Although the supply chain difficulties of 2022 may seem like a distant memory, as we move into 2024 there are still ongoing strains in the retail sector. Consumer spending remains low, driven by persistent inflation and the escalating cost of living crisis, so retailers are looking to understand their customer footfall, and therefore consumer behaviour, on a far greater level.

While it’s true of most business sectors, understanding customer behaviour in retail remains vital. Among the many metrics, one has long stood out for its ability to tell a riveting story – that metric is retail footfall. But what exactly is retail footfall, and why does it matter so much to retailers?

Retail footfall, simply put, is the number of people entering a retail store, shopping mall, or commercial area. As well as telling you how popular a store is, it also has the potential to unlock previously hidden insights that help inform business strategy and growth.

However, footfall encompasses more than just a headcount. What it offers are far deeper insights into behaviour, revealing how effective visual merchandising and marketing strategies are, as well as the overall appeal and accessibility of a retail location.

In this article, we’ll answer the question “What is retail footfall?” and look at why it’s so important for retail businesses. We’ll also cast an eye over the factors that can potentially influence retail footfall, and touch upon the challenges retailers have when it comes to measuring footfall accurately.

So, whether you're a seasoned retailer or just curious about the intricacies of retail metrics, retail footfall is a great place to start your journey into understanding why it's such a significant metric when it comes to the business of retail.

What is retail footfall?

Retail footfall extends beyond the simple counting of customers stepping into a store. It's a metric with many facets, and it plays a pretty important role in the much broader understanding of retail analytics.

At its core, retail footfall refers to the number of people moving around a retail environment. That could be a single store, a shopping complex, a high street, or an entire commercial district. The retail footfall metric is often used as a primary indicator of a store’s foot traffic.

What it offers is a measurable way to understand the appeal of those previously mentioned entities. In the retail world, it is often thought that high footfall equals greater opportunities for sales. In reality, it’s the subtle nuances and insights that empower retailers to a greater degree.

Footfall can be measured in a few different ways, some less sophisticated than others. Traditional methods include manual counting, where someone has to manually tally customers as they enter or pass by a store. You may have seen these people before, standing outside a shop with a clipboard and a clicker.

Despite this method being common still, technological advancements have made this much easier for retailers. Electronic footfall counters, such as infrared sensors and pressure mats, can now offer a more accurate and less labour-intensive way to track footfall.

Even more advanced solutions use computer vision technology to gauge not only the number of visitors but also their movement patterns, demographics, and more, giving retailers unparalleled insights into their customer base.

The difference between retail metrics

But while footfall is an important measure, it's important to distinguish it from other retail metrics. One example would be conversion rate. This is the percentage of visitors who enter a store and actually make a purchase. This metric is used differently to footfall because it looks at how effectively a store turns footfall into a sale.

Another metric worth knowing is the average transaction value. This indicates the average amount spent for every purchase. Again, this can be stacked up against retail footfall and conversion rate to give an even deeper understanding of consumer behaviour.

Although these metrics combined with footfall give retailers a fuller picture of store performance, the footfall metric acts as the foundation for all kinds of retail analytics, without which it becomes increasingly difficult to analyse customer behaviour and engagement.

Why is retail footfall important?

Retail footfall is significant for any retail business, regardless of size. Not only is it a key indicator of a store's performance, but it also serves as a gateway metric to much deeper business insights.

Not only does footfall act as a strong indicator of a store's real-time performance, but it directly links to the potential sales, too. After all, the more visitors a store gets generally means more opportunities for sales. One area where this can be particularly true is in high-street retail.

Why? Well, impulse buys are common, so footfall can be monitored to gauge the general appeal of their store. One with a greater percentage of passersby entering is a good sign and can be a reflection of the effectiveness of the store's location, things like the window displays, marketing efforts, etc.

So while footfall in and of itself doesn’t necessarily guarantee sales, there is a definite correlation between the number of visitors and the revenue generated. This is why retailers often analyse footfall alongside sales data.

Retailers can stack up their conversion rate with footfall data to see if there are any kinks in their sales funnel. If an issue has been identified at this point, it might prompt a deeper analysis, raising questions about the ability of sales staff, the effectiveness of window displays, or maybe things like prices or products.

While isolated analyses can tell retailers something, the best insights are drawn from analyses over time. Analysing footfall patterns over a longer period can give retailers much richer insights into customer behaviour. When are the peak shopping times? What are the seasonal trends? What are the customer demographics?

Answering these questions is essential when making staffing decisions, managing inventory, and launching marketing campaigns. But before we get to that, it’s important to be mindful of the factors that influence retail footfall so they can be taken into account during an analysis.

What influences retail footfall?

Retail footfall is influenced by many things…too many to name here. However, each one plays a pretty significant role in determining the number of people who stop by an individual store, a shopping area, or a commercial district, for example. Understanding the influences on footfall is necessary for retailers looking to increase their footfall and, most importantly, their sales.

Does location impact retail footfall?

Yes, location is probably one of the most critical influencing factors when it comes to footfall. Stores in high foot traffic areas like shopping malls or high streets will understandably attract more people to stop by. Accessibility can also play a part here – stores that are easier to reach with parking facilities or public transport links, are much more likely to have higher footfall.

What about seasonal variations?

Seasons significantly affect footfall. In the West, retail stores typically experience higher footfall during the Christmas season, for example. Also, things like back-to-school periods or sales events like Black Friday will naturally impact the volume of people heading out to the malls and shopping streets. There are plenty of other events that can temporarily boost footfall, but these can vary depending on social, economic and cultural factors.

Does marketing actually boost footfall?

Yes and no. Good marketing strategies and promotions can seriously boost footfall, bad ones won’t even register as a blip. Online or offline advertising campaigns raise awareness of a store, a sale, a new product, or an event, which can then draw customers. Other types of marketing, like in-store promotions, discounts, and loyalty programs, also move the needle on footfall, driving repeat visits and, to a lesser extent, attracting new customers.

What does competition do for footfall?

Retail is competitive. If you’ve stood on a street and wondered why so many barber shops cluster together, well it wasn’t an accident…there’s a reason. When people are given an alternative to a similar service offered by competing brands, it might prompt them to reconsider their initial choice. However, only businesses that make a real effort to differentiate themselves from their competitors will enjoy the best footfall.

So while several factors influence retail footfall, whether that’s location, layout, seasonality, or marketing, understanding them can give retailers a real opportunity to boost their footfall and, hopefully, their potential for sales.

What are the challenges in measuring and interpreting footfall?

Okay, so we may have made retail footfall sound like a breeze. In reality, measuring and interpreting footfall comes with a few challenges. When it comes to making proper, informed business decisions, the accuracy of your data is super important. There are also some other complexities involved in actually sitting down and interpreting this data, too. Let’s take a look.

The accuracy of measurement methods

One of the main challenges when it comes to counting footfall is the accuracy of the measurement method used. We’ve already mentioned the less sophisticated method of a clicker and a clipboard. Manual counting is prone to human error, though. Technology can (sometimes) be no more accurate. Digital footfall counting systems like infrared sensors can be thrown off by environmental factors like the weather, or pesky technical issues.

Whatever the case may be, every method has its limitations. This is why it’s important to choose the right tool for the task, while also considering things like store size, budget, and business needs.

Converting footfall into actual sales

High footfall doesn't always translate to high sales, so this can often be a challenge. Those in charge of strategy in some of the bigger retail outfits face the task of converting foot traffic into customers, and this involves understanding the reasons behind much deeper customer behaviour. What is their intent? Are they just taking a look, comparing with another brand, or are they ready to buy? Retailers should analyse footfall data alongside sales data because, like we said, retail footfall on its own only tells you so much.

Footfall in context with online shopping

Online shopping isn’t a bump in the road, it’s going from strength to strength. So, as online shopping continues to grow, interpreting brick-and-mortar footfall data gets a little bit more hazy. In this case, a decrease in footfall doesn't always mean that there’s been a decline in sales. For example, customers might prefer to shop using your online platform. This is where investing in your online presence and digital marketing pays dividends.

The impact of external factors

Most people by now will be aware of the cost-of-living crisis. Seismic economic shifts like this one in the UK can negatively impact footfall. With fewer pennies in their pocket, people will tend to avoid the shopping streets and malls. While these factors are beyond the control of retailers, they’re still a significant challenge when it comes to interpreting footfall data. The same can be said for the weather. If footfall was down while a tornado was in town, it’s not much of a stretch to think that it may be an extenuating factor.

Overcoming the challenges

So we’ve seen that collecting footfall data is just the first of many steps. When it comes to a deeper analysis and understanding of what the data is really telling us, the challenge lies in using the data correctly for it to be effective.

Retailers need to have the analytical tools and expertise to interpret what the data is saying if they’re going to make anything close to resembling an informed business decision. All of this can be extracted from the analysis of patterns and trends, identifying anomalies and looking at how all of this correlates with a boatload of other business metrics.

To put it plainly, understanding retail footfall is an essential part of much broader retail analytics. For retailers who can successfully overcome all those obstacles and get their footfall data paired with their other business metrics, they’ll be much better positioned to adapt to changing consumer behaviours and market conditions.

Remember, retail footfall is more than a metric. It's a clear indication of the effectiveness of many things, from the retailer's strategy to their marketing efforts, or the store’s location to customer satisfaction.

Retail footfall is one of the most important pieces of the retail puzzle, so it’s important not to forget about it. After all, when it is understood and implemented correctly, it can be the key to success in what is a highly competitive retail landscape.