Capture Rate – what is it?
The issue raised most frequently by our retail clients is whether sales in their brick–and–mortar stores are as good as they could be.
Valuable insights can be gained from tracking store sales against market performance. That’s why data from MRI OnLocation’s UK footfall data has
been so widely adopted by the industry, media, academia and the government. With a correlation of 78% between store sales and footfall in UK retail destinations, there is no denying that footfall is a key contributor to store success.
Of course, having accurate data on footfall from the street into the store is also critical. This data makes it possible to calculate conversion, which is a key performance metric. However, what’s lacking here is context: the success of the store relative to its location. Is the store capturing as much trade as it could be in that town or shopping centre, or is it underperforming? The answer lies in identifying the store’s Capture Rate.
A store’s Capture Rate is the percentage of footfall in the street or mall that enters a store and represents that store’s market share in a location. Capture Rate establishes how a store is faring relative to its location and whether it’s maximising its trading potential in that location. Ideally, a store’s Capture Rate should be increasing – it’s growing its market share, which of course is the lifeblood of any business.
The Capture Rate is crucial from two perspectives. First, the rate itself is a very telling measure of an individual store’s success. Second, the trend in a store’s Capture Rate over time indicates whether its performance is improving, staying stable or diminishing.
Turning first to the Capture Rate itself, Capture Rates reflect a combination of three factors: breadth of offer, brand strength and competition. The influence of each factor varies across different types of retailers. Stores with the greatest breadth of offer and brand strength with the lowest amount of competition will have the highest Capture Rates.
The interplay of these three factors is shown clearly in the difference in Capture Rates between retailer categories. Department stores, with the greatest breadth of offer and brand strength and lowest level of competition, have the highest Capture Rate of any of the 10 retailer categories. Services, Health & Beauty and Electrical & Mobile Phones – of which there many competing brands with a narrow offer – have the lowest Capture Rate.
Capture Rates also vary between stores within a network, depending on the extent of competition within different locations as footfall can be spread across a larger number of stores due to the wider available choice. Stores in locations with more competition – typically those with higher footfall – will generally have lower Capture Rates than stores in locations with less competition. But inevitably there will be outliers – stores that have lower than expected Capture Rates. Identifying these stores provides opportunities to uplift the performance of individual stores and therefore the network as a whole.
The second crucial perspective – the trend in a store’s Capture Rate over time – identifies whether a store is maximising its potential or underperforming. A store should aim for its Capture Rate to be at least stable, but preferably increasing, over time. When a store’s Capture Rate is declining, it indicates that customer numbers in store are either dropping by more than in the location, or customer numbers in store are not increasing at the same rate as external footfall. Under either scenario, the store is losing market share and its performance is diminishing.
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