of store traffic.
About the author:
Ronnie Hart is the Director of Retail at Chrome Industries, an iconic urban lifestyle brand built on the principle of simple, useful and resourceful products.
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