Mall Analytics [Infographic]

Published by Ronny Max on

What is Shopping Mall Analytics?

Quantify foot traffic Visitors with Proximity Traffic and Capture Rate - Behavior Analytics Academy
Mall Analytics | Behavior Analytics Academy

Mall Analytics measures the quality of relationships between malls and stores.

By tracking customers, you know where and how long people stay in the shopping center.

By using people tracking technologies effectively…

Mall owners can increase revenue by optimizing the Tenants Mix

And retail stores can increase the quantity and quality of the Sales Opportunity

Key Performance Indicators for Tracking Shopper Behaviors are:

  • Mall Foot Traffic
  • In-Mall Proximity Traffic
  • In-Mall Marketing
  • Store Proximity Traffic
  • Store Capture Rate
  • Store Sales Conversion

As retailers and mall owners face disruptive markets, the measurement of performance should also adapt.

In such, there is a growing interest in the value of Proximity Traffic for both retail stores and mall management.

“You share data if it gives you competitive advantage. Otherwise, you don’t share it”.  

Ronny Max, “The Right Formula: Measuring Physical-Store Performance in an Omni-Channel Age” by Joel Groover, Shopping Centers Today, November 2019, ICSC.org

Retail-Tech Trends to Watch in 2020

Retail-tech trends, in mall management or mall stores, should be taken in context to shifting consumer perceptions and the evolution of retail.

Specifically:

  • What is the purpose of Shopping Malls? The Local Mall?
  • How often people go to the Shopping Center? Why?
  • How to measure the performance of Malls? Of Mall Stores?

You should remember –

The BIGGEST challenge is that people don’t use the data effectively.

This is why I’d like to think about data in terms of THEMES.

In the case of Mall Analytics, these are the three main themes for 2020:

#1 Social: Successful malls represent their local communities

With technologies such as Vision AI, you will be able to identify if people come along or as part of a group. Shopping groups can be a mother and child, two girlfriends, or a multi-generational family. That will give you an indication of why people come to their community mall.

#2 Service: Customer Experience refers to what people remember from their visit to the mall

Service-based retail is not just movie theaters and food courts. It’s about immersive technology, such as Augment Reality and 3D Body Scanning. That technology takes the concept of “Touch” into “Co-Creation”.

#3 Sanctuary: Different generations have different needs and different perceptions of shopping centers

Segmentation works not only online, but also in the physical retail of shopping centers. Seniors love the ability to walk in the safety and abundance of a mall, sometimes just for exercise.

Gen-Z who grew up in a digital world enjoys the physical attributes of being in a mall but with the built-in convenience and speed. For young adults, WiFi is not an option but a necessity.

Ronny’s Pro Tip: In projects with advanced technologies, avoid vague objectives such as “Improving the Customer’s Experience”. Narrow down to a specific goal that can be measured with a Yes or No outcome.

New Retail Trends in Shopping Malls (2019)

In 2019, Mall owners are following the footsteps of experimental retail and are embracing new concepts:

  • Startup Mindset: retail curators that offer short-term store leasing with amenities to startups. For example, Fourpost offers Studio Shops.
  • Service-Centric: instead of traditional retailers, the malls include health spas, medical walk-in clinics, and retail banking
  • Shopping Tours: a huge trend from Asia, especially China, is the organized shopping tours. To adapt to foreign travelers, malls offer booking services and digital payments.

With the occupancy rate at over 93% in major mall chains, retailers still see value in mall stores.

While Mall foot traffic may be down in recent years, sales conversions are higher. And Physical Retail still dominates.


International Council Shopping Centers (ICSC): The Strong Get Stronger

Shopping centers are evolving due to the disruptive trends in how people buy. The data tells us what malls, and retailers, should do to survive, and thrive.

“The word ‘mall’ is a dated word,” says Steven Lowy, Westfield Co-CEO. In 2007m 42% of sales in Westfield came from department stores. Today, it’s only 28%. (Retail Dive)

Yes, mall traffic is down. People are not visiting the malls as often as they did. But, more important, sales conversions are up. It means the customer’s intent to buy is higher. It also means that a visitor to the mall has greater sales potential than ever before.

We can see the trends in the data, says Coresight Research. But the malls require transformation.

Ronny’s Pro Tip: In customer journey mapping, the “intent to buy” plays an important role in designing the purchase funnel. With demand, geo-marketing and demographics analytics, you can better define the viable revenue potential of the mall.  

Shopping malls in the United States grow over 300% in the last 45 years. With over 23.5 square feet of retail per person, compared to 16.4 square feet in Canada and 11.1 square feet in Australia (Morningstar), the proliferation of retail translated into the over-expansion of malls.

And while the number of smalls leveled off in the last couple of years, shopping centers are far from dead.

Out of 47,000 shopping centers in the United States, 1221 are Shopping Malls (2016). But not all malls are the same says the International Council of Shopping Centers (ICSC).  

The ICSC classifies shopping malls in tiers from A to D based on Sales per Square Foot.

According to ICSC, 20% of shopping malls generate over 72% of all sales.

Bal Harbor Shops is #1 mall. Local demographics help Bal Harbor Shops attain the highest Sales per Square Feet. The shopping mall is in one of the richer neighborhoods in Florida. It also welcomes many wealthy people from Latin America.

The 50 years old luxury mall is thriving because it adapted to the shifts in retail and consumer expectations. It was a pioneer in what retailers define as “Lifestyle Mall”. And it continues to innovate.

On the other side of the spectrum, malls in tiers C and D are dying. The current prediction is that about 30% of the malls will close down.

“To survive in the digital age, malls will need to reinvent themselves.”

McKinsey & Company

The Future of Shopping Malls

Shopping malls are evolving into “experience community centers”. The concept has three key pillars – destination, anchors, and tenants mix.

Ronny’s Pro Tip: If you are working in mall management, your first task is to evaluate the mall’s “Destination” positioning. Second, why people come to the mall? (Hint: Anchors). And finally, what what is the process to optimize the Tenant Mix?

Destination Malls: Reinventing for the Customer’s Experience

Malls are no longer a destination for shopping. People can easily shop for a product or a brand online. Instead, the malls themselves had evolved into a destination.

More precise, the shopping mall transformed into a local gathering place. Adding cinemas, restaurants, and haircuts changed the focus on the customer’s experience.

For example –

My local mall has the same name today it had 10 years ago, but this is not the same. The mall wobbled for years. Five years ago, it bloomed.

The mall owner revamped the food court, which brought families during the weekend. A cinema opened, which enticed teenagers. And the stores changed to make it attractive to students from next door university.

You can see Destination Malls in Hong Kong, Dubai, and New York.

Here are ways to start thinking if your mall is positioned as a “Destination”:

Retail Segments: Bal Harbor Shops gets much of its revenue from tourists. But the busiest times are at the weekend when the locals flood the outdoor shops and restaurants. The mall’s layout and luxury specialty stores enhance the sense of “exclusivity”.

Visitor Segments: Add pinball arenas and cinemas to attract teenagers. Starbucks attracts professionals. The diversity and proximity of the retailers and service establishments add reasons to come to the local community mall.

Buyer Segments: A key challenge for malls is to entice visitors who can pay. A teenager may desire a manicure but her mother is the one who pays. Another example is grocery stores. Supermarkets attract traffic. The question is do grocery buyers fit the positioning of your mall.

 Lifestyle Malls: The hottest trend is Lifestyle centers. Lifestyle malls combine a shopping center for traditional retailers with leisure amenities. Lifestyle malls are designed for upscale consumers. Bal Harbor Shops, for example, is a Lifestyle Mall.

Brand Outlets: Outlets are factory stores for brands that practice the Direct-to-Consumer business model. Outlets seek the discount shopper. Sawgrass Mall, for example, started as an outlet mall.

High Street: The term relates to the main street of a town. But it has evolved into streets that specialize in retail.  It may sound counter-intuitive, but a shoe store does better among 10 other shoe stores.

Michigan Avenue in Chicago and Greene Street in New York are examples of High Street. Apple had chosen the Michigan store as its flagship.

There is also innovation in the concept of the mall itself. Metro Mall, for example, refers to stores within an apartment complex.

Ronny’s Pro Tip: For retailers, the value of a mall lies in its ability to generate sales opportunities. Therefore, the definition of Destination Mall needs to translate to quality Proximity Traffic for the retail store

Foot Traffic by Mall Category | Behavior Analytics Academy
Mall Foot Traffic by Category | Behavior Analytics Academy

The philosophy about department stores as anchors is changing. Macy’s, JC Penney and other Big Box retailers are struggling.

“It’s hard to even use the term [department stores]. What does that even mean anymore?”

Michelle Gass, CEO, Kohl’s (RetailDive)

The question is what kind of anchors will attract people to the mall.

Mall Anchors: Trends in Department Stores & New Anchors

Anchor stores are the principal stores in a shopping center. In other words, Anchors are brand-based stores that generate demand for the store and for the mall.

Department Stores: Department stores are changing. You will see more Store-In-Store formats and branding. Sephora, for example, is a cosmetics brand with standalone stores and branded counters in department stores. This is also true for the Samsung zones in Best Buy.

Big Box Stores: The advantage of scale has an impact on pricing and options. Home Depot specialized in homeowners.  TJ MAXX focused on bargains for designer brands.

Brand Names: We are now seeing the entry of famous brands to the malls. Apple stores are common today. Amazon opened a store at the heart of the publishing industry in Columbus Circle in New York. And there are discussions about Tesla coming to a mall near you…

Shopping Center - Tesla Charge Station | Behavior Analytics Retail
Shopping Center – Tesla charge station | Behavior Analytics Academy

Ronny’s Pro Tip: Proximity Traffic is a good metric to assess the value of “Anchor Stores”. You should follow foot traffic patterns around the mall’s entrance doors, entering and exiting to parking lots, and in-mall path analytics.

Tenants Mix: The Transformation of Mall Stores, In-Mall & Pop-Ups

Not only the shopping mall themselves are changing, but also the definition of a Mall Store.

Distribution Centers: The Omnichannel revolution led to “click and pick” models. Carrie Ask, Levi’s EVP of retail, indicated that they distribute jeans in almost 50 ways. And Amazon, ever creative, is now using old shopping malls as distribution centers.

Service Centers: Some retailers are a hybrid of selling products and services. An example is Ulta Beauty. Once, Ulta competed with Amazon for products and price. Today, the retailer offers a variety of products and a full-service spa. And it is thriving.

In-Mall Popups: An emerging, and innovative, the trend is popup stores. The Popup Stores are temporary. They can be seasonal stores, promotional to a specific event, or to test a new concept.

In-Mall Kiosks: Kiosks are now common. They are box-like structures in the middle of the aisles. And usually, they are centered on a single theme such as bags, phones, or beauty products.

Ronny’s Pro-Tip: Foot traffic analytics serves three objectives: 1. Mall management to optimize revenue. 2. Media agencies to improve the effectiveness of marketing. 3. Tenants to increase sales opportunity


Tracking Shopping Behaviors with the Internet of Things (IoT)

More than a dozen technologies generate people tracking data on where people are and how long they stay.

As physical locations deploy with networked sensors and devices, more technologies will be able to track the activities of shoppers.

For our purpose “tracking” means quantifying “people in motion”.

Tracking technologies can be interactive (require customer consent) or anonymous (location analytics for optimizing stores).

People tracking can be deployed in sensors or in devices.

Sensors refer to mounted traffic counters, which include video, thermal, and laser technologies. In wireless technologies such as WiFi, GPS, and BLE Beacons, we track the device.

Sensors and Devices based tracking are often complementary. And each technology has its own challenges and benefits.

Here’s the important point –

  • Location Marketing is about sending personalized promotions to individuals based on their location. That requires access to a personal device and opt-in/opt-out option
  • Location Analytics refers to the optimization of store layout, product positioning, and customer engagement to improve conversations and profits of the physical store
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How to Calculate Performance Metrics for Shopping Centers

People Tracking Technologies detect, identify, and track where people are (location), how long they stay (time), and what they do (attributes).

The tracking technologies quantify (objects) people in motion.

Tracking data paints a picture of how shoppers behavior inside the mall, and how the stores perform in context to the shopping center.

The Mall-To-Store Purchase Funnel has three key phases:

  • Mall Opportunity includes visitors to the shopping centers and in-mall foot traffic patterns.
  • Sales Opportunity refers to mall visitors who are in proximity to the store.
  • Store Performance is the ability of the store to translate the sales opportunity into revenue.
Mall-to-Store Purchase Funnel | Behavior Analytics Academy
Mall-to-Store Purchase Funnel | Behavior Analytics Academy

Ronny’s Pro-Tip: Each tracking technology has built-in pros and cons. Regardless of the technology, provider, and metrics, you should have a “definition datasheet” on how the metrics are calculated

Here are the metrics:

1. Mall Foot Traffic (Visitors)

Foot Traffic reflects the sales opportunity generated by the shopping center. This is the first step in the Mall-to-Store funnel.

We measure the shopping mall’s foot traffic in the same manner, we count visitors in the retail store.

# Mall Foot Traffic = Sum of ALL Visitors

The technical facets of people counting also hold true for mall traffic.

The counting metrics include Arrivals and Exiting per period of time.

The more advanced technologies also capture Buying Groups and Facial Demographics attributes.

In Mall Analytics, foot traffic is akin to the online metrics Cold Traffic.

Ronny’s Pro Tip: Most Retail Traffic Indexes are designed from the accumulation of foot traffic in regional shopping centers. As a result, Competitive Benchmarks should take into account which index is used, and why

2. In-Mall Proximity Traffic

While mall traffic quantified the number of visitors, the nearest foot traffic reflects the quality of the sales opportunity.

You should be looking for a correlation between traffic flows to the mall and the proximity to the store.

# In-Mall Proximity = Sum of Counts, per Zone

Good examples of In-Mall Proximity Analytics are the foot traffic patterns in food courts and the entrances to the mall.

In Anchor Stores, especially in the big-box department stores, we see a direct link between a specific door and store.

In retail stores located next to the Anchor Store, we can identify an indirect link to the customer’s flow.

Some shopping centers are huge. Sawgrass Mall in South Florida, for example, is one of the largest malls in the United States. It takes an hour to walk from one side to another. If a visitor entered the Target store, they are unlikely to get to Marshall’s on the other end.

Ronny’s Pro-Tip: If you are involved in lease agreements, you should care about In-Mall Proximity Traffic, as well as your store’s Proximity Traffic. They serve different steps in the in-mall customer journey

3. In-Mall Location Marketing

The difference between Location Analytics and Location Marketing is in contact with customers. Often we can do both with the same technology.

While WiFi or BLE Beacons are good technologies for Location Marketing, we have to be mindful of accuracy in the analytics.

Since In-Mall Marketing has an impact on traffic flows, we should take marketing metrics into account. For example, Digital Signage is common in malls. Events occur on weekends. A caveat in events traffic is that massive crowds tend to push shoppers away.

% Stay Time = Dwell Time by Distribution

Ronny’s Pro Tip: To understand the effectivity of a marketing promotion on the customer journey, you should look at both Location and Time-based metrics

4. Store Proximity Traffic

Proximity Rate measures the value of the mall to the store. For mall traffic to be viable, people need to pass close to the store.

Proximity Traffic = # People Passing Near Store

Since Proximity Traffic measures the “close enough” demand to the store, you can think in terms of Online Warm Traffic.

In-Mall Proximity Traffic | Behavior Analytics Academy
Proximity Traffic | Behavior Analytics Academy

Here are some topics to address:

  • Not all stores are alike: The nature of the store impacts the analysis of the value of proximity traffic. A coffee shop is not a toy store.
  • Store Entrances. There is a difference between stores with a single entrance and those with two or more. In such stores, traffic flows include people who enter and exit the parking lots. This irrelevant traffic will lower sales conversion.
  • How close is close? In traffic sensors, the challenge is the Field of View. The tilt of the sensor can be adapted to 1 or 3 feet. The people counting solution should define the concept of “proximity traffic”.

Case Study: One of my favorite case studies is the impact of the Apple store on a Barcelona Mall.

When the Apple store opened on the third floor, it changed the flow of traffic inside the mall. Before, few people visited the 3rd floor of the mall. Afterward, those enjoyed the most lucrative position inside the mall. The Apple Store increased the Proximity Rate in double digits.

Ronny’s Pro Tip: In-Mall Proximity Traffic is important for path analytics and shopping cross-sells. Store Proximity Traffic is important for leasing agreements and the store’s sales opportunity. The clarity creates confidence 🙂

5. Store Capture Rate

What is the value of the store to the retailer?

Proximity Traffic measures mall patterns. The Capture Rate measures the ability of the store to attract traffic to the store.

% Capture Rate = Store Visitors / Passing

The store attracts visitors with branding, promotions, and window displays.

The analogy to the online world is the first Call-to-Action. In a blog, it will be ‘to subscribe’. In e-commerce, it will be to ‘add to cart’. The point is action.

Here are some thoughts on Customer Engagement:

  • Stay Time at Window: There is a debate if Stay Time validates the success of a store window displays. Some say that the only “success” factor is when people stop and look at the display. But displays have a subconscious effect. This is true for windows, mannequins, and display cases.
  • Marketing Signage:  When stores put signage outside the store, the intention is to entice people in. The displays impact the flow of people outside the store. Sometimes, it creates obstacles to entry.
  • Lease line: the traffic sensors count the people who cross the lease line as visitors. Sometimes, stores have displays where customers can stand outside the lease line.

An early project was a jewelry store in a busy mall. The store sat in the corner between two major arteries of mall traffic. It has open displays people can access from both sides.

The same number of people passed near each entrance. The traffic data showed that most customers entered through one entrance. The second entrance has many people walking nearby but almost no visitors.

The reason was the shopper’s flow (path analytics). The low traffic entrance faced the food court. The high traffic entrance was on the main path of the mall. The proximity traffic was similar in the two entrances, but the Capture Rate told the story and the store took action.

6. Store Sales Conversion

Once people enter the store, we shift into the InStore Funnel where the Key Performance Indicator is Sales Conversion.

% Sales Conversion = Buyers / Store Visitors

The InStore Purchase Funnel covers customer engagement, calls to action, friction points, and staffing considerations. To increase conversions follow the guidelines of In-Store Customer Journey and Store Comparison.

Shopping Mall Analytics Inforgraphic

The Evolution of Shopping Malls

As shopping malls and retailers adapt to a customer-centric environment, using data effectively is no longer an option but a must-have for survival.

In summary, here’s why you should use foot traffic data (anonymous location-based analytics) in Mall Analytics:

Mall Owners: Increase revenue by optimizing the “Tenants Mix” using in-mall proximity traffic patterns and location-based marketing metrics

Retail Stores: Increase the “quantity and quality of sales opportunity” by identifying the optimal store location and storefront

“If we have the data, you can have intelligent conversations. And that’s really important. Think about partnerships, and that’s true in all of the relationships because the data will give you the ability to analyze the relationship really well and it will also give you the ability to really understand how to improve.”

Ronny Max, “Reinventing Malls for the AI Age” by Anupam Kundu, Towards Data Science, Medium
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What do you think is the value of Proximity Traffic? Leave a question or a comment below


Ronny Max

Build your Growth Team with People Tracking Technologies, Purchase Funnels & In-Store Optimization (ISO)