When choosing a business location, you may have heard that location is everything. However, there are many factors that play into this strategic business decision. Key data points that influence this choice include foot traffic, walkability, local demographics, and community data.
Foot traffic is an important indicator in determining business location, facility location, or service area based on how many people walk (or drive) by on a daily basis. This means that not only does one need to consider how accessible their location is, but also how it advertises itself with visibility and high foot traffic.
Why Measure Foot Traffic?
One of the greatest failures of small business owners is neglecting to conduct proper market research on the front-end. How can you possibly launch, operate, and sustain a successful business without knowing what you’re getting into in regards to industry, competition, and demand?
Measuring foot traffic helps you evaluate the demand, access, and visibility of a business location. It’s especially a useful metric for retail businesses, who oftentimes hope to lure in tourists, spontaneous shoppers, and passersby. These kinds of critical decisions and data gathering can mean the favorable selection of Location A instead of Location B.
Foot traffic data can answer some very pressing questions for business owners, including:
- Where should I open my business?
- How many people walk past my business every day?
- What times of day are represented by the highest foot traffic?
- What times of year are represented by the highest foot traffic?
- How long do people stay in this area?
- How long are they in my store?
- How much staff do I need and when?
Good foot traffic is relative to what benefits the business owner requires in exchange for the trade-offs. For example, Times Square is one of the most highly foot-trafficked retail centers in all of New York City at a staggering high of as much as 450,000 pedestrians each day (pre-COVID). However, the rent there is equally staggering, cashing out at as much as $2,350 per square foot. So there is a trade-off. Below are a few examples of how foot traffic can vary depending on geography, cost of living, and how that foot traffic is reflected in the rental rates.
Foot Traffic Examples Around the US
Time Square, NYC
(47th and Broadway)
San Francisco, CA
(Main and University)
Times Square district boasts 1,500 businesses
Generates ⅓ of all consumer goods sales in San Francisco
Major intersection in a small Midwestern city
Average Foot Traffic
PPD (people per day)
When Is Foot Traffic “Worth It?”
When determining the balance you’re willing to strike between ticket price and traffic count in choosing a location, it is—unsurprisingly—a numbers game. Consider this example of a small-town gift shop location decision:
- Location A: A scenic and bustling intersection; nearby amenities draw a lot of people out and the businesses all benefit from each other’s foot traffic. Rent is high, but foot traffic numbers are optimal, at about 8,000 daily pedestrians.
- Location B: A short walk off the main strip and surrounded by offices, not retailers. Rent is much more reasonable, but foot traffic is not as high at around 2,000 daily pedestrians.
The question is: How much more money is “worth” spending on Location A vs Location B?
To find the answer, we’ll estimate how many actual sales will result from the busier Location. After all, if an investment (like higher rent for Location A) doesn’t ultimately result in sales, it wasn’t money well spent. Let’s try out the following formula to project potential sales at Location A:
Out of 100% of customers...
Location A foot traffic: 8,000 PPD
Location B foot traffic: 2,000 PPD
A ➗ B = X
8,000 / 2,000 = 4x
90% x 4= 360%
Location A means as much as 360% (or 3.6x) more in sales than Location B
For the gift shop, the result is a whopping 360% (90% x 4) more in sales for Location A. In other words, sales will be almost 3.6 times higher in Location A vs Location B. In this scenario, it’s worth paying 3x more in rent for the better location.
For a guitar repair shop, the estimate is much lower: merely a 40% increase in sales (10% x 4) at the better location. Since a small percentage of business comes from walk-ins, the improved foot traffic does very little to boost the bottom line. In this scenario, one wouldn’t pay nearly as much for the better location.
Foot Traffic Demographics: Tracking More Than Just a Tally
Here’s when and where “Quality over Quantity” comes into play. The volume of foot traffic is always great for a retailer. However, disregarding the demographics, characteristics, and purchasing behaviors of these pedestrians can be extremely detrimental to the longevity of the business. Area and potential demographics play an essential role in the location of your business. Below are some questions to ask first.
Who Is Your Customer?
One underrated exercise in starting a business is market research and knowing your customer. Your “golden” customer is a detailed snapshot of your ideal customer—the sample human for whom you started your business in the first place and what they want to buy from you. A robust online tool for building out your customer identity is the Experian Segmentation Portal, which a business owner can access with a free registration. Also check out our article on How to Create a Customer Profile, which covers all the bases on the process and provides a template.
Where Is Your Customer?
Your business location could be getting as much foot traffic as Time’s Square. But if they’re not your customer, and not likely to purchase your product or service in the first place, your foot traffic count might as well be zero. In tandem with researching and discovering foot traffic count in your location options, should be discovering demographics for the target area to make sure that your customer is walking past that location.
So, let’s revisit our example: a gift shop on Main Street, USA. Not only do I want to identify a clear profile of my target customer (married couples with children, living in multiple-income households, who enjoy purchasing everything from souvenirs, gifts, and cards to premium goods and home decor), I also want to look in neighborhoods and at storefronts where these people actually live. We have to consider the possibility that even if Location A has more foot traffic, Location B might actually be closer to and see more of my target customer.
Read on to learn more about free and paid services for learning demographics and foot traffic patterns in prospective locales.
Measuring Foot Traffic: The Traditional Methods
If you guessed that a traditional method for measuring foot traffic is good old fashioned, pen-to-paper people counting, you’re right on that count!
- Tally or Clicker Counting—if you’ve ever been to an amusement park, you may have noticed the kid manning the entrance to a ride and ticking people off on a manual handheld clicker. If I hadn’t witnessed this myself, I wouldn’t believe companies still use this method for people counting. Even longer ago, businesses would have marked customers by tally on paper.
- Security and Camera Systems—lots of shops and even street corners have cameras or security systems. With these, you could quantify the number of people you see on that camera each day, if you’ve got a lot of time on your hands. Unfortunately, no entrepreneur has the luxury of time. Some security systems are built for today’s business environment though, and therefore have automatic people-counting, integrations, among other features built into supplemental software that complement the hardware.
The Problem With Traditional Measures: No Demographic Data
Hopefully, based on previous sections of this guide, you’ve already spotted the fatal flaw with traditional methods of people counting. We come back to the great debate of quality vs quantity. Sure, you can count the number of warm bodies that pass by or stroll in, but you’re completely missing out on all the dirty details you could learn with more robust, modern methods.
The number of people tells you nothing more than that. You’re trading quality of data for quantity of data, and fortunately, that’s no longer a trade-off business owners have to make.
The Best Way to Measure With Demographics & Data Aggregators
Technology is getting smarter all the time in tracking who we are, where we go, and what we do as consumers. This makes us an easy target for data mining to which we openly and willingly contribute.
Technology informs data on foot traffic, walkability, local demographics, competition, and much more. Cracking the code on these data sets can and will make or break a business depending on its location strategy.
Below are a few foot traffic counting tools and their features listed in order of price. Remember: You get what you pay for. Some free tools are a great place to start, but you can choose to invest dollars in some eerily specific information on your target area, customer, and foot traffic:
- Community Development Corporations (nonprofit), and Economic Development Departments (government)
Remember those taxes you pay every year? Get your money’s worth by looking into location data at a CDC or ED department in your town or city. It’s free to use. Some have one or the other, some have both resources. All of these services are free, and some high-tech offices even have property, demographic, and foot traffic data published on their websites for commercial districts.
This free tool gives foot traffic counts and other limited data for any existing business, venue, shopping mall, or casino. More advanced reports can be purchased.
This beautifully designed site doesn’t give foot traffic counts, but it does provide other valuable geographic lifestyle and demographic data for free, including insights into community population, amenities, and walkability.
Using the free “Property Search” tool, not only can a user access available commercial properties, but you can also download reports outlining everything from foot traffic in the immediate area to category spending within a multi-mile radius.
This site has been an industry leader in comprehensive data points and location selection for years. LocationGenius and some of its competitors use “aggregate data,” which lumps millions of anonymous customer data points (like location, purchasing behavior, and social media pings) together into digestible reports.
GravyAnalytics and some of its competitors use “DaaS,” or Data-as-a-Service which lifts the curtain on staggeringly detailed data points on foot traffic patterns, consumer personas, behaviors, and purchases, visitation frequency, and more.
Learning about your customer via data is like crawling inside their brain and giving them what they want. Why wouldn’t you do that if you could? Foot traffic data lets business owners make more informed and intelligent decisions in choosing a location and way beyond.
Foot Traffic Inside Your Location
Fast forward: you’ve done your homework, you’re in a great location, and you want to better understand your in-store foot traffic. In-store retail analytics can be powerful mechanisms for growing your business and thriving in any environment. Here are a few systems small businesses can utilize to measure and analyze the goings-on and the shoppers in your retail location. This hearty list is only the tip of the iceberg … investigate the various solutions to see what would suit your needs best as a business owner. These featured options are broken into 3-foot traffic measurement tactics: DaaS, AI, and POS.
DaaS and Aggregate Data
This category has a suite of names—DaaS (Data as a Service), Analytics, Big Data, Aggregate Data, Location Analytics … but whichever way you slice it, these methods are learning about your customer by accessing their phone data, usually anonymously, to create a collective consumer portrait. These systems can run wirelessly or wired.
- Valassis—a software that puts a special emphasis on measuring the successes of marketing campaigns.
- Dôr—a software/hardware combo that combines thermal technology and machine learning to measure warm body count in addition to aggregate data analytics.
- Blix—this company is completely cloud-based analytics to “look beyond the door” by “measuring the customer journey.” Watch the video and the spokeswoman’s accent will convince you.
- RetailNext—this is a pretty comprehensive suite of solutions, including Traffic 2.0, a solution that combines hardware and software to measure entrance path analytics, visit duration, occupancy metrics, and more.
Artificial Intelligence (AI) and Facial Recognition
There are so many new ways to measure your traffic patterns, duration of stay, frequency, and more; everything from sensor-laden flooring to body-heat infrared scanners at the door. One interesting solution is utilizing some AI.
- Rhombus—this platform claims to have cornered the people counting market via Artificial Intelligence video software and facial recognition. No mobile data here—but it’s just as cutting-edge.
Point-of-Service (POS) Integrations
Fun fact: POS is not a foot traffic counter in itself. It’s a great integrative technology to combine with your foot traffic tools to draw powerful analytics, data, and insights from. Each tool on its own is great, but together they make for an arsenal so businesses can draw some truly impactful conclusions and make some strategic moves. Double your measurement, double your fun!
Pairs well with Blix:
- Retail Express—couple Retail Express POS with Blix analytics, and you’ve got yourself quite the data cocktail. A good POS will provide the user with omnichannel management, targeted marketing, promotion tools, integrations, and more.
Pairs well with RetailNext:
- Lightspeed—Lightspeed is arguably a leader in POS integration, and pairs particularly well with traffic counter RetailNext (listed above). Robust POS systems like Lightspeed can be an all-in-one manager of your inventory, payment options in-store and online, ecommerce store, Customer Relationship Management (CRM), and more.
Using the Data to Your Advantage
Using some of the above systems, quality foot traffic and analytic data can open the door to all kinds of new revelations and strategy. The savvy entrepreneur can use foot traffic data to revolutionize their business operations. Read on to learn some specific examples of how foot traffic data can revise the business model.
Validate or Invalidate the Product Mix
A novelty shop in South Carolina wants to add to its product mix. Its current selection includes mugs, artwork, women’s accessories and jewelry, linens, gifts, candles, puzzles, and more. It decides to fill a corner of the store with baby gifts: knit caps, blankets, toys, mobiles, baby books, bibs, and so on. Using its foot traffic measurement platform of choice, it learns that traffic flow is not including the baby corner. Combined with its POS and purchase trends, the store owner discovers that customers are not interested in baby gifts after all, and decides to stop wasting money on baby inventory and try something else.
Determine or Reevaluate Staffing and Hours of Operation
A mattress store on the West Coast is open every day from 10 a.m. to 8 p.m. in order to compete with big-box mattress retailers. Each day it follows the square footage staffing formula of 2.5 employees per 1,000 square feet of retail space, so it always have about five team members on the floor. Traffic patterns determined that Sundays meant almost no sales, except 1 p.m. or 2 p.m. It changes its Sunday hours to 12 p.m. to 6 p.m., saving on overhead, utility, and payroll costs at a rate of nearly $500 every Sunday.
Expansion and Growth Decisions
A successful bookstore/coffee shop in Ohio enjoys a college town atmosphere and an onslaught of 20,000 students every Fall. While the small, cozy storefront lends itself to exclusivity and high demand, traffic count and flow patterns show that the shop doesn’t have adequate seating relative to the foot traffic. Eventually, it accommodates a packed house at its local destination hot spot by expanding to the back of the building, and up two stories. This also permits for late-night space like Poetry Slams and Open Mic nights, which expands its hours, extends visit longevity, and consistently brings in customers over 12 hours each day.
Foot traffic data, coupled with POS systems, is a powerful game-changing tool for retailers. This information inspires intelligent decisions regarding inventory, store layout, Return on Investment (ROI) for marketing campaigns, target market, purchasing behaviors, visitation patterns, passersby traffic, and seasonality. Data without analysis is basically worthless, so keep your critic’s hat on if you’re going to tap into foot traffic measurement. The key here is to gain the necessary insight in order to serve the customer every single time they pass through your doors and gain the sale.