US consumers appear to be dining more at home than going out; doing more shopping at price-competitive superstores, wholesale clubs, and “dollar” stores; and spending more time at the gym, spa, and cosmetics counter than they did the summer before the pandemic.
Those are just some of the headlines from recent data on trends in foot traffic from Placer.ai, an analytics platform that crunches real-time location input harvested via some 500 mobile phone applications installed on untold millions of devices. In charts that paint a vivid portrait of how American consumers have been responding to the pandemic — and more recently to surging food, fuel, and housing costs — Placer.ai recently reported that visits to dining establishments have fallen 11% from three years ago while grocery store foot traffic is about the same as it was in August 2019.
As we bear down on the year’s crucial holiday quarter, the losers in the Placer.ai report are in traditionally higher-profit categories, suggesting this will be a season of thinning margins. US apparel store visits lag pre-COVID days by 10%, or about 10 million fewer visits per week. Home improvement store traffic peaked in last year’s fourth quarter, when cabin-feverish consumers went on a spending spree to freshen their living spaces. That category is now seeing 11% fewer visits compared to three years ago. The hardest hit bricks-and-mortar retail sector has been electronics, with traffic falling off by 19% from the summer before COVID-19 turned the world upside down. It would seem those who wanted one have already bought that new television and Ring doorbell.
Superstore traffic (Walmart,Target,Costco, BJ’s) is slightly higher than three years ago, while shopping center parking lots (malls and strip centers) are 6% less crowded.
A tantalizing data point: consumers appear to prefer doing business closer to home than they did three years ago.
Small and medium businesses — e.g., local and independent shops and services — have been riding the “buy local” wave. Placer.ai finds consistent traffic growth, with numbers up this year by around 20% compared to three years earlier and is currently up an additional 7%.
The brightest spots in 2022 so far have been fitness (wellness and gyms), up as much as 20% this year and currently 17% busier than pre-pandemic; and “beauty stores and spas” are boasting 32% more foot traffic.
Last year consumers re-feathered their nests, revenge shopped, and indulged in delayed luxuries. This year the emphasis appears to be on the basics and on self-improvement: presumably to look good for job interviews, returns to offices, and reinvigorated social life.
That said, how to interpret all this intriguing data is truly challenging.
For starters, it seems to confirm what we’ve been hearing in quarterly reports from major retailers, and it reflects the current state of consumer confidence, which cratered this summer. Like bears preparing for hibernation, consumers may be “denning up” in response to an instinct (and a growing list of companies announcing layoffs) that tells them this will be an austere holiday.
Foot traffic may seem an arcane measurement in the age of online retail, but there may be something to the adage that “consumers vote with their feet” especially as Gen Z discovers the joy of shopping in a physical store.
What to do with this information? A couple of suggested approaches for both consumers and retailers:
1. On the consumer side, engage in the physical world and meld it with all the data available in the digital world, like pricing data, to get you the best price. Negotiate with the store to match it and take the product with you. It helps the retailer get rid of inventory, it helps you with what you were looking for, and at the price that is “fair”. It also helps the environment because you won’t force a truck (oil/gas) to deliver the box (tree) to your doorstep when the product is right there in front of you right now. All it takes is a conversation with the store manager.
2. On the retailer side, engage with you customer. They made the commitment to drive to YOUR STORE and given the challenges of hiring enough people and retaining and training staff, it is logical that you can scale better with technology. Think outside the box. How can you gather information on consumers, pattern the data to provide understanding of the situation and give it to the fewer people running your business to make better decisions?
One thing is for sure, Gen Z wants to engage and inform companies’ leaders, but so do all other generations. Ignoring their input doesn’t seem logical or sustainable any longer and neither does the outdated “suggestion box” I saw yesterday at the door of a multibillion-dollar big box retailer.