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Shopping Centers Today -> May 2001
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WATCHING WALKERS
PeopleCounter helps centers track pedestrian traffic more accurately
By Dave Bodamer
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| RCT’s PeopleCounter software and hardware system, above, uses small video cameras installed above mall and store entrances to count shoppers. |
In the increasingly competitive shopping center industry, developers are looking to streamline costs and increase sales any way they can. REITs, including Simon Property Group, General Growth Properties, CBL & Associates and Crown America, are using an advanced people-counting and foot-traffic-analysis system that is helping those owners in that quest.
Using technology and data produced by RCT Systems, mall owners are now able to more efficiently manage their operations — such as cleaning, security and climate control — while also being able to measure the effectiveness of in-mall promotions based on pedestrian traffic data.
Chicago-based RCT Systems has long argued that large crowds in stores cause shoppers to spend more. Its tools help developers gauge how certain factors, including lighting, temperature, cleanliness and marketing campaigns affect, and are affected by, pedestrian traffic. RCT’s national trend data also are used by ICSC and the Bank of Tokyo-Mitsubishi, among others, when analyzing sales trends.
“The idea of traffic information is not new to the retail industry. However, the method of gathering the information and reporting it back to the user has evolved greatly,” RCT Systems President George Kramerich said. Retailers, analysts and developers have begun to take more of an interest because of the improvement in data collection and available information, Kramerich said.
RCT’s hardware and software, called the PeopleCounter, is not complicated, and is an improvement over past traffic counting systems that use infrared laser beams placed on the floor in doorways to count traffic. RCT uses small video cameras installed above mall and store entrances that feed into a device called an Entrance Processor (EP) throughout the day. RCT’s software, which runs on the EP, then analyzes the objects moving through the scene, separating people from shadows, plants or other objects, to give developers more comprehensive data about people moving throughout the mall and in and out of stores. The system, which can even measure how long patrons spend on average in a store or the shopping center, is now used in about 250 regional malls.
“The advantage of using image processing for counting pedestrian traffic is improved accuracy and reliability — both very important qualities in a traffic counting system,” Kramerich said.
RCT has several other products as well designed to analyze entire shopping center portfolios for developers, retailers and other chains.
“We’ve gotten quite a bit out of it so far; it gives us very accurate data on the traffic flowing into our properties,” said Tom Stephenson, executive vice president of asset management for Crown American, Johnstown, Pa. “Before, we were guessing what our traffic numbers were.”
For Crown, the data have been very illuminating, Stephenson said. For instance, Crown has used the information to convince advertisers to buy ad space within its malls, as well as during the process of negotiating leases to demonstrate the strength of its assets. The data also have helped in cases where tenants were seeking rent relief and claiming the traffic levels at the mall were too low and hurting sales.
“We’ve been able to sit down and show them the true traffic counts and haven’t had to give them rent relief that they were not entitled to,” Stephenson said.
Simon Property Group, Indianapolis, and General Growth Properties, Chicago, the two largest regional mall REITs in the United States, both use RCT Systems tools in their portfolios. Simon CFO Stephen Sterrett explained that Simon has used the data to adjust scheduling for security coverage, housekeeping and temperature control at its centers based on traffic levels.
Sterrett said the technology has given the company much more comprehensive data than beam counting systems provided; those systems often counted shadows, he said, skewing the data.
Another benefit for developers is the ability to gauge the success of a particular promotion at a mall.
“When we spent money to put on a special promotion in a mall, before we installed the traffic counter we had no feel as to whether it was a cost-effective event or not,” Stephenson said. “Now that we’ve got accurate traffic counts, we’re able to see results on the money we spent.”
The same sort of analysis can be done by retailers to measure the effectiveness of their sales or promotions.
“The fact is people walk into stores and choose not to buy all the time. Others buy that never had any intention of spending,” Kramerich said. He added that retailers are left to guess what drives buying decisions unless they can measure sales activity against traffic levels to gauge the effectiveness of particular sales or promotions.
Lastly, once the technology has been in place for more than a year, developers are able to obtain comparable traffic data that can be used in the same fashion that same-store sales figures are used now.
RCT’s competitors include ShopperTrak and Roth Bros. ShopperTrak, Chicago, also uses a video monitoring system and has proprietary software that analyzes the data; however, the company tapers its products more toward retailers than shopping center owners, according to the company. Roth Bros., Youngstown, Ohio, produces the DigiCount system, which, very similar to RCT’s system, uses video image processing to digitally track the number of customers who have entered or exited a facility. Roth produces mall-specific software as well. The prime difference between RCT and its competitors is that RCT goes beyond providing property-level data and produces portfoliowide and even industrywide analysis that individual owners can use as bases for comparison, according to RCT.
RCT would not release specific financial information, but Stephenson said that Crown pays for the service on a monthly basis.
RCT Systems produces the National Retail Traffic Index (NRTI) that is now coming into use by shopping center analysts looking for a fast gauge on the retail environment. Sales figures are counted on weekly and monthly bases, but the NRTI can be updated daily. During the holiday shopping season, on Nov. 25, 2000, RCT, using figures gathered from its participating malls, reported that 67.6 million shoppers — roughly 25% of the U.S. population — visited malls on Nov. 24, 2000, “Black Friday.” Those figures are up 9.7% from last year’s 61.6 million shopper visits on the day after Thanksgiving. That gave the industry its first glance at the season; ICSC’s Holiday Watch a few days later confirmed that Black Friday’s sales were up over 2000.
In the near future, RCT will be releasing detailed analysis of its data from its sales-per-visitor index. For the first four weeks of the year, RCT data show that sales per visitor was basically flat versus last year. Thereafter, up until press time, every week but one had shown people spending more per trip. At press time, RCT was working on additional details surrounding these figures.
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