Shopper insights put adidas in a league of its own
adidas | The Client
For over 80 years, adidas has de livered state-of-theart sports footwear, clothing and accessories. Today, it is a global leader in the sporting goods industry, with products available in virtually every country in the world. It is home to many well-known brands including Reebok, TaylorMade, CCM-Hockey and Rockport, employing almost 40,000 people.
The adidas Business Challenge
Australia’s Pitt Street Mall, located in the central business district of Sydney, New South Wales, is sited on the most expensive street in Australia (and the seventh most costly worldwide). Stores in this prime retail space know that they must perform at the top of their game to ensure profitability. Faced with declining traffic during construction work, adidas, a global leader in the sporting goods industry, took steps to improve the conversion rate at its Pitt Street store and ensure the team seized every shopper opportunity.
While adidas’s Pitt Street store in Sydney, Australia already had a basic people counting system in place, this produced only raw customer count data and had extremely limited reporting capabilities.
As a strategically important location for the adidas group, it was the first store selected to trial a solution from Experian FootFall. Until then, adidas had no way of tracking the ratio of staff to customers in the store at any given time – a critical factor in successfully converting shoppers into customers. Furthermore, staff rosters had to be planned manually – a time consuming and laborious task.
Experian FootFall’s Solution
- Experian FootFall thermal counting system
- Experian FootFall Delivered Reporting
- Experian FootFall Interactive Reporting
- Consultancy Services
Business Benefits of People Counting
- Increased conversion rate by 42% over three-year period
- Constant level of sales maintained despite 15% fall in traffic year on year
- Improved performance in all key measures of success
- Staff rostering matches shopper demand
- At-a-glance reports encourage staff buy-in
- Saves hours of time compiling manual reports
- The effect of changes to store layout can be measured
Drawing on its analytics expertise, Experian FootFall helped adidas define the factors that determine their store’s profitability and designed a reporting system that would report those Key Performance Indicators (KPIs).
Ross Harris, retail operations manager for adidas in Australia and New Zealand, explains, “The customised reports we get from the Experian FootFall system enable us to manage the most important variables that affect store performance. They’ve shattered several misconceptions and given us real insight into our business.”
He adds, “Armed with high quality analysis that shows the number of customers in the store hour by hour, we are able to put together the best possible roster that maximises the peak periods. Staff rostering is now far more effective.”
In fact one of the early revelations was the discovery that the hour before closing time on Sunday afternoon, far from being the quietest period of the week when it had been thought safe to send staff home early, was in fact one of the store’s busiest times. As adidas had been measuring sales in isolation, which had inevitably suffered fro the low ratio of available staff to customers in the store, this crucial fact had not been apparent before.
“Armed with high quality analysis, staff rostering is now far more effective.”
Ross Harris, Retail Operations Manager, Australia & New Zealand – adidas
Now, by comparing a combination of metrics – such as sales figures, average transaction value (ATV), items per transaction and conversion rate – the store’s data suddenly becomes meaningful. The simple, graphical reports enable adidas to immediately see correlations between variables, identify cause and effect and to take action to improve sales.
In addition to showing current performance, year to date and year on year comparisons, the reports can be tailored to match customers’ precise requirements. In the case of adidas, this has involved grouping stores not only geographically but in clusters according to store type – sports performance, original stores and factory outlets – to allow more meaningful comparisons to be made.
Unsurprisingly, staff buy-in to the system has not been an issue. On the contrary, as Ross Harris explains, “The Experian FootFall reports make managers’ jobs considerably easier. They consider them a useful management tool that helps them identify areas for improvement and coach their team members accordingly. We believe in using the reports in a positive way and in future I’d like to see the reports broken down even further to individual level.”
Using Store Analytics Data
By analysing the store data, Experian FootFall identified the optimum ratio of staff to customers – the point at which the number of staff will deliver the greatest return without a corresponding increase in wages. Its ‘magic number’ is 1:20 – one member of staff for every 20 customers in the store per hour. Adding more staff will increase the conversion rate and items per transaction but not enough to offset the marginal wage costs. Conversely, when the ratio exceeds 1: 20, customer service becomes stressed and KPI performance tumbles. If adidas sees a decline in the conversion rate at a time when staffing levels are within the optimal ratio, it can probe more deeply to find the cause – are non-selling tasks, such as restocking, keeping staff away from customers?
Ross stresses, “While one of the group’s guiding principles is to consistently deliver outstanding financial results, another is to be customer-focused and match or exceed consumer expectations. What this means at store level is we encourage sales achievement but without being seen as pushy by the customer. Selling, done properly, is never about hassling customers but providing good service.”
adidas has found the Experian FootFall system invaluable in other ways. In 2008 the innovative Pitt Street store challenged the convention of displaying stock by adidas’s internal classification, which resulted in men’s and women’s clothing being mixed together. Instead, it wanted to devote the ground floor solely to women’s apparel and the upstairs to men’s, which it believed was a more customer-oriented approach. It tested the impact of the move by measuring KPIs immediately before and after the switch. These showed the changes met with customers’ approval and all adidas stores in the region subsequently adopted the revolutionary new layout.
Unrivalled Accuracy in Store Analytics
Ross Harris and the rest of the adidas senior management team take comfort in the knowledge that they can rely on the accuracy of the reports they receive. The raw data on which Experian FootFall reports are based is checked for accuracy and consistency by expert auditors who are trained to spot any anomalies quickly – for instance, undercounting, overcounting or communications problems – so any glitches can be corrected, saving adidas from days or weeks of false readings. Ross Harris says, “Every member of the adidas team, even casual workers, receives bonuses based on store performance against the KPIs. When reports are being used to determine an individual’s remuneration, whether it’s a bonus or salary increase, we want to make doubly sure that the numbers are correct beyond any doubt.”
The Pitt Street trial proved so successful that adidas ensures each new store is fitted with the Experian FootFall system and it is now retrofitting systems to the existing stores. It also plans to extend the system to New Zealand.
Ross Harris says, “This was my first encounter with Experian FootFall but the experience has been really positive and I’ve felt supported all the way. All the people I’ve dealt with to date have been fantastic, taking the time to understand how our business works and what we needed to get out of the system to make it a worthwhile tool.”