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Foot Traffic Analytics

Retail cannibalism: do two stores in one shopping centre affect retail store performance?

Written by Tony Loxton
Dec 15

Sales strategies aren’t set in stone. And when it comes to a franchise, owners rely on strategic insight and guidance as to how they can successfully amplify their success, in a way that benefits the franchise as a whole. Franchises operate according to the saying “one for all and all for one” – in other words, what’s good for the franchisee has to be good for the whole brand, and vice versa. In order for franchises to grow, meet their customers’ needs, and increase their bottom line, they need to constantly find new ways of amplifying their offerings, in a way that doesn’t put the retail store performance of co-franchisees and the franchisor at risk. 

One of our clients, a high-end international jewellery brand, wanted to expand their customer base by opening a second store in the same location.

The problem was, they had no way of knowing whether this would be beneficial or detrimental to their efforts. If successful, this tactic could be an effective way to expand their operations across the country, but they needed data to confirm this. In order to solidify their proof of concept, the retailer implemented our foot traffic analytics software to measure people counter data in both the new store as well as the original one. And the results were in their favour.

The client implemented Blix Traffic to gather data about visitor flow in order to test out their theory that positioning two stores in close proximity to each other can encourage cross-shopping.

The original store was located in a popular shopping centre, and the second was a kiosk opened during the festive season in the same mall, one floor down. Traditional thinking goes that when faced with two stores belonging to the same franchise, shoppers would favour either one or the other. Our client suspected that this wouldn’t be the case, and were proven correct. Using Blix Traffic, our people counter software, the client was able to see that on average, 5% of their customers cross-shopped between the two stores. This confirmed the client’s suspicion that having two stores in the same vicinity would enable them to generate the same (or similar) amount of revenue from each store. In other words, a second store wouldn’t cannibalise the other’s customers.

Thanks to the people counter data gleaned from Blix Traffic, our client was able to qualify and quantify their assumptions.

By being privy to accurate people counter data that’s delivered in real-time, the client can now rely on data-driven insight into their customers’ buying behaviour and store performance. They can now encourage their franchisees to open other stores in the same location without fear of cannibalising their existing customer base. If you want a deeper understanding of your retail store performance and people counter data, download our free guide to going beyond store performance. 

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