Store traffic is a gift – retailers need to unwrap it

Every retailer – regardless of category or size, wants one thing – store traffic. 

Store traffic is the lifeblood of retailing, many retailers say. When sales are down, traffic is often blamed; when sales are up, traffic sometimes gets the credit. The way retailers talk about and obsess about store traffic, one would think that this simple, foundational data must permanently reside on the dashboards of retailers across the board.

The reality is that only about half of retailers track store traffic and even those retailers that do, often fail to apply the insights from it in any meaningful way. As the former head of data science for a very large specialty chain said to me, "store traffic is just not on the radar of our executives."

If retailers cared so much about store traffic, why do so many retailers today still not track it or ignore the data they have? I’ve been trying to answer this question for more than 20 years. The main reason for this is because retailers think they know their store traffic. Many retailers still use sales transaction counts as a proxy for store traffic and that’s, in part, why it’s so ingrained in the industry. This sacred cow needs to be slain. Transaction counts are not a good proxy for store traffic.

Transaction counts only represent the number of sales made, and are almost always lower, (and often much lower) than store traffic counts.

The surprising relationship between store traffic and store sales

The general assumption that store traffic delivers more sales doesn’t always hold – at least not the way many retailers think about it. The common misconception is that the store will sell to every shopper who entered the store intending to buy. 

But the sad fact is that every hour of everyday people visit stores intending to buy but leave without, despite their intention to do so. These are lost sales opportunities that the retailer didn’t even know they had. That’s why traffic and shopper conversion insights are so important. 

Naturally, store traffic and sales are correlated, but the relationship between traffic (the sales opportunity) and sales (the outcomes) is more nuanced than many retailers realize. The fact is – and I have data to prove it – stores can have more traffic and lower sales; and stores can have lower traffic and higher sales. Sound impossible? It’s not. And when you analyze store traffic and shopper conversion rates every day and to the hour, you can clearly see where opportunities are being missed.

Store traffic does a retailer little good unless it’s converted into a sale. Traffic defines a stores’ sales opportunity, and conversion rate is a measure of how effective the store team is doing at turning visits into sales.

Conversion barriers and super converting stores

Every physical store is unique. Its geographic location, physical characteristics, trading area, product mix, and most importantly, store leader and frontline team. Everything that happens within the four walls of the store is part of the store’s unique conversion algorithm.

To improve conversion rate performance, you must first understand what the conversion barriers are and then take steps to eliminate or minimize them. Some conversion barriers are controllable by the store team, but others are not. 

For example, stocking-out of a fast moving, promotional item with no clear substitute is a non-controllable conversion barrier. Store teams shouldn’t be held accountable for this, but there are a lot of other factors that the store team can control and should be held accountable for, including merchandising, positive engagement with shoppers, and having a smooth checkout process to name a few.  

But to really move the conversion performance needle, retailers should identify their super converting stores. Every retail chain has them. These are stores that produce conversion rate performance well above all the other stores in the chain. These super converting stores hold the key to unlocking conversion performance across the chain and are the source of the very best, best practices that should be implemented in all stores.

The trick is in identifying these super converters, some of which may be low sales volume stores that often get overlooked. This is relatively easy to do if you have store traffic counts and conversion rates. Improving in-store conversion rates even modestly can have a significant impact on overall sales – without spending a nickel on marketing to drive store traffic.

Navigating uncertain times

Retail is a perpetual motion machine – the one thing that won’t change is continual change. From pandemics to supply-chain issues, hyper-inflation and now tariffs, retailers will always be faced with external factors that can have a profound impact on their customers, store operations, and business results.

 Success or failure will come down to how retailers manage these changes, and store traffic and in-store conversion insights provide the foundational context that informs critical decisions to navigate the change.

Store traffic is truly a gift. Store traffic and shopper conversion insights enable every retailer to unwrap it.

Mark Ryski is founder and CEO of Headcount Corp, and author of the new book, “Store Traffic is a Gift.”