Despite the rise in e-commerce in recent years, brick-and-mortar stores remain the main sales channel for the vast majority of goods and services purchased in the United States. As a result, foot traffic analytics – which reveal how consumers behave in these brick-and-mortar retail outlets – can provide critical insights into current consumer preferences. And businesses trying to sell products to consumers – and especially CPG companies that don’t operate their own retail outlets – can leverage third-party location intelligence data on in-store consumer behavior to improve their operations. By diving into consumer characteristics and habits on a store, chain, or regional level, retail stakeholders can gain a better understanding of consumer trends and segments and stay ahead of the competition.
And in today’s rapidly changing retail landscape, staying up-to-date with in-store shopping habits is critical. Companies that know which consumer segments are shopping at which chains, when and how often shoppers visit stores, and how these patterns are evolving can stay ahead and thrive despite a challenging economic climate.
This white paper leverages location analytics to analyze changes in consumer behaviors and demographics across multiple industries and offers insights that can help retailers and CPG companies better cater to today’s brick-and-mortar visitors.
Inflation and wider economic concerns have dominated headlines from mid-2022 into 2023. The increase in prices shifted consumer spending and behaviors, with some shoppers choosing to trade down from their usual brands and switch to lower-cost alternatives. Comparing the demographic or psychographic attributes of the population in a given chain’s potential and captured market can reveal which audience segments are favoring which types of retailers. A chain's potential market consists of the areas where visitors to the chain’s venues reside, weighted according to the population size of each census block group of the trade areas.
The chain’s captured market consists of the areas where visitors to the chain’s venues reside, but weighted according to the actual visit share to the POI from each census block. In other words, a chain’s potential market includes the population that lives in the chain’s trade areas, while the captured market reveals the demographic and psychographic characteristics of the population that visits the chain in practice. Digging into the captured and potential market for two major chains, Target and Ulta, reveals which audience segments are particularly drawn to these brands.
Target has been a retail darling over the past few years, displaying a marked resilience in the face of economic headwinds, and an analysis of its trade area suggests the company’s stores are still attracting a coveted visitor segment.
Comparing Target’s potential market to its captured market reveals that the company is attracting a larger-than-expected rate of higher-income households. Data from STI: Popstats indicates that, while 17.8% of Target's potential market includes households earning over $150,000 a year, that number rises to 19.6% within its captured market. The higher income among Target’s captured market visits highlight Target's ability to attract financially comfortable consumers – which may be giving the company a leg up during the current inflation-induced retail downturn.
The data also sheds light on the shopping preferences of financially stable individuals, suggesting that they recognize the value offered by mid-range retailers like Target. Retailers, CPG managers, and even dining industry stakeholders can use this information to tailor their product offerings and market their budget-friendly options to a higher-income customer segment.
Ulta has established itself as a beauty powerhouse, and the brand’s positive foot traffic trends consistently defy the odds in a challenging economic environment. The company has long been a leader in selecting products that resonate with its wide customer base, opting to house mass and prestige brands under one roof. Similarly to Target, Ulta appears to be successfully catering to all income brackets – and the brand seems particularly strong among high-income shoppers. The share of households with a median annual HHI of $150K is larger in Ulta’s captured market than its potential market visits. But these results vary across states. New Jersey Ulta stores seem to have a significantly larger share of high-income households in their captured market relative to their potential market. Meanwhile, the captured and potential trade areas of Illinois and California Ulta stores seem to show less variance. Understanding where affluent consumers are shopping in more affordable stores can help brands gear their product selections and marketing strategies accordingly to reach this desired cohort.
In a period marked by economic uncertainty, understanding which audience segments remain willing to spend – and which are looking to cut back – can be crucial for consumer-facing companies. Target and Ulta trade area data indicates that it is possible to appeal to affluent shoppers while catering to a wide range of customers and remain relevant in a changing marketplace.
The past three years have upended how people approach their professional life. But while the early pandemic days saw many employees switching to a full-time remote model, hybrid work now appears to reign supreme, with 58.0% of employees reporting that they now enjoy a flexible work model. Office foot traffic has stood at about 60.0% of pre-pandemic levels since the second half of 2022, indicating that many workers are now back in the office several times a week – which, in turn, is having an impact on retail behavior.
The partial return to office has had a noticeable impact on consumer retail habits, particularly in terms of the shifting visitation patterns to stores. CVS, a pharmacy chain, has felt the effect of this shift in behavior on hourly visitation patterns.
The share of CVS visits between 6 PM and 9 PM increased from 16.5% in Q1 2021 – when many employees were still working fully remote and enjoying flexible schedules – to 19.9% in Q1 2023. During the same period, the share of visitors going to a CVS from their workplace increased by 3.9 percentage points, and the share of visitors returning home following a CVS visit increased by 5.5 percentage points. This data suggests a return to normal shopping routines, with people making stops at CVS on their way home from work, aligning with the partial return to the office.
Stores, CPG companies, and retail real estate professionals can take note of this shift in visitation patterns to adapt their offerings to the current needs of consumers.
The changing visitation patterns are not limited to chains located primarily in urban and suburban areas. Dollar General, a retail chain with a significant presence in rural areas, is also seeing a surge in evening visits as consumers in less densely populated regions also move closer to their pre-pandemic routines.
Understanding these shifts in consumer behavior can help companies optimize their marketing and in-store product selection. For instance, Dollar General already appears to be responding to the increase in evening visits – the company recently started offering more fresh food options at its stores and is marketing these products by publishing dinner recipes on its website. CPG companies can also leverage the change in visitation patterns to focus their in-store marketing and product placement efforts.
Dining has been a closely-watched category within an ever-changing inflationary landscape. While some dining segments have struggled, others are finding success. Take buffet restaurants, for example. Visits to these bang-for-your-buck eateries have grown over the past few years – but digging into visitor demographics reveals that the increase is mostly coming from non-family households. Meanwhile, two leading full-service restaurant (FSR) chains – Texas Roadhouse and Olive Garden – appear to be particularly attractive to family households.
Texas Roadhouse, the wildly popular chain, has had a great few years, and its success shows no signs of slowing. The restaurant creates a welcoming atmosphere for families, playing loud music to spare diners the sounds of boisterous kids and offering special menu items that cater to children.
This commitment to creating a family-friendly space seems to have paid off – the chain’s captured market across multiple states includes a higher rate of family households than its potential market. Dining concepts that want to identify family-friendly strategies may want to take a page out of Texas Roadhouse’s playbook.
Similarly, Olive Garden’s captured market also includes a larger share of family households than the chain’s potential market. And, like Texas Roadhouse, Olive Garden also seems to be making an active effort to cultivate a family-friendly – and couple-friendly – atmosphere with record-breaking Valentine’s Day visits in February 2023 and a wide children’s menu.
With inflation straining budgets and many families looking to cut down on food costs, some dining concepts are still finding ways to attract this segment by creating a family-friendly atmosphere.
The grocery sector has been particularly volatile in recent years. After experiencing a massive foot traffic increase over the pandemic, visits fell as rising food prices led consumers to cut down on grocery non-essentials. More recently, however, the return of mission-driven in-store behavior seems to be reflecting shoppers’ desire to increase their grocery shopping efficiency and make the most out of each grocery store visit.
Layering data from the AGS: Behaviors & Attitudes dataset on top of Placer.ai’s visitation data also seems to point towards a shift in more efficient grocery shopping. For example, Hannaford, a Northeastern-based supermarket chain, has seen its average dwell time fall in recent years – but the chain also includes more "Grocery List Keepers" within its captured market.
So even though the Hannaford shoppers do not exhibit the classic mission-driven shopping behavior, visitors to the chain still seem to favor a more efficient grocery shopping experience. And with grocery prices continuing to cut into budgets, it’s unsurprising that more visits are coming from those looking for ways to save money.
Identifying shifts in consumer cross-shopping patterns can also provide insights into current retail trends.
Over the past three years, for example, an increasing share of quarterly visitors to Aldi – the discount grocer known for its no-frills approach and competitive prices – also visited discount stores in the analyzed quarter. In Q1 2021, 37.3% of Aldi shoppers also visited a Dollar Tree, a figure that grew to 40.6% by Q1 2023. Similar patterns repeated at Dollar Tree and Five Below.
This trend likely reflects the growing dominance of discount and dollar stores and highlights Aldi shoppers' heightened price consciousness. The increase in cross-shopping also indicates that even retailers known for their budget-friendly prices are operating in an increasingly crowded discount space. Retailers and CPG companies that can cater to consumers’ current value orientation are likely to stay one step ahead of the competition.
Although recent macroeconomic changes and wider societal and technological innovations have led to shifts in shopping behavior, brick-and-mortar locations remain the primary channel for consumer purchases in the United States. This means that retailers, CPG companies, and commercial real estate professionals that leverage up-to-date and in-depth insights on in-store habits can tailor their strategies to best service today’s customers.
In the wake of inflationary pressures, Target and Ulta both saw a higher likelihood of visits from wealthier households. The trend of higher-income shoppers visiting mid-range stores presents an opportunity for retailers to tailor their offerings to attract financially comfortable consumers.
As work schedules settle into a more predictable hybrid model, more shoppers are stopping at stores like CVS or Dollar General on their way home. Companies that take note of this shift can take care to gear their advertisement and product selection to better cater to these shoppers.
Texas Roadhouse and Olive Garden, two of the most popular FSR chains in the country, both saw a higher share of visits from family households from their captured market. The two chains offer a child-friendly experience, and brands who wish to attract that segment can learn from their success.
Hannaford and Aldi saw their customers showing signs of bargain-seeking, an opportunity for retailers and CPG brands to offer discounts that will attract value-conscious shoppers.