Footfall Data & Analytics

Blix CEO, Tony Loxton,  discusses the cost of retail staffing and leases

Written by Tony Loxton
Mar 29

Retail profit margins are (typically), extremely narrow. In Australia specifically, they sit at around 4.9 percent, according to this Government Retail Trade Report. As this statistic indicates, there’s a thin line between operating at a profit, and operating at a loss. To ensure that your business remains in the green, you need a firm handle on your operating costs.

If yours is like the majority of stores, two of your biggest overheads are retail leases and retail staffing.

Forking out thousands (and sometimes millions) of dollars on property rental and human resources is a necessity. Without either, your store wouldn’t exist. That said, if you’re not monitoring these two aspects closely, the dollars very quickly add up – often unnecessarily –  to the detriment of your bottom line. As such, it’s crucial that the money you’re spending on these two overheads, in particular, is justified. To do this, you need to measure the way they’re impacting your overall store performance.

Retail is all about location, location, location

There are no two ways about it: your store’s location has a massive impact on your profit margins. But how do you know whether your current location is serving your store? By measuring metrics such as foot traffic in the area (also known as walk-bys), foot traffic in your store, dwell time, shopper bounce rates and then using foot traffic analytics software to make sense of it all.

After all, information is only useful if it’s timely, accurate, and actionable.

Not only does your store have to be in the right location with regards to your specific product or service, your storefront and surrounding signage need to draw people through your doors. You need to establish the connection of passerby traffic with your conversion rates, as well as identify the times that are busiest, and the times that are quiet.

Consider this hypothetical example:

A retail store uses Blix Traffic to monitor their walk by conversions over a two week period. In week one, they were converting 13.21% of passersby. In week two, this increased to 17.28%. The reason for this increase? New store signage. 4% might not sound like much, but when you consider that the average external traffic in the area is 20 000 people, this is a significant improvement. If the store wasn’t monitoring the relationship between external foot traffic and sales, they would have carried on converting only 13.21% of passersby. When you put this in terms of dollars and cents, you realise just how much money they’d be missing out on. The moral of the story? You can’t afford to measure in-store foot traffic only.

Gleaning insight into your retail staffing is just as critical as gathering data about retail leasing.

We’ve just written about the vital role that staff rostering plays in a retail store’s performance. Just as important as your location, your staff can either facilitate increased conversions or hamper them. To optimise ROI, and ensure that the money you’re spending on retail leasing is being covered by sales, you need to get your staff to customer ratio spot on.

Weigh up the cost of your lease versus the amount of foot traffic and revenue it brings in.

In other words, the benefits of paying twice the amount for a great retail location that brings in a substantial amount of foot traffic far outweigh paying lower rent on a retail store that’s located in an area with dismal foot traffic. In the same vein, it’s advisable to view your staff as a profit centre, as opposed to a cost. After all, it’s your staff who close sales, which makes them a vital part of the sales generation process. Having the right number of staff on the sales floor means that more people could end up buying, basket sizes are likely to increase, and the staff are also happier because they're not completely run off their feet. Happy staff equals happy customers.

To assist them (and the business as a whole), invest in staff rostering tools that enable you to optimise your retail staffing and, ultimately, increase revenue. Most businesses either use old school traffic counters or point-of-sale data to track the busy and quiet periods. Creating rosters based on this information often misses the point. First, by using point-of-sale data you can’t track how many people bounced due to lack of service; second, a door counter won’t tell you if your store traffic dwell time is suffering at certain times of the day.

If you’re ready to amplify your revenue by investing in powerful foot traffic analytics, find out more about Blix Traffic for retail optimisation.

Learn more about Blix Traffic for retail

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