Mall Analytics [Infographic]

Published by Ronny Max on

What is Mall Analytics?

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

Shopping Mall Analytics measure the quality of relationships between the mall and the store. By tracking customers with foot traffic data and capture rate, we know where and how long, shoppers stay in the mall.

Regardless of the People Tracking Technology, the Key Performance Indicators for Mall Stores are:

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

New Retail Trends in Shopping Malls (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 for foreign travelers, malls offer booking services and digital payments.

With occupancy rate at over 93% in major mall chains, retailers love mall stores.

Here’s why

Retailers lease stores in shopping malls because they expect quality sales leads.

The contract between the mall and the store is two-sided. The shopping mall gets leasing fees. Often the payments include fixed rent plus a percentage of sales. In return, the retailers expect the mall owners to generate traffic for their mall stores.

Mall Analytics Infogrpahic [Behavior Analytics Academy]

Despite proclamations of the Retail Apocalypse, shopping malls are not dead. 

Moreover, the shopping center is a trailblazer in re-imagining retail.

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

(Pro Tip) There are distinct pros and cons if you are using Interactive or Anonymous customer tracking, and if you are using @Edge Sensors or Device Personal Trackers.

The Mall is NOT Dead

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.

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 or retail translated into over-expension 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 per the International Council of Shopping Centers (ICSC).  The ICSC classifies shopping malls from A to D based on Sales per Square Foot.

(Pro Tip) Sales Per Square Foot is a more effective metric to evaluate retail stores than Comp Sales if you want a direct link between the physical location and sales.

With Shopping Malls, Foot Traffic scales and the Strong Get Stronger

According to ICSC, 20% of shopping malls generate over 72% of all sales. 4 out of the top 10 malls are in Florida. Aventura Mall, for example, is a Tier A mall.

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.

Bal Harbor Shops is #1. The demographics help Bar Harbor 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. It was a pioneer in what retailers define as Lifestyle Mall. And it continues to innovate.

How to Calculate Foot Traffic Performance Metrics for Mall Stores?

People Tracking Technologies detect, identify, and capture the Time and Location positions of people (objects in motion). The tracking data analytics on shoppers paints a picture of how mall stores perform in context to the mall.

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

  • Mall Opportunity: This includes visitors in the mall in general, the people who entered the nearest entrance, and in-mall marketing such as signage and digital monitors.
  • Sales Opportunity: This quantifies mall visitors who are within the proximity of the store.
  • Store Performance: This refers to the ability of the store to translate the sales opportunity into revenue.

Here are the metrics:

1. Mall Foot Traffic (Shopping Center 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 shopping malls 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. We track “Arrivals” and “Exiting” per period of time. Also, we count individuals, regardless of buying groups.

In Mall Analytics, the analogy of foot traffic to online metrics is Cold Traffic. Having 100,000 visitors in the mall is akin to cold traffic to your website

The bulk of Retail Traffic Indexes comes from mall foot traffic.

2. Mall Door Foot Traffic

While mall traffic quantified the number of visitors, the nearest mall entrance traffic reflects the quality of the traffic. We are looking for a correlation between traffic flows to the mall and the proximity to the store.

# Mall Door Traffic = Sum of People Counts

The question here is doing it matter where, and when, people enter the mall. The data provide insights into traffic flows and store locations.

In Anchor 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.

Mall Door Traffic, therefore, should be a factor in lease agreements.

3. In-Mall Location Marketing

The difference between Location Analytics and Location Marketing is in the 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

When we design Customer’s Journey, the various time metrics are the best way to quantify engagement.

(Pro Tip) The performance metrics are valuable during leasing negotiations because you can quantify the value of the store’s location in and inside the shopping mall.

4. In-Mall Foot 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 = Counts of People Passing Near Store

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

We get the number of people passing by either from the shopping mall or from the retailer’s Store Systems.

Here are some topics to address:

  • Not all stores are alike: The nature of the store impacts the analysis on 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 the 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”.

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.

5. The Mall Store’s 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 / People 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 which 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. The Mall Store’s Sales Conversion Rate

Once people enter the store, we shift into the InStore Funnel. The Key Performance Indicator for conversion 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.

They’re watching you: Malls tap new tech to track shoppers (CNBC)

People Trackers: Sensors vs. Devices

More than a dozen technologies generate people tracking data. As physical stores and other locations fill up with networked sensors and devices, more technologies will be able to track the activities in physical locations.

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

In other words, tracking technologies have a data output of “location” (where) and “time” (how long). We can divide tracking technologies into two categories – sensors and devices.

Sensors refer to mounted 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. In sensors, we care about all behaviors in view. In wireless technologies, we track the individual path to purchase.

In tracking solutions, there is also the factor of data integration with systems such as WFS and POS. Moreover, each technology has its own concepts of consistency and validation.

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The Future of Shopping Malls

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

Shopping malls are evolving into “experience community centers”. The concept has three key pillars. The first is that a mall is 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 change the focus to the customer’s experience.

For example –

My local shopping mall today has the same name it had 10 years ago, but this is not the same mall.

My local 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.

The Customer’s Experience Factor

Shopping Malls used to be synonymous with department stores. But retail is moving away from ‘one size fits all’. And the focus is the customer’s experience.

Here are ways to start thinking about the Customer’s Journey:

  • 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 shift is away from the large department store, and into specialty stores.
  • Visitor Segments: By adding pinball arenas and cinemas attract the teenagers. Starbucks attracts the young mothers. The diversity and proximity of ‘service retailers’, adds reasons to come to the 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. This is one of the most interesting topics of analytics.

(Pro Tip) How to increase Sales Conversions & Profits of Mall Stores? If you accept that retail stores are social, sensual, and chaotic environments, you are a step ahead into the fascinating & emerging concept of In-Store Optimization.

The Demand Factor (Customer Acquisition in Mall Analytics)

The real-estate definition of ‘malls have enclosed structures’ has also evolved. For retailers, the topic is which category generates demand.

  •  Lifestyle Malls: The hottest trend is the Lifestyle Center. This is a shopping center that combines 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. The idea is direct sales from the brand to the consumer. Outlets seek the discount shopper.
  • Sawgrass Mall started as an outlet for stores such as America Signature, North Face, and Gap.
  • High Street: The term relates to the main street of a town. But it has evolved to 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 choose the Michigan store as its Flagship Store.

And there’s innovation. The Metro Mall, for example, refers to stores within an apartment complex.

For retailers, the value of a mall lies in its ability to generate traffic. And mall analytics must evolve as well.

The Future of Stores

“The Mall Is Not Dead: How Shopper Analytics Ensure It Thrives.” Chain Store Age

The philosophy about department stores as anchors is changing. Macy’s, JC Penney and so many others are struggling. The question is what kind of retail will attract people to the mall.

Anchors of the Future

Anchor stores are the principal stores in the shopping mall. While mall stores are liable for their own capture rate, the anchor stores generate proximity traffic.

  • Department Stores: The department stores, and the way we know them changing. And they are changing in two ways. One way is the concept of Store within Store, which ties to branding. An example is Sephora. The cosmetics brand has a standalone store and branded counters in department stores. This is also true for the Samsung area 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 buying designer brands on the cheap.
  • Brand Names: We are now seeing the entry of famous brands to the malls. Apple stores are now common. 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…

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

Stores of the Future

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.

Regardless of the retail store category and type, foot traffic analytics will provide actionable insights on the ability of the physical location to entice proximity traffic into visitors and increase the capture rate.

If you are in New York,  check out these concept stores.

“The closer collaboration between tenants and landlords will be key in the New Retail landscape.”

The Tenant of the Future: Insights from the Hong Kong Market, Coresite Research

Mall to Store Performance

Mall stores are an important weapon in the arsenal of retailers. To measure the value of the shopping center to retailers, quantify the location of the store in context with foot traffic.

Mall Analytics provide the quantitative value to relationships between shopping malls and physical retail.

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Ronny Max

I help retailers, brands, technology providers, high-tech startups, marketing agencies, venture capital, and research organizations on People Tracking Technologies, Customer's Journey Projects, and In-Store Optimization (ISO)