Sales = Traffic x Conversion: The Complexities of a Simple Equation

Knowledge of traffic and conversion is essential to measure and maximise sales opportunities across stores, however the knowledge of traffic and conversion by category display within the store reveals the mysteries of the shopping experience and promises the riches of increased sales productivity for every gondola, wall and precious retail square metre.

 

sale=trafficxconversion

What retail success boils down to is selling as much as possible to as many people as possible. In the context of any retail business this is very much in line with the key departments of marketing and merchandising. The role of marketing, in its widest sense, to attract as many people, as often as possible, through the store entrance. The role of merchandising in its widest sense to create an irresistible and relevant assortment to entice these people to buy.

In today’s world these top line KPIs are always, or at least should be, at the fingertips of any retail director, marketer or merchandiser; essentials to gauge the success of marketing initiatives and merchandising developments, to learn and develop and constantly improve.

At the heart of this process is the simple but essential requirement of the knowledge of what our traffic into the store is, and how well it converts. Traffic counters and POS data.

However, with many of the more fundamental opportunities for large scale sales increases at store level now already developed through the combination of best practice location strategy with marketing & promotional campaigns, the next place to look literally for profit potential is with the accumulation of incremental sales increases, through the maximisation of the traffic x conversion equation not at store level but at category and product level.

If store location planning is the recognised science to maximise sales for stores, then product location planning is the new science to maximise the sales of store square metres.

Replace “Best product in the Best place!” with “Best Conversion in the Best traffic!”

Knowledge of traffic and conversion by gondola, table and wall is the next and essential step to maximising sales productivity within every store. Video analytics can supply us with this information, and a product location planner can use it to generate the highest sales.

So what impact can the Product Location Planner have on your store layout, your adjacencies and your sales per sq. metre armed with traffic by aisle and gondola and POS data by category and fixture?

Firstly test the bigger picture – putting the highest converting product fixtures in the highest traffic. The simple knowledge of what fixtures are converting the best may be a surprise to some retailers particularly when bearing in mind their store location which of course may be shrouding their true potential.

The risk to such a sweeping strategy is of course store chaos, through the braking up of logical adjacencies and departments which ultimately creates too much difficulty in shopping that everything suffers. The key is the balance of maintaining logical adjacencies whilst exposing the most converted gondolas, ends and modules to the highest traffic.

In this way stores can break away from the democratic logic of store layout whilst retaining integrity, and crucially maximise traffic flow, particularly the first 1/3rd or 5 metres of stores and departments, drive aisles and feeder aisles. True analysis of traffic flow will also expose surprising aisles with traffic flow beyond the expected due to its “short-cut” location or en-route to services situation. These may well be populated with low conversion product categories.

Carried out with retail understanding, shopper empathy and armed with POS data the exercise of placing “best converted product fixtures in best traffic” can deliver tangible and sustainable increases to store sales, maintaining conversion but with higher traffic – the tantalisingly difficult task addressed by all retailers.

The next opportunities come from the recognition that store conversion comes from the sequential conversions that are intrinsic in the customer journey. Attraction is the conversion of passing traffic to aisle specific traffic, engagement is the conversion of aisle traffic to customer dwells, touch is the conversion of fixture dwells to product interaction; and finally sales conversion the conversion of either fixture dwell to actual POS sales.

Every journey will have strengths and weaknesses in this conversion funnel that effect the total conversion. By having the traffic data at each point of this conversion funnel retail planners can identify where the conversion is weakest and where and how it can be improved.

Weaknesses in attraction conversion can be improved through stronger and clearer proposition visibility, weaknesses in engagement conversion can be addressed through more logical range display, best seller highlighting and secondary communication, touch conversion can be improved through logical display adjacencies and hero product display, whilst final sales conversion weaknesses can direct retailers to improvements in the assortment structure or pricing.

These increases in the conversion funnel are an integrated process where store planners and analysts can work with marketers, merchandisers, buyers and visual merchandisers to optimise the conversion opportunities at each level of the journey.

Sometimes easy and sometimes complex the simple fact is that none of this is possible without the knowledge of traffic by store area, aisle and fixtures. All of this is available through the application of in-store video analytics.

Conversion rates for any store, are therefore the result of a chain of different conversions in the customer journey. In ignorance these different steps are a series of barriers to increased sales performance, but with illumination and insight and understanding they become a pathway of logical steps to higher sales and profit performance which can be extrapolated across a whole portfolio of stores.

So who is on the money in your retail business? Who is in search of traffic and conversion data throughout your stores? Who is actioning store analytics and who is integrating with retail functions to improve merchandising, in-store marketing and space planning for higher performance retail outlets by gondola, wall and for every precious retail square metre.

Tim Radley of VM-unleashed works with video analytics software, traditional POS data and across retail functions to assist retail businesses in improving their store profitability through improvements to the conversion funnel.

For more information:

Tim.Radley@vm-unleashed.com

+44 (0)7967 609849

www.vm-unleashed.com

Tim

I'm Tim Radley and I started VM-unleashed! in 2007, and as the one who makes most of the decisions, and does most of the work, then I guess that makes me the Managing Director. I've now been doing this sort of thing for over 20 years now, so hopefully i know my way around the retail block ...but hey, what do I know?

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