Shoppers traffic main indicator for gauging retail sales

26 Mar '14

4 min read

Retail traffic is an important indicator of shopper behavior and a bellwether for retail sales results. If more people are visiting stores, there are more opportunities for retailers to convert shoppers into sales. When traffic is down, retailers have fewer opportunities, thus, typically, fewer sales. More traffic doesn’t guarantee more sales, but store traffic and sales are correlated.

But getting a reliable bead on retail traffic is difficult. A glaring example of the problem was this last holiday season. If you scanned the headlines about retail traffic during this past holiday season, you would likely have been more confused than enlightened. Depending upon which index you referred to, retail traffic was either significantly down, somewhat down, or up.

Why are there such discrepancies in these indexes – and whom should you believe? Is retail traffic up or down? The answer, as it turns out, depends on where your numbers come from.

On January 16, 2014, The Wall Street Journal reported that retail store traffic over the holiday period (defined as November and December) was down 14.6% compared to the prior year. The source for this data point was a company called ShopperTrak, which, says it has traffic counters installed in some “60,000 malls and large retailers across the country.”

Retail analytics company RetailNext released its own holiday report. It counted “34.6 million shopping trips to specialty and larger format stores during the 2012 and 2013 season,” and concluded that retail traffic was down 6.5% – less than half the decline that ShopperTrak reported.

To add to the confusion, a third retail analytics firm called Euclid, as reported in Digital Journal on January 3, 2014, claimed that there was a 9% increase in year-over-year traffic, based on “nearly 25 million domestic shopping sessions during December.”

By itself, each index seems credible enough, but given the dramatically different conclusions, you have to wonder which one is correct – if any.

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