Are retailers squandering store traffic?

Discussion
Photo: RetailWire
Aug 03, 2017
Mark Ryski

Much has been written and said about declining traffic in brick-and-mortar stores. It continues to dominate the headlines and remains the most frequent reason cited for lackluster store performance.

At the same time, there’s plenty of evidence to suggest that, even when there is traffic in the store, retailers are failing to convert these opportunities into sales. It begs the question, how much better could stores perform if they focused as much attention on converting traffic as they do worrying about the lack of it?

Today, many retailers track traffic and measure conversion, but what do they do to optimize in-store conversion rates? The answer for many is not much.

Online, Conversion Rate Optimization (CRO) has become an industry onto itself, spawning a global community of consultants and service providers, formal methodologies and over a hundred books dedicated to the topic on Amazon.com alone. There is only one book (mine) on brick-and-mortar conversion listed on Amazon.

Given the difficult business conditions so many are facing, it’s baffling that CRO hasn’t become an obsession with brick and mortar retailers.

Some are starting to pay closer attention. Macy’s CEO Jeff Gennette recently said, “The key will be for us to convert — we’ll get the traffic.” And yet CRO remains largely unexplored. A startling number of major retailers don’t even track conversion rates, instead relying on sales transactions as a proxy for traffic.

In today’s environment, retailers can ill afford to squander the sales opportunities. Stemming the tide of store traffic declines may be difficult if not impossible, but it doesn’t prevent retailers from focusing on the opportunities and applying CRO strategies.

CRO is not a panacea, but it can go a long way in helping brick-and-mortar retailers deliver better results, despite traffic declines. And just like the online survivors of the dot-com bust, brick-and-mortar retailers need to realize that it’s not just about the amount of traffic in their stores, but what they do with it that matters most.

DISCUSSION QUESTIONS: Do you believe brick-and-mortar retailers could materially improve results by focusing on conversion rate optimization? What are the biggest conversion rate killers in physical stores and what can retailers do to minimize them?

Braintrust
"Conversion Rate Optimization is a consumer-centric mindset. Any retailer today would improve their results if they put the customer first. "
"The key is the willingness on the part of retailers to invest in people and item variety to make it happen."
"As said before, one of the key advantages of physical retailers over online retailers is the human factor."

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25 Comments on "Are retailers squandering store traffic?"

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Charles Dimov
BrainTrust

Conversion Rate Optimization has been revolutionary for marketing. It is a good time to apply these practices to retail. Basically, it gives retailers the ability to monitor what they are doing, tweak it and see if it improves conversion. It takes a scientific approach to retail. That means the omnichannel promise, that 58 percent of in-store pickups result in more sales, can be even further optimized with this figure rising.

The biggest conversion rate killers today are long checkout lines, the lack of knowledge of staff on product/inventory and the unwillingness to go truly help customers. I am confident that CRO will shine a spotlight on some of these challenges. That’s the first step in getting them fixed!

Nir Manor
BrainTrust

CRO analysis and improvement for brick-and-mortar retailers is a must and they can definitely improve results with this focus. This should be a part of a wider “digital transformation” strategy in which retailers use technology to improve in-store operations. As said before, one of the key advantages of physical retailers over online retailers is the human factor. By improving human interaction and empowering store staff to use technology to identify shoppers, see their purchase history and personalize offers or provide better and faster answers to their product-related inquiries, conversion will increase and, no less important, with cross selling opportunities baskets size will grow as well.

Phil Masiello
BrainTrust
When you run an e-commerce website, you generally have three or four great tools that you review every day to see what is working on the site and what isn’t. Conversion is a main focus and a good e-commerce retailer will continually modify their site seeking to increase conversions. And that is because the e-commerce mindset is consumer-centric. Always searching for ways to improve the customer experience to increase conversions and retention. Unfortunately, retailers are retail-centric and the data they review has to do with accounting and not customers. Conversion Rate Optimization is a consumer-centric mindset. Any retailer today would improve their results if they put the customer first. What you find in retail today is that most retailers are doing the same thing they have done for the past 30 years. They put displays in the same spot with the same items according to the same merchandising schedule that they have used for years. There was a book that was published many years ago called “Why We Buy” which addressed this point. Many retailers read it, but very few implemented the concepts because no one wants to go against the grain and try new things. When they do, like… Read more »
Dick Seesel
BrainTrust

Charles is right on the tactics needed to improve conversion rates. Customer service and shorter checkout lines both require payroll expense whether you are Macy’s or Target. The question is whether stores will commit these dollars since their expenses are already being stretched thin by omnichannel initiatives like BOPIS and ship-from-store.

Dave Bruno
BrainTrust

In my opinion, CRO in a vacuum is risky. So many factors impact conversion, it could be easy to overreact to CRO metrics without the context of omnichannel conversions and other influencing factors (price competition, stock availability, etc.) However, as part of a toolkit designed to evaluate how successfully experiences are meeting expectations, CRO is invaluable.

Max Goldberg
BrainTrust

Conversion rate optimization should join traffic count and basket size as key metrics for retail. Retailers need to work hard to convert every visitor into a customer. To me, the biggest CRO killers at retail are out-of-stocks, inability to quickly locate desired items and category SKU creep. Retailers need to make it easier for customers to shop their stores.

Art Suriano
BrainTrust

It makes sense that if you have fewer customers coming into your store, your only solution is to sell more to fewer customers. That’s common sense, but Mark is right that too many retailers do not see the obvious. They talk a good game but fail to measure conversion correctly. Even worse is watching, as I do often, lost sales with customers who had intentions of buying but either could not find the item or, worse yet, could not find a well-trained associate to help them, so they left. That’s very sad.

Retailers are crying the blues but remember it was they who for too many years assumed the merchandise would sell itself, never dreaming they’d have the competition they have today. And during those years, they kept cutting store staff and training, and now they wonder why they can’t get comp store sales up. When they look at conversion correctly, a retailer can easily see the opportunities they have. If it means that a retailer has to invest a few dollars in more staff and better training, the pay off would be worth it because it would generate more sales!

Lyle Bunn (Ph.D. Hon)
BrainTrust

The new de-branding is to not respect the gift of a store visit by shoppers. Every visit should include discovery and the satisfaction of needs and wants, with each visit fueling the desire for future visits. Information about new products, inventory visibility and promotions about how the features and benefits of products ideally suit them should be presented in engaging ways. A failure for optimal conversion on one visit should motivate future purchases. A visit is also the opportunity to promote future in-store events. Dynamic signage and other digital experiences can keep the store worthy of being on the outing itinerary.

Shep Hyken
BrainTrust

Brick-and-mortar retailers are competing against other brick-and-mortar retailers and online retailers. Competition is tougher than ever. If a retailer isn’t properly training their people to not only sell but, even more importantly, to build a relationship with the customer, they are missing a big opportunity. Conversion rates aren’t just being hurt by price-sensitive shoppers who believe they will get better pricing online. They are being hurt by employees who don’t know how to sell and build customer relationships.

Lee Kent
BrainTrust

Thanks Mark, for bringing this to mind. I think about customer experience all the time and often forget myself to align CX with CRO. Retailers need to be looking at what makes a customer choose shopping in-store over shopping online, and give them that experience. And they need to measure the delivery in conversions. If they are simply looking at sales transactions, they have no way of knowing if they are giving the customer the right experience and enough of it. As for conversion rate killers? If you know the reasons your customers come into the store then map the customer journeys and make sure every potential exit point has been addressed with the right solution and/or interactions.

For my 2 cents.

Bob Phibbs
BrainTrust

Higher conversions come from humans. Keep cutting staff and not giving them training and you might as well cede your business to Amazon.

Ricardo Belmar
BrainTrust

You nailed it Bob! This is yet another example of how all roads lead to sales associates in retail. How many different ways (and metrics) does the industry need to realize that associates are the key to increased conversions, higher sales, great customer experience, and, oh yeah, a successful brick & mortar business!

J. Peter Deeb
BrainTrust

All of the comments below on this subject are correct! The key is the willingness on the part of retailers to invest in people and item variety to make it happen. The trend needs to be reversed from cost cutting to staffing with associates trained to sell, sufficient in-store inventory, ability to utilize data to promote sales and a seamless transition to the retailer’s website to sell and ship recommended items to the in-store consumer. This takes well-trained staff with initiative and may well require a different compensation system to make it work.

Lee Peterson
BrainTrust

I’m thinking the opposite. That stores need to figure out how to improve online conversion vs. in-store conversion. More and more, retailers should start to think of their physical spaces as the optimal brand touch points, where you emotionally engage humans with the real power of your brand and subsequently drive online purchase when the consumer feels like it. Not just places to put stuff on a shelf and try to get them to buy on the spot. Samsung 837, Yeti, Nike, UO Spaces; these are the stores of the future.

Face it, it’s SO much easier to buy online on your own time, why on earth would you continue to fight the way people truly want to purchase? Functional/convenient: online. Emotional/human: stores.

Mohamed Amer
BrainTrust

Thank you Mark for highlighting an obvious, yet overlooked opportunity for brick-and-mortar retailers. Your book on the topic is a very useful resource.

Every shopper walking into a store has already made a time commitment and is ready to buy. This is especially true today where a significant amount of exploration and research is done on a mobile device. Being properly staffed and inventoried should be viewed as high ROI investments to achieving conversion or CRO. Unlike online conversion, in the physical world you need people and products in an easy and pleasant shopping environment.

Some of the biggest solutions to conversion rate killers are obvious. Eliminate long lines at checkout or customers having to hunt for an associate so they can make the purchase. Restock, restock and then restock again so your shelves reflect your inventory position. Give associates the tools and access to information so they can be advocates for the customer. Understand that the physical in-store experience (and CRO) cannot be delinked from your online presence. Finally, hire people that like to help people and are interested in the products you sell.

Cathy Hotka
BrainTrust

Conversion will be a big topic at the upcoming Store Operations Council meeting this September. There is some frustration among store operators that they’ve been left out somewhat as retailers beef up their online presence … when 70 percent or more of retail sales happen in the store, it’s time to pay more attention to what actually happens there.

Ryan Mathews
BrainTrust

CRO gives retailers a critical metric. But the real issue is, are we getting better and better at measuring the evolution of decline? Yes, temporarily it allows retailers to modify their approach in near real-time, but I don’t think it addresses the macro questions behind declining performance in certain channels. Good tool? Yes. Salvation? Not hardly.

Craig Sundstrom
Guest

I find Mr. Gennette’s comment, while full of confidence, to be dubious. Isn’t the whole narrative in recent years that traffic everywhere is down? That stores are NOT “getting the traffic.”
To the extent that his attitude is typical, I see little chance that CRO will become of much interest.

Ralph Jacobson
BrainTrust

The challenge is first to remain a relevant draw for shoppers to take the time to visit your stores. This has everything to do with being a compelling merchant that has the products people want to see / feel / hear / touch / smell better than they can online. Sure, there’s a conversion issue today due to myriad causes, showrooming not the least of them. CRO is just one tool to leverage, alone with other critical ones to gain insights into how to generate those ways to get shoppers to buy more in-store. We can all think of those innovators that always have heavy traffic in their stores and are leaders in conversion rates. It can and IS being done.

Peter Luff
Guest
People go in to shops with one of three principal purposes in mind: looking to make a purchase, finding out what’s new in the store, or carrying out research on a product. So half the job is already done – getting the shopper into the store. Turning browsers into buyers is what separates great retailers from the rest, and most great retailers deploy customer counting technology and management programs to provide focus on the task. Shooting at conversion rate targets also acts as a great motivator to store colleagues. With so much attention given to digital technology nowadays, store teams run the risk of becoming a forgotten asset. Passionate staff, on hand at the right times, who have intimate product knowledge and take an interest in their customers can drive not only engagement but conversion. The future of retailing is not just about the “what,” it is also about the “who.” It is about minimising the “bad friction” in shoppers’ experiences – queues at checkouts, disappointing levels of service, no one to seek advice from, needless wastage of precious time. These are not just conversion rate killers but the things that discourage future trips to the store and the chance… Read more »
Doug Garnett
BrainTrust

This is an important, but risky, topic. Once someone has come into your store, it’s reasonable to want as many as legitimately possible to spend some money and to spend more money. And there are solid answers here about customer service and checkout as key.

The problem with a metric like this is it isolates one element of shopping and leads us to ignore what might be most critical. For example, Byron Sharp has done tremendous work on Double Jeopardy in brands. While marketers everywhere obsess about maximizing heavy shoppers, Sharp’s work finds that the larger a brand’s market share, the larger the average spending per consumer (so pure focus on big spenders ensures small market share).

So my guess is that problems with conversion are linked to product mix or product display or traffic flow problems. Solving customer service problems will only do a small amount. Having compelling, important products will do far more. Remember when Keurig dominated stores? Remember when the Foreman Grill drove all small appliance departments? Remember when…? If you have products people care about and make them easy to find, shoppers will spend money.

Ricardo Belmar
BrainTrust

Absolutely conversion rates are something retailers need to spend more time seriously evaluating and optimizing in their stores. That said, it’s not the “one metric to rule them all” — and I don’t think there is such a metric anyway. The best answer is to use the right set of metrics to evaluate your stores. When you look at traffic counts, conversions, average transaction value, and total sales, you have to wonder when retailers will start realizing that their store associates have the most impact on the majority of these metrics. When shoppers are asked what upsets them the most in their store experience (and therefore keeps them from making a purchase)? Invariably you’ll get answers like long checkout lines, lack of knowledgeable associates, and out of stock merchandise, to name a few. Anyone notice two out of those three can be directly impacted by store associates? Too often reducing labor costs take center stage and that creates a formula for poor conversion. Retailers need to rethink their approach to labor while at the same time focusing more on conversion rates.

Hilie Bloch
Guest

All retailers can always do better with conversion rate optimization. If they ever stop trying, some competitor is going to come along and grab market share. Conversion rate killers come in two groups — human and technological.

On the human side, customer service throughout the shopping experience can be hugely positive and hugely negative. Cashiers, clerks and others impact sales every hour — or even more frequently. Properly trained and equipped with both the right data and the right equipment, these front-line staffers can drive sales as well as, if not better than, other shopper influencers.

On the tech side, having the right actionable information at the right place and the right time for those employees to better engage the shopper is going to drive conversions. Conversely, the lack of the right resources at the point of purchase will almost certainly lower conversion rates.

Franklin Chu
BrainTrust

One of the major differences between shopping online and offline is that customers will inevitably leave trails when they shop online: e-tailers know their home addresses, phone numbers and email addresses. Retail companies even know which products shoppers browsed yet didn’t buy.

By contrast, physical retailers lack the capacity to keep track of their customers. When shoppers enter the store, pick up items and pay by cash, retailers do not capture any detailed customer profile data.

In response, retailers with physical stores should monitor customer conversion to understand their silent customers and adjust their service accordingly. They can start doing this by equipping their stores with technology, including headcount devices and mobile payments. Most importantly, physical stores should take advantage of the richer, multi-sensory customer experience they can provide and embrace technology to offer personalized customer service.

Jeff Sward
Guest

Unless you think there is a time coming when the malls are all closed and Amazon is the only retailer left, then OF COURSE conversion has to be one of the key metrics of the business. You KNOW you are going to have less traffic, so you HAVE TO convert more of it to actual sales. Kind of a no-brainer. You are competing for customers emotions. They buy when and where they FEEL it’s the right moment to buy. It might not be rational, but it’s what they feel.

I think it was RetaiWire that I read that people FEEL faster than they THINK. I love that observation. It explains a lot. Customers are developing a FEELING within mere feet of entering a store. It’s PRODUCT and PRESENTATION first. It’s assortment planning and color management.

Customers are developing their FEELING before they encounter a human. PRODUCT and PRESENTATION…then the humans can finish the emotional engagement and overall experience.

wpDiscuz
Braintrust
"Conversion Rate Optimization is a consumer-centric mindset. Any retailer today would improve their results if they put the customer first. "
"The key is the willingness on the part of retailers to invest in people and item variety to make it happen."
"As said before, one of the key advantages of physical retailers over online retailers is the human factor."

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