First and foremost, don’t cut your staff
We’re at a point where the majority of retailers are experiencing year-over-year store traffic declines at brick-and-mortar locations.
Thankfully, there’s a silver lining. Declining traffic doesn’t have to result in sagging sales, says Mark Ryski, president and CEO of retail traffic and conversion analysis firm HeadCount Corp. (pictured).
Ryksi contends that it’s the retailer’s actions—based on bad data—that usually ends up harming stores far more than slower traffic. We asked Ryski, who has written two books on the subject of how to convert traffic into sales in retail, a few questions about what to do when traffic is thin.
JCK: Why is traffic down in U.S. retail stores?
Mark Ryski: Nobody knows for sure. All we know is retailers have a pretty good handle on the facts of their transacation counts. But the problem is that many retailers are using tranaction counts as a proxy for traffic counts, and they are not the same thing. What we’ve discovered by analysis of hundreds of stores is, yes, we’re seeing traffic declines.
But lots of time there is traffic in the store, but the retailer isn’t converting traffic into sales. Maybe they don’t have the product mix; maybe they don’t have the staff to meet the needs of the traffic that is coming in. Traffic and transactions are two fundamentally different problems, and you need to understand that before you try to fix anything as a retailer. We saw one store that saw a 16 percent increase in traffic over a certain period, but sales were down three percent…this happens a lot.
What are some ways retailers can convert the traffic they do have into sales?
If traffic is down, then you really more than ever need to focus on converting that traffic. If a customer comes into a store ready to buy and they don’t find what they’re looking for and they buy something on their phone outside the store, the retailer absolutely has to take accountability for that. I’m sympathetic to retailers—traffic is certainly softer, there’s no question about it. But retailers need to turn their attention to the traffic they do have. If you do that, you could turn negative same-store sales into positive same-store sales.
Get serious about measuring traffic in all your stores. If you don’t have traffic counters, install them. If you use transaction numbers as a proxy for traffic, stop it. It’s wrong and reckless. Map the performance of every store by breaking results into traffic, conversion rate, and average sale…then focus your store on driving the conversion rate and average sale numbers. Then provide your managers with easy-to-digest insights. Train them on what to do with the insights, and then hold them accountable. Your managers don’t control store traffic, but they absolutely influence conversion and average sale values.
What common mistakes do retailers make when they’re grappling with declining traffic numbers in their stores?
Retailers cut payroll down and have less staff. Service levels dip down and you have people coming in and saying, “Why am I shopping at this store when the service isn’t good?” Sooner or later, it becomes a systemic problem. And the shoppers go online. What’s the point of driving people to the store if you don’t have enough staff to service it?
What’s the point at which traffic is so low, it makes sense to shutter a location?
Traffic defines the store’s opportunity. Less traffic is less opportunity. If you have some stores in your chain where traffic is low and continuing to decline, and you haven’t been successful applying marketing efforts to drive it back up, you may have to think about whether you need that store. You have to prune for excellence.
(Photo courtesy of HeadCount)