The spring season has been one of mixed emotions for brick-and-mortar retailers. Merchants boosted year-over-year average transaction value (ATV) and sales per shopper (SPS), but lost sales and traffic numbers in March and April 2015.
In the two month span, sales and traffic rates respectively fell 5.2% and 9.4%, according to the Retail Performance Pulse from RetailNext. At the same time, ATV jumped 2.5%, SPS leapt 4.7% and conversion rates increased 0.7%.
“Consumers are being much more productive in the store,” said Shelley Kohan, VP of Retail Consulting at RetailNext. “They’re buying more per visit, and they’re converting higher than they have in the past. On the flip side, since the traffic is down, the sales naturally go down along with it. Retailers can make up for that traffic variance by converting higher and by selling more.”
Advertisement
The numbers do not necessarily signify a decline for brick-and-mortar. If anything, it represents an evolution in the relationship of the consumer and the retailer, and a change in the direction of purchasing habits. This puts the spotlight on the retailer to adapt their models to these consumer trends, according to Kohan.
“Retailers are now forced to look into the formats of their stores, which I actually think is a positive for the economy overall,” Kohan said in an interview with Retail TouchPoints. “They’re closing the unproductive locations, and they’re putting more capital, dollars and effort into stores that are more profitable, and making those relevant to the shopper. You see this with Walmart playing around with their formats, going from 160,000 square foot stores to 20,000 square foot stores. Macy’s, which is traditionally a department store, has acquired Bluemercury and they are starting to play in the specialty store environment. The key for retailers is finding the most productive use of that physical retail space.”
April 25 garnered the highest sales and traffic of the month, whereas conversion rates and SPS were highest on May 1. Easter Sunday (April 5) was the lowest across all performance metrics, which is in line with historical performance. Excluding Easter, the lowest sales occurred on the April 20, while the lowest traffic and transactions occurred on the April 13.
The Northeast region of the U.S. encountered the steepest traffic and sales declines of the four major regions classified with respective regressions of 19.2% and 16.6%. Weather patterns and the placement of Easter Sunday and Spring Break are considered large factors for the declines, according to Kohan. While all four regions (Northeast, Midwest, West and South) experienced declines in traffic and sales, every region boosted its conversion rate, meaning more shoppers who enter the store are making purchases. All regions except the Midwest increased their ATV and SPS from the year before.
“I think we’re going to continue to see a positive trend on the KPI metrics, such as the conversions, the ATV and the SPS,” Kohan stated. “One of the biggest challenges that retailers face is the knowledge deficiency gap, which is the difference in knowledge that customers have walking into a store versus the sales associates on the floor. I think retailers are understanding that they have to fix that, and going into the summer, you’ll probably see a better, well-trained associate on the sales floor. You’re going to see a lot of effort put in — whether it’s training or technology — in the stores to make a better experience for the customer.”