By ShopAbility for Retail World Magazine 
This is the fourth in a series of five articles about Achieving Retail Objectives from the team at ShopAbility. We have previously discussed Frequency and Inter-Purchase Interval, Average Weight of Purchase, and Basket Incidence (these articles are re-published here at www.sh-opportunity.com.au/news-articles if you missed them). The focus of this issue is driving Traffic to deliver growth.
What is Traffic?
Traffic relates to footfall – the number of shoppers crossing the store threshold in a given period (hour, day, week, month, year).
Essentially, there are two kinds of traffic: new and repeat. Traffic might be repeat to the retailer, but new at a store level. The importance of each changes depending on the kind of retailer. For example, given that 80% of Australian shoppers already frequent both Woolworths and Coles (based on proximity), it’s difficult to argue that very many initiatives will generate new traffic at a supermarket retailer level. However, increasing repeat traffic (ie increasing frequency) at a store level is a worthwhile goal in these outlets. As a supplier, if your category is a destination category, you can help to do this.
Who is responsible for Traffic?
In our view, creating new traffic at retailer level is largely the role of the retailer. They can do this by differentiating their retail offer and experience versus competitors in order to appeal to specific shopper types.
Driving traffic to the store is also largely the role of the retailer. It could be argued that it’s the retailer’s job to get the traffic to the store and the supplier’s job to help in providing the best experience at category, brand and product level once the shopper is inside. Ie
The line is blurred, however, for categories thought to be destination or traffic driving categories. There are also a handful of brands thought to drive traffic. For these categories and brands, suppliers need to consider their role in using their above the line and promotional activities to drive traffic to a retailer/store, as well as promoting brand purchase conversion in the store. Destination categories and brands drive traffic at a store level and are thus important to retailers from a Spend point of view.
Suppliers therefore need to understand the role of their category within the store (destination, routine, convenience, impulse – and also whether it’s a traffic driver, frequency driver, AWOP or spend driver) in order to determine whether or not, or how best, to support their products with store-traffic driving activities.
In an environment where manufacturer brands are playing against private label brands, particularly in retailer store catalogues, in our view most suppliers need to focus their above the line marketing activity around brand building to generate brand conversion instore, and judiciously use above the line activity under specific retail drivers (traffic may or may not be one of them) once the category, brand and product opportunity instore is understood.
The more in demand your brand, or exclusive it is, the better you are able to argue it drives traffic (ie it becomes a destination).
Driving traffic to store is the retailer’s job, via catalogue promotions, other promotions and retail brand marketing. Supplier brands may be part of the catalogue but are not solely responsible for traffic driving.
How is Traffic Driving built in to your KPIs and planning?
First cab off the rank here is to understand baseline store and category traffic vs promotional period traffic.
It may be worthwhile to include some shopper research in the assessment process. For example, instore observations on how many shoppers are shopping the category during the promotional period, versus off promotion baseline, in specific stores. These observations would also tell you purchase conversion rates (browsed vs bought) for both on- and off-promo periods.
Your measures for Frequency and Basket Incidence – if you’re using a Homescan product or similar – can also demonstrate repeat Traffic.
Why is Traffic Driving important?
Traffic is a critical retail driver. Assuming purchase conversion rates remain constant, and increase in traffic can equate to an increase in one or more of frequency, AWOP, and spend.
Understanding what drives shopper traffic is fundamental for any retailer. Their survival literally depends on it. If there are no shoppers, there are no $.
For suppliers, understanding what drives both new and repeat traffic to your category and brand enables you to help the retailer grow traffic to the store.
Traffic counting technologies assist in measuring footfall (although currently moves to differentiate new vs repeat shoppers via traffic counting are still in their infancy). When measured store transactions, it’s possible to get a measure of conversion rates … and the size of the missed opportunity (the number of shoppers browsing but not buying, or abandoning planned purchase due to out of stocks or other reasons).
Traffic Driving applied to shopper behaviour
Traffic is linked to the drivers of individual store selection. Shoppers choose stores based on proximity, range, ease of shopping, value/price, occasion shopping for, and shopping trip type (mission), and special offers – in pretty much that order for grocery stores. (For other channels Service often ranks in the top 3 store choice drivers).
Proximity can’t be influenced but the rest can, and all do, influence traffic.
Improving store range and shopping experience is a long term retail goal and may result in increased store traffic over time driven by consumer preference.
The other drivers – range, value/price, occasion, mission, and offers are all tactical and thus easily influenced.
5 Ways to Increase Traffic
1. Catalogue promotions
- Bear in mind that this only appeals to a certain kind of shopper (price-driven) and that many shoppers don’t choose a specific retailer simply because they are going to save 5c on a can of tomatoes. However, catalogue promotions can be effective for specific shopping occasions (such as gifting or entertaining) and to promote new products. New products can help drive the buzz required to generate new traffic to the store, and to your category.
2. Loyalty programs & rewards schemes
- These are all about repeat traffic, and dovetail with your other retail objectives of Frequency and Basket Penetration. Mechanics offered for your product can be tailored to other retail drivers such as AWOP, eg ‘earn 3x the points if you buy two Product Xs’.
- Loyalty programs and rewards schemes can be used to drive traffic at specific days and times (typically to boost lower traffic periods) by offering ‘double bonus point’ days. This works brilliantly for retailers in the USA such as Petco.
3. Day and day part promotions
- Shoppers often demonstrate their different missions and occasions by shopping in different day parts. An obvious example is the ‘dinner tonight’ shop which is most likely to occur between 4 – 7pm and accounts for between 10 and 15% of all shopping trips. Day parts are underutilized promotional opportunities in Australia. Specialty retailers in the USA do this well by offering additional discounts, extra products or more bonus points on specific days of the week or during happy hours (back to the old ‘red light specials’ that used to happen in the 1970s).
- Pubs have been combating downward traffic trends (a result of the GFC) by ramping up their day and time specific promotions. Not just happy hours from 5-6pm, t ‘$10 steak Tuesdays, ‘half price mussels all day Wednesday’ and other day and day part specials that drive traffic. Cheap movie Tuesdays also succeed at this. How can you use day part promotions in grocery and in the other channels you operate in, such as convenience? Some convenience stores in the UK change their entire front of store displays according to day part, in order to drive traffic.
4. New product development / release
- New products and releases drive traffic. Offering an exclusive launch period on a new product for a specific retailer ‘New X – only available at Retailer Y’ can help drive their traffic (but may obviously antagonize other retailers, so approach with caution).
- Specific packs for specific retailers may assist with traffic driving but only IF it’s a destination category, a highly desirable brand, AND the product is differentiated and/or value adding in some way.
5. Themed Promotions
- Examples include consumer promotions that offer value or experience in a way other than pure price, such as tie ins with movies, television, special events and so forth.
- Retailer specific themed promotions (not just packs) may involve one or multiple suppliers, and could be a category wide promo or against an occasion with multiple suppliers. An example is the recent Coles ‘Feed the Family for $10′ promotion.
- It’s important to ground these kind of promotions in a strong foundation of consumer and shopper research; understanding who your primary shopper is and what is likely to appeal to them.
Green light for proactive planning
Time to take a look at the role of Traffic Driving in your planning process.
Who is responsible for what? Ensure you understand the role of your brand and category in traffic driving – within store and/or to store, and adjust you above and instore marketing programs to suit.
Clarify with your retail partner what shopper missions and occasions you plan to appeal to with your traffic-driving initiatives.
And measure your impact through shopper research, so you can demonstrate to your retail partner that what you are doing delivers positive growth for their store.
Next time; Trial Management. In the meantime we welcome feedback from you. Email us at enquiries@sh-opportunity.com.au
