What Is Foot Traffic?

Foot traffic is a term used in business to describe the number of customers that enter a store, mall, or location. Foot traffic numbers are heavily monitored by store owners in particular retail stores, such as department stores. Foot traffic–or customer traffic–is an important metric because higher foot traffic tends to lead to higher sales and revenue numbers. However, foot traffic alone is not enough to generate new sales. Companies must offer a desirable product or service and follow through with delivering a positive experience to the customer.

Key Takeaways

  • Foot traffic is a term used in business to describe the number of customers that enter a store, mall, or location.
  • Foot traffic numbers are heavily monitored by store owners in particular retail stores, such as department stores.
  • Foot traffic is an important metric because higher foot traffic tends to lead to higher sales and revenue numbers.

Understanding Foot Traffic

Before a business even decides to set up shop in an area, the company's research team will study the foot traffic in the area during different times of the day and the week. Companies that are chain stores or franchises study traffic patterns in an area as well as median income, crime rates, and local foot traffic. If it's a larger business and is interested in the area, it might contract out the work. Consultants are often used to conduct surveys and analyze foot traffic patterns at different times of the year.

Street-level retail establishments, naturally, depend heavily on foot traffic, but businesses on a second or third floor of a building also need foot traffic to get noticed. On the street level might be a retail store, such as a coffee shop. However, on the upper floors might be professional service stores, such as law firms, financial advisers, and accountants. The signage and marketing at the street level is a crucial element in boosting foot traffic for the businesses located on the second and third floors.

Foot Traffic and Competition

Typically, locations with higher amounts of foot traffic tend to command higher rents. Any given city or suburban town has a popular area where foot traffic is bustling. These are desirable spots for shops and restaurants, but they can be expensive to operate. As a result, once businesses have been established, the focus shifts to competing for foot traffic with other local businesses in the area.

Large numbers of people don't necessarily guarantee profitability for retailers and restaurateurs in high-traffic zones. Highly sought after areas with foot traffic tend to have higher rents, higher taxes, and fierce competition. As a result, companies need to offer a product or service that differentiates them with the competition to win the battle for foot traffic but also justify the higher operational costs.

Foot Traffic and Urban Planning

Foot traffic is also an important consideration in urban planning. If an area is or is expected to become popular with pedestrians, planners will want to ensure proper aesthetic design and placement of buildings along with safety factors to protect pedestrians from vehicles. Street trees, crosswalks, and extended curbs are integrated into spatial planning. Urban planners can play a role in determining whether an area will be popular with shoppers.

State and local governments often allocate funds to renovate and improve areas where small businesses are located. The funds might be used for improving local parks, the waterfront, adding new lighted walkways and greenery, as well as improving access to the train station. The strategies are all designed to redirect or entice foot traffic to shopping areas.

Tracking Foot Traffic

There are various methods used to track and interpret foot traffic. The information gathered is critical to boosting sales and profits. Insights gained from studying foot traffic include:

  • Peak hours and days for customer activity.
  • Numbers and the types of products purchased, whether the products bought were on sale, or were they in a specific location, such as near the door or cash register.
  • Lost sales tracking, which helps businesses plan inventory. If sales for a product was poor during peak foot traffic hours, the product might not be worth selling.
  • How much time spent in the store or the average time spent by customers. Data showing time spent in a store combined with the time of day, week, or year can provide critical insight to customer buying patterns and interests.
  • Traffic patterns outside the store, such as rush hour, as well as the distance from the store to the customer's home can be studied and correlated with foot traffic.

Companies can track point-of-sale (POS) transactions done in the store to determine what merchandise was purchased as well as the time of day or week. Small businesses that are mom-and-pop shops might monitor foot traffic manually. Tracking foot traffic could be as simple as keeping a notebook by the register; counting customers and noting the times of day.

For larger, busier retail stores, electronics are usually employed to track foot traffic. Data from sensors and cameras that's connected to the Wi-Fi network can be saved and studied to determine the highest traffic times. From there, a business could increase staff or adjust employee hours so that the best salespeople are working during the peak times of foot traffic.

Special Considerations: Foot Traffic Trends

Foot traffic at shopping malls, strip malls, and traditional street-side brick-and-mortar stores have been on the decline in the U.S. for years. As a result, a wave of mall and store closings, particularly in secondary and tertiary locations, have occurred. The cause, according to widespread belief, is the rise of e-commerce, which offers convenience, selection, and competitive prices. Landlords are scrambling to keep up with the changes. Retailers and landlords have been collaborating to find ways to fight downward trends in foot traffic.

Many malls and shopping centers are employing an experience-shopping strategy whereby they strategically place restaurants, coffee shops, movie theaters, and activity-based stores to boost foot traffic to the other retail stores. The key is to come up with a plan to give people reason to walk around and enjoy the shopping experience instead of staying home and shopping online.