Footfalls : logic, mathematics and statistics

Big brands and small brands vie for him; always devising strategies to attract him. One of his ilk may not make a substantial difference, but more of them put together can either make a mall or break the retailer's heart. Open the doors for the Customer. He reigns. An analysis of footfalls by Ashwin Merchant shows you how...

We keep hearing about the retail boom. But, then, who creates the boom? Is it real estate prices, elegant showroom displays, branded products, state-of-art technology…? Who is behind the great retail turnaround that we witness today?

Its customers, customers and customers. Retail business, like any other business, starts with the customers and grows only because of them. Loyal customers and new customers make a retail outlet, be it a shop, store, supermarket or mall, a great success.

The first mall that opened in Mumbai was around the dawn of the new millennium. Hundreds and thousands of people visited this mall day in and day out. Traffic inside the mall, and outside on the roads was uncontrollable. Store managers and media managers had never anticipated such a mania. Traffic police and mall management failed to manage the euphoria of 'customers' who thronged non-stop initially. Neighbourhood residents complained about and the media complimented the great 'noise' happening with the coming of the mall.

A screening system was introduced to control the flow of footfalls: like entry only for credit card holders, or those with mobile phones, etc. Car-parking charges were high. This helped in controlling the mad rush for a while, ie, solving the problem of overshooting footprints figures. Simultaneously, real estate rates jumped.

Curious visitors from nearby states began visiting this mall. The mall carry-bags that customers carried with them made the mall apparent everywhere. The symbol of the new generation of shoppers, it seemed, had evolved.

Subsequently, customer traffic stabilised Gradually, the new mathematical process began, and footfalls mathematics became real figures. Due to the high volume of footfalls, mall retailers used calculators to check the amount of purchases made by visitors. On comparing sales figures with that of footfalls, the former seemed just like the tip of the iceberg. Calculations also revolved around the actual transactions made by visitors out of hundreds of footfalls; the volume of sales and the profit generated; how many footfalls turned out to be customers?

Today, with increase in competition, the need of retail businesses is sales and not just footfalls, in other words, footfalls conversions. Retailers are analysing whether it is possible to survive within the figures that constitute conversions.

In such a situation, many storeowners feel they are running out of time. They are debating whether to renew the lease agreements made with their malls, or to find a more lucrative location. In other words, should they consider the mall, where they have their outlet, as a permanent business address, or just as an exhibition where they have a temporary stall.

Storeowners are also thinking about the turnaround numbers of 'smalls' (outlets) in a mall, ie, how many outlets have closed their shutters and moved out of the mall? They are also wondering why everyone has begun auditing everything  from the footfalls, comprising the window shoppers and buying customers, to the purchase volume and value, to repeat customers and other variables.

By this number game it is evident that the footfalls in a mall have a direct bearing on the success of the outlets or the mall.

Earlier this year in Mumbai, one of the biggest and the most successful chain of malls and markets, known for its strategy not only to attract more footfalls but also to create a great platform for visitors to make a volume purchase, announced a limited, a one-day offer.  In addition to the special discounts and schemes on offer, the logistics and other processes, such as  ensuring ample stock availability,

were organized with such great business acumen that most of the footfalls converted into sales. This event became history in retailing in India.

Today, the visitor wants much more from a mall. In addition to a great shopping experience, the new-age visitor seeks an equally great visiting experience that involves food courts and multiplexes. At the same time, there are customers who come just for recreation and entertainment without the intention of shopping. This can be a great opportunity for the mall to convert probable customers into actual customers. The challenge is to make mall visitors visit shopping joints  the small stores and the anchor shops. To add the big crowd outside a shop, to the few customers inside the shop.

For this, a new equation in footfalls mathematics has evolved: there are visitors who enter the mall and head for purchase, thereby becoming customers, called 'C'; and those shoppers, called 'S', who visit simply for recreation and entertainment and don't make any purchase. These two types make up the C/S ratio.  How can this be solved using a marketing strategy?

Unlike in the first case study on Mumbai's new mall, footfalls economics plays its role from a very early stage. How do you improve the C/S ratio? Out of in-store management, staffing, display… what is it that obstructs the C/S ratio from attaining the value of 1?  The C/S ratio will equal 1 only when all the visitors to a mall convert into buyers. In reality the effort is towards making C/S -> 1. Which strategies must be implemented that would increase the 'C' factor?

And the footfalls statistics

To evolve strategies for more conversions, find the average number of customers per day, further into per working day, and during weekends, average spending per customer, average purchase made, comparative study of purchase of food items and non-food items, durables and non-durables, top of the line brands and general purpose products  ie, collect customer data using different direct and in-direct systems, such as developing customer profile, analysing the buying pattern, developing forecasting models (derived out of information leading to knowledge which helps to forecast the sales in a similar situation in real time, in real life) and the marketing strategy for CRM and other applications.

Retail business marketing strategy, based on market trends and forces leading to footfalls, are aimed at achieving the best from footfalls logic, mathematics and data. If you have the relevant data and statistics on your customer, you get know him better. Once you get to know customer dynamics, you can position your product accordingly and achieve maximum returns. But it's not so simple to know about your customers in detail in a short period of time. It is an ongoing effort to get more data, at the micro and macro levels, eg, for every transaction. This insight-gathering exercise helps generate the best results including profits.

Conclusion

Retail business strategy aimed at marketing of retail stores, positioning of retail outlets ('small' to mall), branding of store to targeted customers, development of appropriate customer-centric marketing, in-store facility and counter sales staff grooming, data collection drive to understand customers better, application of store's customers data to increase sales, ongoing customer communication, auditing the retail outlet from 'outside in' as well as 'inside out', keeping a tab on the changing customer behaviour leading to footfalls mathematics, economics and statistics is the need of the hour. Those who can solve the footfall equation correctly, in time and with efficiency, will win the great retail war.