Although shopping centers have been using technology to count people and evaluate traffic trends for more than a decade, the concept has yet to gain universal acceptance.
Using a traffic-counting system requires not just technology and the related financial commitment, but also people who can take information out of the system and evaluate it. Some developers don't have the people to commit to such a job. Others believe that the feedback on sales provided by retailers sufficiently describes business trends. Why add expensive traffic counters to confirm trends already identified?
The major traffic-counting companies predict that traffic-counting technology will eventually show up in most shopping centers for one reason: increasing competition. As competition intensifies, so does the need to understand, manage and capitalize on traffic trends.
Simon Property Group, for one, has taken these basic management tools and rolled them out across its portfolio. Last year, the Indianapolis-based company installed traffic-counting systems in more than 100 malls.
"In the old days, managing one mall with traffic information was interesting, but it is exponentially more valuable when a developer has all of its properties up and running," says Bob Lobascio, vice president for sales at Chicago-based RCT Systems Inc., the company that provides the technology used by Simon. "The portfolio roll-up system that we supply offers two major new capabilities. First, it enables a developer to set benchmarks for each property. Second, it offers huge opportunities for new revenues from corporate sponsors."
RCT's benchmark concept combines accurate counting with a new generation of reporting software that will analyze traffic, sales, marketing, leasing, operating expenses and other factors for an entire portfolio of properties and help establish performance standards for individual properties.
RCT wired Simon's malls with digital video traffic-counting systems. This technology provides traffic counts accurate into the high 90% range by counting people moving in both directions, into and out of, entrances to the malls and anchors, as well as passageways into major mall common areas such as food courts.
At the same time, RCT connected each mall to a remote data host maintained by RCT. "Every night, this host system dials into Simon centers and pulls out the traffic counts for the day," Lobascio says. "The system scrubs the data and checks it. That evening or the next morning, Simon people at the corporate office or in a mall can click on the data site from their desktop computers and work with the data."
Simon's mall managers can use the data to prove traffic to potential tenants, evaluate the success of a marketing program and control operating costs. More importantly, perhaps, they can compare mall performance with benchmarks set by corporate management.
At corporate headquarters, Simon executives can evaluate the performance of individual malls within the context of all the company's centers, while studying something new: exception reports.
"For example," says Lobascio, "suppose I have a sales benchmark of X dollars per 1,000 visitors to my portfolio of malls. I can tell the system to correlate traffic to sales in each of my centers and report back, via e-mail, when exceptions occur. In other words, I no longer have to go out and look for that information. The system will check and tell me when there is a problem that needs looking into."
The system can be set up to track virtually any correlation and report back when it finds a problem in the data.
When traffic at one mall falls out of an acceptable historical range for the portfolio over, say, Mother's Day, the system advises management. When security costs at another mall rise above acceptable standards, the system sends a memo to the security director.
"This is different than requiring an executive to study month-end and quarterly reports and drill down through the data looking for exceptions," Lobascio says. "On Monday morning, I turn on my desktop computer and find exception reports generated by the system over the weekend. I don't have to look for the problem at the end of the month. Instead, I know about it early, and I can respond to it early, before it gets any worse."
Another benefit of the RCT portfolio roll-up concept involves the embryonic area of corporate sponsorships in malls.
"Corporate marketing departments invest in newspaper, radio, television and other forms of media advertising to promote their products," Lobascio says. "Rates for those advertising sponsorships depend upon determining the size of the audience. Corporate sponsors live and die by precise numbers, and you must have precise numbers to negotiate effectively.
"With our counting technology, we can tell with great precision which entrances to the mall have the heaviest traffic," he continues. "We know how many people visit which areas of the mall at what time of day. This allows center executives to tell corporate sponsors that X number of eyes pass this point in the mall every day, week, month and year."
By enabling corporate sponsors to make informed decisions about where to place soft drink vending machines, pay phones, credit card information booths, or major displays, mall managers can create or enhance revenue-generating capabilities in common areas.
At the new Coral Ridge Mall in Coralville, Iowa, Chicago-based General Growth Properties uses an RCT traffic-counting system to track the people who pass through the mall and use a soft play area for children. Created by agricultural equipment manufacturer Deere and Co., the area features soft-play versions of Deere machinery. "Deere paid a significant fee to sponsor this area," Lobascio says. "And Deere management wants to know how many people see their logo."
New ways to look at traffic-count data Bunyar-Malenfant International Ltd. of Chambly, Quebec, pioneered traffic-counting technology in the mid-1980s, introducing the concept with infrared (IR) sensors placed on the sides of entrances. People break the beams as they pass through, and the system counts them.
However, lateral IR sensors can under-count people walking side by side through a wide entrance. The beam breaks once, but five people walking abreast have entered. In addition, older IR systems cannot distinguish direction: When the beam breaks, a person is counted. But was she on the way out or in?
Bunyar has responded to these questions by introducing overhead IR configurations and video imaging technology. Company executives believe that IR systems will continue to satisfy a variety of traffic-counting needs for retailers and shopping centers.
"For wide entrances, say from an anchor into a mall, overhead video technology may be a good solution," says Yanick Plamondon, director of sales and marketing for Bunyar's mall division. "But IR works fine in narrow doorways that prevent people from entering side by side. In addition, new IR systems can determine direction by using two beams, one set to count people going out and the other set to count people going in.
Video technology has limits, too, according to Plamondon. "High levels of light or changing light can affect the performance of cameras," he says. "In addition, cameras are expensive. We try to tailor systems to customer needs. In some areas, you might need video for the sake of accuracy. In other areas, IR may be accurate enough."
Assuming that a traffic-counting system provides a level of accuracy fitted to needs, Plamondon points out that the major challenge for traffic-counting companies involves developing new and better ways to use the data once it has been acquired.
"Every system on the market processes data and generates reports that enable managers to make basic decisions about marketing, staffing and operations," he says. "What distinguishes our company is that we have a strong base in retail traffic counting as well as mall traffic counting. I think that's important because of the nature of competition today. When competition grows stronger, the game gets harder at the local level. What happens in a mall in California is different than what happens in a mall in New York. In the future, I think that retailers and malls will have to work more closely together at a local level."
To address this issue, Bunyar recently introduced a new reporting tool called Daily Sale. "Daily Sale automatically collects daily sales from tenants every day," Plamondon says. "Instead of tracking sales at the end of the month, long after the fact, you can make immediate decisions. TrizecHahn and Cadillac Fairview have both experimented with Daily Sale."
Roth Bros. Inc. of Youngstown, Ohio, has taken a different tack on managing and applying the data collected by its IR and video imaging technologies.
"A number of large center developers have never counted traffic," says Todd Hansel, national accounts manager for Roth Bros. "Then again, others are counting traffic at some properties. Some are experimenting. Still others have put counters into all their properties."
Why not count? "A traffic-counting system is like exercise equipment," Hansel continues. "If you use it, you'll get into shape. But if you don't use it, if you don't have the time or the people to evaluate the information and to adjust your operations, it won't do you any good.
"So our approach is to make the information as useful as possible to as many people as possible," he continues. "To do that, our system uses a Microsoft Access database with a number of report wizards. Because virtually everyone is familiar with basic Microsoft software techniques, anyone from the receptionist to the CEO can pull up a report at any time."
Alternative traffic-counting hardware Cabling can cause a major headache during installation of a traffic-counting system. The longer the cable runs, the more expensive the installation. In addition, remote areas of the mall may limit cabling alternatives.
Infodev Inc. of St. Foy, Quebec, offers a traffic-counting product designed to solve such problems by eliminating cables.
In this and other ways, Infodev has taken a sweeping new look at the design of traffic-counting systems. "IR sensors and beams and video technology require cabling systems to move data to the computer for analysis," says Alain Dechene, Infodev's CEO. "We've developed a directional system of electro-optical sensors that counts people coming in and going out and stores the information at the door or entrance."
The system comes with a hand-held data collector that grabs the information from the sensors and downloads it to the computer. Of course, a person has to carry the collector around the mall and swipe the information from the storage devices.
"That's not really a problem," Dechene says. "The information isn't that time-sensitive. The point of the data is to describe long-term trends. Usually, collecting the information once a week is sufficient."
Another Infodev innovation is a portable traffic-counter with a sensor and data logger that can be downloaded to the main system. "You can place it anywhere you want in the mall," Dechene says. "We rent these devices to do surveys. Suppose a tenant says that no one is passing his or her store and wants to move to another location. The leasing manager can place two of these portable devices in front of each location, collect the results and discuss them with the tenant."
Infodev software provides all of the basic reporting functions associated with traffic-counting and management systems. In fact, the company introduced some features that have since become industry standards. One software feature, for example, shows the layout of the mall with the traffic numbers for certain times superimposed over locations. Mall management can use this feature to review traffic distribution during an event and also compare this year's traffic patterns with those from last year's event.
"Still, the most important parts of the system are the brains of the people who evaluate the information," Dechene says. "You still have to apply real-world judgment to the numbers and the reports.
Dechene cites a recent visit to a customer who said the system wasn't working properly. "The center had done a promotion and was filled with people," he says. "When the manager comparedthe total traffic during the promotion with the total traffic from the corresponding day of the previous week, he found that fewer people had come to the mall on the day of the promotion. That didn't seem right to him.
"But it was right; he just didn't take his analysis far enough. The numbers were lower by half on the day of the promotion. But when we studied the numbers at the site of the promotion, we found that those people who did attend stayed longer."
The promotion worked.
And so does counting traffic, in the hands of a smart manager.
According to Amedeo Romanelli, vice president of sales for Montreal-based Prodco Technology Inc., a supplier of traffic-counting systems, counting traffic enables center managers to carry out any or all of seven tasks. Managers can:
1. Measure total traffic as well as traffic patterns and distribution throughout the center.
2. Increase marketing effectiveness by correlating customer traffic and sales with promotional campaigns.
3. Track traffic moving from the common areas into the stores and report close rates to tenants.
4. Explain seasonal and yearly traffic variations to tenants. Was traffic really down in September, or was last year's higher September traffic a fluke caused by unusual weather?
5. Adjust security staffing to match busy times and busy areas of the center.
6. Control utility costs by matching lighting and air conditioning levels to high and low traffic patterns.
7. Manage maintenance: During a snowstorm, for example, it may be wise to mopthe entrances after a certain number of customers enter.