Customer Footfall Analysis

The retail sector has started using data and analytics in a big way. In general, data and analytics is used extensively by online players in the retail sector. This means that companies like Amazon and eBay have traditionally been collecting data extensively from their customers and have also been using this data to make business decisions. However, this practice was not very prevalent in the offline retail sector.

Traditional retailers had very limited access to consumer data. Some organizations would use rudimentary technology such as pen and paper and counters to keep a track of the number of people visiting a store at any particular time. However, this data was not very accurate and also quite difficult to collate.

Over a period of time, companies started paying close attention to the effect of information related to footfall.

Retailers discovered that footfall analysis could benefit their decision making process in a number of ways. Also, the technology which enables collection of footfall related data also became much more accessible to retailers.

In this article, we will have a closer look at what footfall analysis is and also the business benefits which are likely to accrue to a retailer if they do engage in footfall analysis.

What is Customer Footfall Analysis?

Footfall analysis can simply be defined as the process of tracking the number of prospective customers which enter a retail store within a particular period of time. The idea is to not only keep a count of the number of people entering and exiting the stores but also to keep an eye on the behaviour patterns of the people once they are inside the store.

Retailers often divide their stores into segments which allow them to track footfall movement within each segment. The data derived from tracking such movement can provide significant insights.

For instance, a retailer might find out that customers visit the electronics section of a store only on certain days of the week and at certain times. On the other hand, the apparel section of the store may be showing consistent footfall on all days. The retailer can then use this information while making decisions about promotional events and other strategies.

It is also important to note that the technology which facilitates footfall analysis has grown by leaps and bounds within a short span of time. Retailers can now use infrared tools, heat maps and even video cameras to automatically derive information related to footfall.

Why is Footfall Analysis Important?

Footfall analysis is important because the data is used in several business decisions which have a huge financial impact.

1. Product Placement Decisions: Footfall analysis can reveal the types of products that customers tend to engage with most. These products generally have an inelastic demand which means that customers tend to look for these products within the store. Hence, even if these products are purchased at an inconvenient location, customers will still try to find these products.

   Footfall analysis helps retailers place these products at inconvenient locations whereas placing products that they want to promote at eye level on the way. Such type of product placements has proven to be very effective at increasing sales.

2. More Effective Marketing Campaigns: Data derived from footfall analysis can also be used in order to make more effective decisions regarding promotions and marketing.

   Retailers can ensure that their promotional dollars are spent in such a way that they get maximum bang for their buck. This may include instore promotional events as well as promotional spends which are done on mass media.

3. Identification of Peak Hours: Data derived from footfall analysis helps retailers find out more information about the peak hours at their stores. Retailers can also have data related to the demographics of the customers which are likely to visit during peak hours.

   Store management can use this data in order to make meaningful decisions which impact the customer experience. For instance, the store management may decide to open up more cash counters so that customers do not have to wait in long queues to get their products billed.

4. Make Staffing Decisions: Retailers can also use the footfall data to make staffing decisions. Footfall data tends to be consistent over time and emerging trends can be easily identified. The information related to these trends can be used to make staffing decisions.

   Retailers which tend to use footfall data while staffing their employees have a much lower probability of being understaffed as compared to their peers.

5. Optimize Inventory: Retailers have realized that their sales tend to be significantly correlated with footfall levels. Hence, they use past footfall data and correlate it with current patterns in order to forecast sales. This method has proven to be quite effective in the recent past. This is the reason that footfall data is used as one of the inputs to optimize inventory levels.

The fact of the matter is that footfall analysis has become very advanced over the past few years. New technologies are making it convenient to derive data almost in real time.

It is also important to understand that the data derived from such analysis is now used in important decision-making processes. Hence, footfall analysis has now become a strategic tool which is used by retailers across the world to enhance their profitability.