Accurately assessing footfall: Guide for retail spaces

Foot traffic is the currency of retail: it indicates how many potential customers pass by a particular location. But quantity does not equal quality. Thousands of hurried commuters at the train station bring a jeweller less than a hundred relaxed strollers in the old town. Footfall is usually determined by manual counts or modern laser and Wi-Fi trackers and has a significant impact on rent prices. Before signing a lease, you should therefore critically question the landlord's figures and check whether the people passing by are really your target group.

The dream of a full shop

When you're looking for a new retail space, you'll hear the old mantra of the real estate industry over and over again: ‘Location, location, location’. But what actually makes a location good? It's primarily the likelihood that people walking past your shop window will stop, come in and buy something. This likelihood starts with a simple metric: foot traffic.

Many prospective shop owners are blinded by high numbers. A location with 20,000 people passing by every day sounds like a gold mine. But if you don't understand the dynamics behind these numbers, the supposed gold mine can quickly turn into a bottomless pit. Because footfall alone doesn't pay the rent – sales do.

What is footfall?

In simple terms, footfall describes the number of people who pass a defined point in a public space within a certain period of time. In the context of commercial property, it is an indicator of your customer potential. People often talk about the ‘high street’ or ‘prime location’ where footfall is highest.

But you have to be careful here. There is a huge difference between traffic frequency and shopping frequency. A tunnel in the main railway station has a huge frequency at 7:30 in the morning. But these people are on their way to work, they are in a hurry and have their heads full of appointments. Their willingness to spontaneously buy fashion or furniture is close to zero. A quieter side street on a Saturday afternoon may only have a tenth of this frequency, but the people there are strolling, have time and are generally more inclined to buy.

How is it measured? From click counters to lasers

In the past, you would often see students standing on street corners with mechanical hand counters. This method may be old-fashioned, but it is still useful for random checks by yourself. Today, however, professional location analysts and cities rely on technology.

Modern shopping streets often use laser scanners or infrared sensors that count around the clock. Even more precise – and repeatedly discussed in terms of data protection law – is tracking via Wi-Fi signals from smartphones. This not only allows you to count how many people walk by, but also how long they linger in front of the shop window (the so-called ‘dwell time’) and whether they are returning passers-by. You can often find this data in the detailed location analyses of large estate agents or from specialised providers such as Senozon.

The impact on rent

There is a direct correlation between foot traffic and rent. Basically, a shop window works like an advertisement on the internet: you pay for impressions, i.e. visual contacts. The more people pass by the space, the higher the price per square metre tends to be.

In Switzerland's absolute prime locations, such as Zurich's Bahnhofstrasse or Rue du Rhône in Geneva, you pay astronomical rents because the footfall there is not only high but also has high purchasing power. The risk for you as a tenant is that you pay a ‘footfall rent’ without achieving the corresponding ‘conversion rate’. If you sell a niche product that requires consultation, an expensive high-footfall location may not be necessary. You would then be paying a premium for thousands of passers-by who are not your target audience.

Conversely, a B location with lower rent can be more lucrative if you attract people to you through targeted marketing (destination store). You save on rent and invest the money in advertising instead.

What to look out for when evaluating

Never blindly rely on the information in the exposé. These figures are often averages or come from the best hours of the year (e.g. Saturdays in Advent). To realistically estimate the footfall for your business, you should consider the following points:

Pay close attention to the sunny side and the shady side. It sounds trivial, but in many shopping streets there is one side that is significantly more frequented – often the one that is in the sun in the afternoon or the one that is the direct route to the train station. A shop on the ‘wrong’ side of the street can have 30% less walk-in customers despite having the same address.

Distinguish between weekday and weekend crowds. A location in the financial district is excellent from Monday to Friday at lunchtime (restaurants, takeaways), but is dead on Saturdays. A shopping mile, on the other hand, only really comes to life at the weekend.

Take a look at the surroundings and the ‘magnets’. Who are the neighbours? A large anchor tenant (such as a department store or a popular supermarket) attracts footfall, which benefits the small shops around it. However, if this magnet closes or moves, footfall often drops abruptly.

Conclusion

Footfall is a hard currency, but it has to fit your concept. Before you sign a long-term lease, invest time in analysis. Stand at the location at different times of the day. Observe not only how many people walk by, but who they are and how they behave. Are they stressed? Are they carrying shopping bags from other shops? Do they look in the shop windows? In the end, these qualitative observations are often more valuable than the bare figures in an Excel spreadsheet.