CONVERSION OF CUSTOMER FOOTFALL TO PROSPECTIVE SALES

AT SELECT RETAIL OUTLETS IN BANGALORE

S.Manjunath, MBA (Research Scholar)

Canara Bank School of Management Studies

Bangalore University

Bangalore

Tel: 9901159460 (Off), 08026573435 (Res)

AND

Dr. Cynthia Menezes Prabhu, PhD

Canara Bank School of Management Studies

Bangalore University

Bangalore

Tel: 9902554503, 08022961977 (Off), 08025441037 (Res)

ABSTRACT: Retailing consists of the sale of goods or merchandise from a fixed location, such as a department store, boutique or kiosk, or by post, in small or individual lots for direct consumption by the purchaser. The field of retailing is both fascinating and complex. In retail, footfall is the shopper’s mechanism of non assisted magnetism; conversion comes from the foreplay between the merchandise and shopper. With organised retail comprising just 3% of India’s retailing today, the whole world is looking at how to glamorize it to entice a billion plus people to spend. There are just a handful of global brands that have the capacity to pull in shoppers by their brand power. But that is not at all enough to get the footfall required to run different categories of organized retail in India. This paper Studies the Retailing Footfall and conversion of customer footfall into prospective Sales in Bangalore

Key words: Footfall, Retailing, Conversion, Bangalore

1. INTRODUCTION

1.1 RETAILING

Retailing consists of the sale of goods or merchandise from a fixed location, such as a department store, boutique or kiosk, or by post, in small or individual lots for direct consumption by the purchaser. Retailing may include subordinated services, such as delivery. Purchasers may be individuals or businesses. In commerce, a "retailer" buys goods or products in large quantities from manufacturers or importers, either directly or through a wholesaler, and then sells smaller quantities to the end-user. Retail establishments are often called shops or stores. Retailers are at the end of the supply chain. Manufacturing marketers see the process of retailing as a necessary part of their overall distribution strategy. The term "retailer" is also applied where a service provider services the needs of a large number of individuals, such as a public utility, like electric power. Shops may be on residential streets, shopping streets with few or no houses or in a shopping mall. Shopping streets may be for pedestrians only

1.2 RETAIL FORMATS IN INDIA

There is various kind of retail formats existent in the Indian retail market. The following are the retail formats found in India:

Mom-and-pop stores: These are generally family-owned businesses catering to small sections of society. They are small, individually run and handled retail outlets.

Category killers: Small specialty stores have expanded to offer a range of categories. They have widened their vision in terms of the number of categories. They are called category killers as they specialize in their fields, such as electronics (e Zone) and sporting goods (Sport Authority).

Department stores: These are the general merchandise retailers offering various kinds of quality products and services. These do not offer full service category products and some carry a selective product line. Shoppers Stop is a good example of department stores. Other examples are Lifestyle and Westside. These stores have further categories, such as home and décor, clothing, groceries, toys, etc.

Malls: These are the largest form of retail formats. They provide an ideal shopping experience by providing a mix of all kinds of products and services, food and entertainment under one roof. Examples are Sahara Mall, TDI Mall in Delhi, The Forum, Sigma Mall, Garuda Mall in Bangalore.

Specialty Stores: The retail chains, which deal in specific categories and provide deep assortment in them are specialty stores. Examples are RPG's Music World, Mumbai's bookstore Crossword, etc.

Discount stores: These are the stores or factory outlets that provide discount on the MRP items. They focus on mass selling and reaching economies of scale or selling the stock left after the season is over.

Hypermarkets/ Supermarkets: These are generally large self-service outlets, offering a variety of categories with deep assortments. These stores contribute 30% of all food and grocery organized retail sales. Example: Big Bazaar, More, Spencer’s, Food World. Convenience stores: They are comparatively smaller stores located near residential areas. They are open for an extended period of the day and have a limited variety of stock and convenience products. Prices are slightly higher due to the convenience given to the customers.

E-tailers: These are retailers that provide online facility of buying and selling products and services via Internet. They provide a picture and description of the product. A lot of such retailers are booming in the industry, as this method provides convenience and a wide variety for customer. But it does not provide a feel of the product and is sometimes not authentic. Examples are Amazon.com, Ebay.com, etc.

Vending: This kind of retailing is making incursions into the industry. Smaller products such as beverages, snacks are some the items that can be bought through vending machines. At present, it is not very common in India.

1.3 FOOTFALL

Footfall is the measure of number of people who walk into a store. Customer counting, also known as footfall monitoring, is a measurement of the number of people entering a shop or public space, serving as a key indicator of popularity. It captures the flow of potential customers, and over time provides an indication of customer demand patterns and trends therefore empowering businesses to better target their marketing efforts and move towards maximising their sales potential. By understanding customer behaviour, you can increase your profits. Counting customers by measuring footfall means that a retail business' decision-making is noticeably more profitable and scientific, whether it's to do with individual promotions, merchandise, staff scheduling, point-of-sale material, window displays, refits, layout or TV advertising. Measuring customer footfall answers some of the following questions of the retailer:

• What is actually driving our business: are changes in the volume of sales the consequence of a rise / fall in footfall levels or changes in the percentage of shoppers that make a purchase?

• How do people shop our stores?

• Why do they behave in the ways that they do?

• What is happening down at the fixture level: are new displays effective in drawing the shopper's attention?

By capturing the shopper's complete experience from store entry to exit, and analysing their behaviour patterns, the solution provides the retailer with facts and insight into the quality of the shopping experience, and how it matches the intentions behind store design. The analysis can drill down to fixture level, providing both qualitative and quantitative feedback on issues such as what shoppers touch and try, how they navigate their way around the store and interact with staff.

Simply put, sales=footfall X conversion ratio X average transaction value (ATV).

Retail space is priced on the basis of the footfall it receives. Malls price their shops on the basis of the footfall they receive during weekdays and weekends. Even stand alone shops are sensitive to accessibility by customers.

2. LITERATURE SURVEY

Footfall is the measure of number of people who walk into a store. Customer counting, also known as footfall monitoring, is a measurement of the number of people entering a shop or public space, serving as a key indicator of popularity. It captures the flow of potential customers, and over time provides an indication of customer demand patterns and trends therefore empowering businesses to better target their marketing efforts and move towards maximising their sales potential. Consumers on foot, like drivers of motor vehicles, adhere to certain rules or patterns. It helps to identify these rules when designing a store. A research conducted by noted industry expert Paco Underhill called "Why We Buy, The Science of Shopping" has suggested that, when given a choice, the vast majority of consumers will turn right after entering a store. The research points to a psychological barrier that exists approximately 15 feet within the front door of a box retailer. Also called “the decompression zone,” in this space it is rare for an ad or product to catch the eye of entering consumers. The area just beyond the decompression zone, on the other hand, is a prime location for what Mr. Underhill calls “speed bumps” — hot products and cool displays that get the customer’s attention and slow down their movement through the store. Nowadays people live in time-compressed lifestyles. They are busy with their jobs, families, friends & want a retail experience as quick as possible. Hence that calls for a traffic pattern that allows them to get through the store as quickly as possible without them getting frustrated. Just as drivers can face serious penalties if they disregard traffic regulations, retailers who don’t pay attention to shoppers’ traffic patterns can wind up suffering. Retailers who don’t identify and act on shopper behaviour ultimately will lose rupees. Hence considering the store

layout is an important factor. Different categories have different defined purchase cycles: for example, FMCG is day, week, monthly driven; automobiles have a purchase cycle of 3, 5, 7 years; for consumer electronics it’s 3 to 5 years, and for fashion the purchase cycle is 6 to 12 times a year. The strategic brand promoter can totally control the purchase cycle of any category.

2.1 FOOTFALL CRISIS IN INDIA

It’s not easy for organized retail to take India’s unstructured human ocean from footfall to conversion. Too many signs, colours and symbols contribute to the cacophony in the marketplace. Sometimes billboards gets washed out in the rain and sun, often the illumination lights are not lit; an electric transformer on the road hides them.

FAÇADE: Most shoppers enter an organised retail with an impulse mindset, apart from the need based product they come to buy. If your store signage has some impulse exposure shoppers will step in. We have seen this upside down billboard on a main road for 3 months. Any brand can put up its billboard in front of mom&pop stores. Often new products are introduced but the old illuminated billboard remains on top. International brands fall prey to such situations too. A roadside quick print service store with sophisticated American machines exposes its totally washed out billboard. You require a unique approach that breaks all disturbing factors to grab your relevant shopper’s attention in this jungle. Indian retail facade in prime area doesn’t address impulse purchase

Retail façade marketing is the most crucial factor in India. Retailers spend heavily for a prime place but fail to make a hypnotic façade to facilitate footfall.

Present situation of Bangalore Retailer facade

The façade of the retail stores was highly need based with no sense of appeal to instantly attract impulse customers, make them curious and change their mentality into a shopping mode. The static façade failed to attract regular footfall despite the stores being in the prime locations. The absence of the dynamism in the façade that’s regularly changed has a big power to increase footfall. The absence of the provocative character of the façade has failed to appeal instantly to the impulse customers, make them curious and change their mentality into a shopping mode.

2.2 CONVERSION (CRISIS IN CONVERSION)

Merchandize display:

Conversion is like a jackpot; you may or may not get a share of the shopper’s wallet. That’s why there has to be a difference between dumped stock and artistic magnification of product display in the store. Shoppers do not buy on seeing a large pile of merchandize in premium retail.

In-store price segmentation:

Most retails in India do not divide the store into 3 price layers, entry, mid and high price. As mass scale shoppers still come in an impulse motif with no clear idea of what they want to buy, if they see high or mid priced items at the retail’s entry, conversion will never happen.

Figure 1

In-store dumped stock displays plays Product at the retail’s entrance could be a low priced piece of the core product, or some accessory that has a token price. This area needs attractive displays, with a variety of merchandise of different pricing. Foreplay starts here where products look like vibrant offers.

Mannequin: In low profile fashion stores in India, there are several mannequins hanging here and there without being customized as part of the selling proposition design.

Stop image: To empower different occasions, it requires strong visual impact which can be flexibly changed from time to time to bring newness in the merchandize. 

Visual merchandise: The design has to be akin to an aquarium of whirling fish. From zone to zone the shopper can be given a different ambience to whirl in.

Lighting: Lighting at the retail is a crucial element that can change the perception of the merchandise. Flood lighting gives a discount retail appearance, while theatre-stage lighting focuses on the active actor on the stage. To sell premium value products, the retail requires theatre-stage lighting on the merchandize. Lights should not hit the shopper who, like the audience, would be intimidated; instead the actor, which is merchandize here, should get the prominence. Of course this definition changes when the shopper comes in front of the trial room or any mirror in the store.  Then the shopper becomes the actor who needs prominence. 

HIGH PRICEMID

PRICEENTRY PRICE

The more they whirl inside the retail, the more time will they spend, and spending time is another sign that will lead to conversion.

100% movable visual merchandize: All the visual merchandize in the store have to be totally movable to give flexibility for changing the store plan at any time.  

Strategic racks: As per the average height of Indian people, the hand movement reaches up 3.5 feet. In a 6 ft height rack, it is totally useless to put merchandize in the bottom 2 feet as it is below eye level. Doing so would merely make it look like a stock yard. Displaying merchandize above 6 feet is not friendly for shoppers to see and handle easily.

That’s why the bottom 2 feet can be used as in-store inventory with different stop images pasted on it to illustrate the variety of merchandize inside these drawers.

Illustrating mix-and-match product variety: In front of every occasion of wear, LCD screens demonstrate the mix and-match criteria of the variety in each occasion. This helps the shopper make up his/her mind. Totally movable independent racks with flexible shelf arrangement design

Intangible ambience: Music is needed as an intangible marketing tool. Playing jazz, rock or blues in a very traditional shopping area is a dramatic mistake. Our research reveals that different types of music are required for the morning, afternoon and evening as temperaments differ at those times. If you know your target shopper, music has huge power in the foreplay between the merchandise and shopper.

Alchemy of footfall to conversion requires high convergence of multi knowledge such as end-customer understanding, branding, catchment science, architectural and engineering proficiency with high sense of visual expertise. These are the 15 key areas which require micro detail work to get quick ROI in retailing irrespective of the retail category. These are all frontline activities for retail business. Negligence of any one of these areas can create deficiency in ROI.

The research also throws light on some of the following findings:

• People do not see signs that are badly laid out and placed in wrong places. One has to place the signs where people are waiting.

• It is always better to provide seating for support people (eg: husbands shopping with wives, etc).

• Men are easier to up sell than women. Men are more likely to ignore price tags.

• Kids have an influence on what their parents would buy.

Thus it can be said that the right product with the right price & right place is what is necessary to be successful. In other words "Retail is about following shoppers where they are going!"

3 Research Gap

The research gap is as follows:

Studies have been conducted on customer footfall in various parts of the world, especially in the United States of America. But such kind of research has not been conducted in our country India, where retailing is still in the nascent stage. The previous researches conducted are limited to countries where retailing is in a much developed state. The behaviour of retail customers in India is much different when compared to behaviour of the retail customers of rest of the world.

Hence to overcome this research gap, this project has been undertaken to understand the consumer shopping behaviour. The purpose of the present study was to document the factors and parameters that would increase customer footfall.

4. RESEARCH METHOD

For the present study, the researcher has based his theme on descriptive research. Descriptive study or survey method is used by interviewing or asking questions to people who are believed to possess the desired information. This research is both quantitative and qualitative. This study is based on the data collected through questionnaire from customers visiting the selected retail outlets in Bangalore city. The entire research work is done taking into consideration select retail outlets in Bangalore. Data has been collected from various sources; there is a combination of both primary and secondary data that has been used in this research. Primary Data is the data exclusively collected for the research work by the researcher. It is the raw data collected for research work that represents an official position or opinion. This kind of data is always authoritative because the information collected has not been interpreted or filtered by a second party. Primary data is collected afresh from the field for the purpose of conducting the research. A structured questionnaire was designed & administered to the respondent. The questionnaire was constructed as concise and simple as possible keeping the profile of the respondent in mind. The data has been collected through face-to- face interviews with the help of a questionnaire. It involved visiting select retail outlets in Bangalore & administering the questionnaire to the customers who were willing to volunteer for the survey. Secondary data is the data collected by the researcher from some other sources where the data would have already been collected and interpreted. Here it’s not possible to get the data in its purest form because it would have been used for some other purposes already. The primary data collected by one researcher becomes secondary data for the other researcher. Secondary data is the refined form of primary data. Internet databases & text books related to retail & Research Methodology have been a major secondary source for the extraction of the expert’s opinion. Also articles have been sourced from magazines & journals.

A total sample of 100 customers was considered from the above mentioned retail outlets. From each of the above retail outlets the sample size was 25 customers. A convenient sampling technique (non – probability sampling) was used for the selection of the samples. The sample selection was based on the cooperation of the study subjects, i.e., the customers visiting the retail outlets. The primary data has been collected through questionnaires administered to customers visiting the retail outlets of More, Spencer’s, Reliance Fresh & Food World.

5. RESULTS AND DISCUSSION

Chi-square test was used to test the null hypothesis, whether it is significant or not. Two tests were done

Test #1:

Null Hypothesis Ho: There is no difference in the factors (location, ambience, discounts, multiple brands & loyalty card) that motivate a customer to enter a retail outlet

Alternate Hypothesis HA: There is a difference in the factors (location, ambience, discounts, multiple brands & loyalty card) that motivate a customer to enter a retail outlet

Test #2:

Null Hypothesis Ho: There is no difference in the factors (price, quality, brand, offers & visuals) that influence the purchase decision of a customer from a retail outlet Alternate

Hypothesis HA: There is a difference in the factors (price, quality, brand, offers & visuals) that influence the purchase decision of a customer from a retail outlet

Proposed Concept which provides overall factors influencing the Retail Footfall

Figure 2

6. CONCLUSION

This research indicates that there is still a sizeable market which needs to be tapped to attract it towards organized retail outlets. It can be seen that advertisement and promotions are effective methods to influence the shopping decision of buyers. Hence retailers can use this as an effective tool in marketing their products/items. There are quite a number of customers who engage in impulsive buying in the retail store. Location and Loyalty card of the retail store are the main factors which motivates the customer to enter the store. This research also indicates that Price and Quality are the products are the main factors which influence the purchase decision of a customer from a retail outlet. The customers engage in cherry picking, i.e., those who go from store to store to pick the best-priced items and leave the rest, as they are extremely price sensitive. The customers feel that the quality of service provided by the retail outlet is good, nevertheless it is better that the companies differentiate themselves from the other by providing

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special services. The leading concept which can express the retail identity to communication which will lead for conversion of footfall into prospective sales would be all 10 factors mentioned in figure no 2 above, Finally according to the survey we can conclude that we can convert the footfall to maximum extent through (1) Right Brand/Category Mix- Location & Size, (2) Enhanced Value Delivery, (3 )Proper customer services(4) Great Product with Excellent Service is the key(5) Retail Service Quality ensure that to remove our faults in day to day activity and convert the footfall.

7. LIMITATIONS AND FURTHER RESEARCH DIRECTIONS:

The competition can only get fiercer as organised retail grows. Retailers need precise tools in hand that will allow them to target individual consumer bases and invest with greater confidence. As this industry grows, it will become increasingly imperative for retailers to adopt the ‘analytics’ approach. Radical innovation in IT processes helped India leapfrog to become one of the biggest IT destinations of the world. Given the current scenario, adaptation of a similar attitude towards retail science could catapult India to the global leaders of retail too. Future research needs to address this critical need before research into Footfall Analytics approach through IT in Indian retailing can progress further.

First, this study was only conducted in supermarkets in Bangalore. Generalizability will definitely be improved if other cities were included. Second, the results of this study may further be validated by including other factor which may come for converting footfall into sales which are controllable and uncontrollable factors may exist. Future research should consider factors such as merchandise, culture, promotion policy, loyalty policy, culture impact etc. Lastly, only limitation of this study is the use of a relatively small sample and of the study being restricted to the city of Bangalore. This could impact the extent to which these results can be extrapolated to other retail formats, product types and cities. Future research in Indian retailing could examine a wider respondent base across other cities of India. A larger sample size would also enable separate analysis across different income groups, gender and age categories. Future research should take into account of other types of retailers in Bangalore.

REFERENCES

[1] Baker, J, Grewal, D and Parasuraman, A (1994): "The Influence of Store Environment on Quality Inferences and Store Image", journal of the Academy of Marketing Science 22 (Fall) : 328-339.

[2] Hart, CWL, Heskett, J L and Sasser Jr., W E (1990): "The Profitable Art of Service Recovery", Harvard Business Review 68 (July-August), pp. 148-156.

[3] Mazursky, D and Jacoby, J (1985): "Forming Impression of Merchandise and Service Quality", In Perceived Quality: How Consumers View Stores and Merchandise, Edited by J Jacoby and J C Olson, Lexington Books, Lexington, M A, pp. 139-153.

[4] Oliver, R (1981): "Measurement and Evaluation of Satisfaction Processes in Retail Settings", journal of Retailing 57 (Fall), pp. 25-48.

[5] Parasuraman, A, Berry, L L and Zeithaml, V A (1993): "Research Note: More on Improving Service Quality Measurement", journal of Retailing, 69, pp. 140- 147.

[6] Reeves, C A and Bednar, D (1994): "Defining Quality: Alternatives and Implications", Academy of Management Review, 19, pp. 419- 445.

[7] Sellers, P (1990): "What Customers Really Want", Fortune 121 (13), pp.58-68.

[8] The Economic Times (2003): Changing Gears: Retailing in India, An ET Intelligence Group Report, ET Knowledge Series.

[9] Westbrook, R A (1981): "Sources of Consumer Satisfaction with Retail Outlets", Journal of Retailing 57 (fall), pp. 68-85.

BOOKS

[1] Retail Management--A Strategic Approach' by Barry Berman and Joel R Evans, Pearson Education Publications, Tenth Edition, 2006.

[2] Michael Levy and Barton A Weitz, Retailing Management.

[3] Retail Management by Rosemary Varley, Mohammed Rafiq- Palgrave Macmillan.

[4] Managing Service Quality: v. 3 (Quality Management in Services) by Dr Paul Kunst and Professor Jos Lemmink.

[5] Retail Management by Uniyal & Sinha-Oxford Publications.

[6] Managing Quality Customer Service (Better Management Skills) by William B. Martin

[7] Managing Retailing by Piyush Kumar Sinha and Dwarika Prasad Uniyal

[8] Retail Management by Chetan Bajaj, Nidhi Varma, and Rajneesh Tuli Arya

[10] Businessworld, April 9, 2011

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