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When every penny counts

Published:  17 April, 2009

Footfall is a vital metric for both centre management and tenants. Garnered and used effectively, this information can help drive sales. Shopping Centre reports

Footfall is a key metric for shopping centres and retailers alike: fact. However, in these times of economic woe, merely reporting the facts is no longer going to cut it with hard pressed tenants and managing agents. They want more bang for less bucks and preferably in pretty graph and dashboard format.

“Retailers have used traffic in the past to understand how many people enter a store [or shopping centre],” says Kim Pilkington, accounts director at StoreTech. “This [information]
has sometimes been fed back to marketing teams for interest,” he continues. “It has been used as a standalone historical view of their world and not really operationalised. Traffic has limited interest and value when used this way.”

Certainly, footfall specialists including Footfall, PFM Counting Solutions and StoreTech are finding ways of making customers’ data work harder for them. On its most simple level, as Howarth hinted, counting customers and subsequent conversion rates is a relatively painless way of calculating the success of marketing campaigns. “If you’re advertising on the television it is likely to be costing you an absolute fortune. If you are not monitoring the number of people coming into the stores it’s very difficult to know whether it has been effective or not,” agrees David Sturdy, managing director of PFM.

Jonathan de Mello, director of property consultancy at Footfall’s parent company Experian, says a comprehensive footfall system is an expectation of any tenant in a shopping centre. “Footfall comes out of the service charge in pretty much every instance and obviously retailers have to pay a service charge which encompasses marketing contributions and operations costs when they take up a tenancy of a particular store,” he explains. “Footfall is a key measure – retailers want to know what the footfall is, how it’s changing, how it responds to different promotions and how that might change across different parts of the mall too.”

Inevitably, there is a myriad of technology options when it comes
to customer counting. The more traditional camera-based solutions remain popular but infrared and laser systems are becoming increasingly prominent in the shopping centre arena. For PFM’s Sturdy, it is vital not to hone in on one specific technology as the requirements of each individual scheme are always entirely unique; there can be one no size fits all approach, he says.

StoreTech takes a slightly different approach to many counting companies. It is fitted in store entrances, rather than at the shopping centre’s doors and aims to help retailers increase sales at store level, through improved customer service by providing staff with the tools they need to make a difference. The StoreTech solution combines performance dashboard, staff planning, business intelligence and customer counting, delivering key information to staff in real time.

For Sturdy at PFM, it is not so much the technology that’s important, but the approach. “We don’t necessarily have a technology we’re promoting; we have a raft of technologies. Our approach from a survey perspective would be to go and look at the site and we look at every individual entrance and then consider which technology would work the best in that installation environment,” he explains. “If you had a shopping centre with a great big wide entrance with a glass roof you wouldn’t necessarily want to use CCTV because it suffers from light levels, fluctuations and light reflection on
the floor from the roof.”

The complexity and quality of the system, and whether it covers just shopping centre entrances or retail stores as well, is often dependent on what the landlord is intending to do with the data. “If a scheme is based on turnover rents for example, the landlord has a vested interest in knowing how retailers perform,” explains de Mello. For Sturdy, rents with a turnover-based component are the future. “That’s where the whole shopping centre market should be aiming to be because it creates a partnership approach,” he argues. “Shopping centre owners and retailers both have a vested interest to improve their proposition and to make the most of the customers that are driven into the centre.”

Certainly this approach seems to be working for PFM’s client, Resolution Property, at its factory outlet Park Avenue in Bilbao, Spain, where rent
is turnover based. The scheme’s management implemented PFM’s infrared counters and web-based reporting system to enable it to work with tenants to boost sales. “We really needed to understand how tenants were trading to make sure we can drive their sales as well,” says Michel Nangia, senior manager at Resolution. “If the capture rate is too low, we’ll work together on signage and a wide array of ideas to increase sales,” he explains. The results speak for themselves: “We’ve had quite a few success stories,” claims Nangia.

Some suppliers are finding that while their customers are demanding more, they are also under tougher financial constraints due to a pressure to reduce service charges. “It will affect us from a supplier perspective because I have noticed a certain amount of pressure to reduce costs and that is obviously reflected in the price that we offer.” In addition to the initial outlay, the ongoing maintenance of the systems is also a thorny issue among clients, says Sturdy. “We have a number of customers come to us and say that they are looking to reduce maintenance and service charges, so we’re under some pressure to bring those down.”

Meanwhile, Experian’s de Mello is adamant that it remains untouched by pressures on customers to reduce service charges. “This is information that retailers want: they demand it as part of the service charge,” he contends. “The service charge is spent on many things – heating, lighting, security etc – and those are the things that will be getting cut by companies that have publically come out and said that they are cutting the service charge, but footfall is and always will be a key metric for retailers,” he continues. “It’s not one that the landlords think is discretionary, it’s one that is essential because the retailers demand it.”