To make empowered decisions, we need data-centred metrics at our fingertips. This is vital for retail because customer behaviour is constantly evolving. If we don’t meet the needs of shoppers, then sales and visits will decrease. After all, without these KPIs, how would we know whether our store layouts or marketing efforts are working?

This article will explore the retail footfall ratio. We’ll dive into how to calculate your retail footfall ratio, how to understand what this information really means, and how best to use it for business success.

Retail footfall analysis at a glance

To understand the retail footfall ratio, we must first look at retail footfall. At its simplest, retail footfall refers to the number of individuals who physically enter and visit a retail store or commercial space within a given period. When used alongside other retail data, it can be a crucial metric for measuring the volume of in-store traffic and customer engagement, and for identifying trends that cause an increase or decrease in the number of visitors.

As we discussed in our article, “What is retail footfall?” there are many ways it can be measured. Some of these techniques can be manual, but it’s becoming more common to integrate footfall counters, but they’re not all created equal.

Some of the simpler footfall counters use infrared sensors in a beam break system, while others are much more sophisticated, harnessing computer vision technology instead. As a result, the latter are much more powerful for retailers and retail businesses.

What is the retail footfall ratio?

The retail footfall ratio is calculated by taking the number of individuals entering a retail store and dividing it by the number of transactions or sales during a specific period. In other words, it’s the footfall conversion rate.

Using the retail footfall ratio strengthens the overall analysis of retail footfall, helping us add more meaning to the numbers. It’s great when footfall is high, but this doesn’t always equate to increased sales, the footfall ratio will help us determine this.

How to calculate the retail footfall ratio

First, you’ll need clear footfall data, whether that’s from simple infrared sensors or more advanced video analytics technologies.

Using these numbers, simply divide the number of people who enter your space by the total number of transactions within the same timeframe. The power of this basic equation should not be underestimated – it can unveil insights into your ability to convert potential customers into actual buyers.

For example, if you have 500 people visit your shop on one day, and 125 transactions take place, the retail footfall ratio would be calculated as 500 divided by 125, resulting in 4. This is your retail footfall ratio.

What does the retail footfall ratio tell us?

Used to its full potential, and taken in context with other retail analytics, the retail footfall ratio can go beyond merely counting the number of visitors. The ratio can be used to firstly understand the current conversion rate (turning visitors into customers), and secondly to make strategic decisions that result in increased sales and customer retention.

The higher the retail footfall ratio the better. Because a significant percentage of visitors are converting into customers, this can indicate a thriving retail environment. On the other hand, a lower ratio indicates a need to rethink. It could be caused by the layout of the retail environment, product placement, shop locations, pricing strategies, and so on.

Insight into customer engagement

The ratio serves as a measure of customer engagement levels within the store. A higher ratio suggests that the store has successfully captured the interest and attention of its visitors, prompting them to make purchases. How can we take this insight further? Through additional surveys and capturing email addresses to send a receipt to, we can gauge whether these are first-time buyers or returning customers.

An understanding of operational effectiveness

Analysing the retail footfall ratio allows retailers to assess the efficiency of their business. A lower ratio may signal operational challenges, prompting investigations into factors such as product placement, pricing strategies, or the overall in-store experience that may be affecting the conversion rate.

Are customers having their queries answered and resolved by staff? Is the ambience of the shop appropriate for the demographic? We make unconscious buying decisions based on how we feel, so if the music is too loud, the air conditioning is too high, or too sweet of a scent in the air, negative feelings can be evoked, causing potential customers to walk out the door.

How to adapt to changing consumer behaviour

Calculating your ratio shouldn’t be a one-time task to tick off. It’s a key metric that should be calculated and logged regularly to see if there are any variations. Changes in the retail footfall ratio over time can signal shifts in consumer behaviour and market dynamics that perhaps you didn’t anticipate.

It’s hard to spot new trends in real-time so using KPIs helps you to adapt your strategy in alignment with changing preferences so you’re responsive to the needs of their target audience.

Are there certain times of the year when students don’t make purchases in your store, potentially as they await for the next instalment of their student loan? This would be a great time to announce a 20% student discount for a fortnight. Do sales plummet at a certain time of year? It’s time to vary your product range on a seasonal basis.

The importance of data-powered footfall strategies

Once we have these metrics, it’s vital to build our retail strategies using up-to-minute data on peak hours, customer journeys, conversation rates, and foot traffic patterns. This data makes it easier to understand how best to optimise store layouts, strategically position high-demand products, or implement targeted marketing campaigns to attract and engage customers.

The success of these decisions can be determined by continued calculations on the retail footfall ratio and how that relates to other kinds of retail analytics. The goal isn’t just to increase footfall, but to see the true meaning behind it.

The retail footfall ratio can open a window, enabling us to think deeply about how visitors interpret a retail space and what improvements we can make to make them stay longer and make purchases.

However, it’s important to note that the retail footfall ratio in isolation only tells part of the story, and a well-rounded retail analytics strategy that takes into account multiple factors will be the difference between gut feeling and true insight.