Retail Foot Traffic Rising Again

Foot traffic is a long-established indicator for the retail industry. It’s used, among other things, to help businesses select locations or determine operating hours. In the past, these counts were typically made manually by individuals with hand clickers stationed on sidewalks measuring activity. Today, however, the prevalence of smartphones armed with global positioning systems means that the days of manual counts are pretty much over.

By tracking the number of discrete cell phones inside a select geography, it’s possible to determine how many people are passing through or lingering in a location, based on data from nearby cell towers. Real estate brokerage firm Avison Young is leveraging this technology to provide retail foot traffic data for numerous markets in Canada as well as the U.S.

But Avison Young, cognizant of how retail dynamics have evolved over the past decade, isn’t just capturing data in major retail districts. By measuring foot traffic at key distribution facilities, they have found a way to normalize the numerical comparison between in-person and online shopping.

To learn how foot traffic is measured through this tool, LoopNet spoke with Craig Leibowitz, executive director for U.S. innovation and insight at Avison Young and one of the creators of the product. Similar in design to the Office Vitality Index, this retail-focused tool is a public-facing platform that generates data at the country and city levels for both the U.S. and Canada.

Referred to as the Retail Vitality Index, the tool measures foot traffic at big-box stores, along retail corridors, in local retail establishments, at shopping centers and even online. The version accessible to the public enables users to measure how foot traffic has changed from one year to the next on several key shopping days, such as Black Friday in the U.S. or Boxing Day in Canada.

For example, one can determine that foot traffic at shopping centers in Philadelphia increased by 138% between 2020 and 2021 on Black Friday. While this increase is significant, keep in mind that in 2020, the U.S., like most countries in the world, was in the depths of the pandemic with people remaining largely at home. One year later, in-person activity had picked up significantly.

Two other cold-weather markets, Chicago and Seattle, also posted significant foot traffic gains at shopping centers over that same period of 234.7% and 146.3%, respectively. The index shows that these three markets recorded the biggest increases, all of which were nearly three times the U.S. average of 60.5%. While this increase in activity was visible to most through impressions and anecdotes, Avison Young was able to measure and quantify it.

Although the Retail Vitality Index is new, data from 2019, or prior to the pandemic, can help inform longer term trends. Leibowitz commented that “the health of the labor market and broader economy — plus pent-up savings from pandemic-related restrictions in 2020 — pointed to very strong in-person shopping visitor volumes in 2021.”

He continued that while a significant increase above 2020 levels was reported for in-person shopping throughout North America — due predominantly to diminished governmental restrictions — the Retail Vitality Index shows that 2021 visitor volumes in the U.S. remained 11.6% to 18.9% lower than 2019 levels on Black Friday.

These lower volumes in 2021 are in line with “ongoing pandemic-related concerns, tourism restrictions and heightened reliance on online shopping among consumers, despite supply chain-related shipping delays,” Leibowitz said.

Leibowitz explained that foot traffic for in-person shopping in these types of locations is calculated by determining how many people (or cell phones) are “dwelling” or spending time at shopping centers, grocery stores, retail corridors or big-box establishments. But online dwell times are not calculated as one might think; by, for example, tracking the time individual shoppers spend online.

To generate online traffic, “it's based on the pickers, packers, truck drivers, managers, et cetera, who work at [distribution facilities] or are transgressing across those last-mile distribution centers,” Leibowitz said. Cell phone data from the professionals working in a distribution center is used to express the level of activity occurring at those locations to fulfill online orders. So, if there's more foot traffic among distribution center employees (more distinct cell phones pinging cell towers ) they surmise that more online shopping could be occurring.

Asked to comment on the accuracy of the online shopping metric given the novel way it’s measured, Leibowitz noted that rising and falling foot traffic at these facilities illustrates a number of forces at work like “online shopping sales volumes and the extensiveness of supply chain disruptions, such as shipping delays due to port congestion, blue collar labor shortages and other prevailing issues.” This online foot traffic data from last mile facilities can substantiate or contradict many of these types of behaviors.

Leibowitz mentioned how Avison Young characterizes each of the retail categories used in the index.

• Big-box stores. These are the typical “large category killing department stores, like Kohl's or Home Depot or Walmart,” Leibowitz said.

• Local retail. Local retail establishments are based on foot traffic at grocery stores, since shoppers tend to buy groceries locally, inside their own neighborhoods.

• Retail corridors. All areas classified as retail corridors are above-ground outdoor shopping locations, Leibowitz noted. They can be areas close to residential clusters such as Third Avenue in New York City or tourist-centric places like Fifth Avenue in Manhattan. This is accomplished by geo-fencing the sidewalks along retail corridors in addition to select retailers along the route.

• Shopping centers. The shopping center category is based on shopping malls, “whether they're a single facility or a clustering of outdoor facilities, which is traditionally what we find in markets like Florida,” he noted.

To conduct the analysis, Leibowitz said Avison Young monitors between three and 10 areas or buildings for each retail category in every one of the 51 cities they cover in the U.S. and Canada. These boundaries enable the firm’s market analysts to select buildings or locations based on quality rather than quantity, allowing them to include those that are truly representative of each retail category.

“In New York City, for example, there aren't that many shopping malls, but there are plenty of retail corridors,” Leibowitz said, adding that it was up to the local market expert to select the best pool of buildings to represent each category.

To calculate online foot traffic, “we didn't have a threshold [of three to 10 buildings]. It was simply the isolation and identification of true last-mile distribution facilities, which are very different from traditional warehouse distribution centers.”

Leibowitz noted that activity levels at distribution centers vary, and that fluctuation is not based solely on the August to December shopping season. He noted that at some centers, core activity periods could be unrelated to retail shopping seasons and could almost be considered counter-seasonal. “For example, some of the prime times, for those warehouse distribution centers — depending on who the user is — could actually be the summer months in anticipation of the shopping season,” Leibowitz said.

“We wanted to exclude those types of facilities and instead include those that are making multiple runs into and out of cities. We have a few industrial experts on our team who know exactly what defines a last-mile distribution center and we geo-fenced almost all of them for this analysis.”