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Hidden company's data helps stores, gives holiday predictions

Shoppers look over items on sale at a Macy's store in New York, November 23, 2012. REUTERS/Keith Bedford
Shoppers look over items on sale at a Macy's store in New York, November 23, 2012. REUTERS/Keith Bedford

By Jessica Wohl

CHICAGO (Reuters) - The falloff in visits to U.S. stores the week after Thanksgiving was not as steep this year as last, as retailers appear to be doing a better job of luring shoppers during the holiday season, the founder of shopper counting firm ShopperTrak said.

So what exactly is ShopperTrak? Its data is often quoted by media and analysts during the holiday shopping season. But to the shoppers it is tracking, the company is all but invisible.

ShopperTrak uses foot traffic from stores outfitted with its monitors, sales data from those retailers and algorithms of historic government sales data to come up with sales growth figures, founder Bill Martin explained while touring stores on Chicago's State Street with Reuters on Wednesday.

"We're not quite sure what value the numbers have," Martin said, referring to the overall tallies and estimates distributed during the holiday season. However, the data generated nightly for retailers has "high value" for the chains, he said.

What the most recent numbers showed was that foot traffic in stores rose 3.7 percent in the week ended on December 1 - the week after Thanksgiving, traditionally the start of a lull for retailers - and sales increased an estimated 2.3 percent.

That is a stronger showing than the comparable week a year ago, when ShopperTrak said traffic fell 6.4 percent and estimated sales rose just 0.2 percent. During this year's Thanksgiving weekend, traffic rose 8.2 percent and sales increased an estimated 2.7 percent, the firm said.

Martin has been tracking the number of shoppers at stores since 1995, when the firm began with four people. It was then - while standing in a Pier 1 Imports store in New Jersey watching "people walking out and not being converted" into buyers - that Martin says he coined the retail phrase "conversion rate," or the rate at which shoppers become buyers.

Today, companies as large at Wal-Mart Stores Inc use the term "conversion rate" and Wall Street analysts use the term in the notes they publish.

Chicago-based ShopperTrak, whose long-time clients include Payless ShoeSource, American Eagle Outfitters Inc and Disney Stores now has more than 200 employees and measures traffic at more than 50,000 locations in over 70 countries.

Walking through a mall on State Street, just blocks from his condo, Martin pointed out his firm's small boxes at various stores. Shoppers probably would not even notice the counters, which matched the ceilings, black at the Disney store and white at Sunglass Hut. Many stores use such devices to track shoppers, though chains such as Target Corp use cameras.

ShopperTrak then helps retailers use the data for such things as evaluating the performance of promotions, determining how to change marketing to lift results at stores with low traffic and managing staffing for busy and off-peak times.

To succeed, stores must provide an experience that is not available elsewhere to "convert a shopper into a buyer," Martin said. "Right here is where the money is made."

Standing near the entrance of a Puma store, Martin pointed out sneakers in bright colors, such as red. Shoppers can see the exact hues of the shoes and try them on, rather than trying to determine their colors online, where trying shoes on is impossible. If the hue they want is in stock in their size, the store is more likely to close the sale. If not, perhaps a helpful associate can order the shoes, keeping the shopper from going elsewhere.

The National Retail Federation predicted that holiday season sales, or sales in November and December combined, should rise 4.1 percent to $586.1 billion this year. ShopperTrak expects 3.3 percent sales growth, down from 3.7 percent in 2011.

The two groups measure different sets of sales data, with ShopperTrak monitoring general merchandise, apparel, accessories, furniture and other specialty categories, while NRF includes non-store, auto parts and accessories stores, discounters, department stores, grocery stores, and specialty stores.

Though his firm only tracks traffic at stores, Martin says retailers must marry their stores and various online channels, or use what is called an "omnichannel" approach.

"You can't even say that's coming anymore, that's here," Martin said.

Online spending for the first 32 days of the season was up 14 percent to $21.4 billion, according to comScore Inc.

For online data, Martin said comScore is the one to watch.

"To me, they're the gold standard," he said.

(Reporting by Jessica Wohl in Chicago; Editing by Steve Orlosky)

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