---
title: "The Biggest Danger for Retail Stores Today: Declining Customer Traffic"
description: "The biggest problem facing retail enterprises today is the decline in customer traffic, which is the root cause of all other issues. Data shows that hypermarket traffic has dropped over 40% compared to normal years, and Japanese convenience stores have seen five consecutive years of slowing growth, with negative growth in the last twelve months. This trend is dangerous as it indicates consumers are leaving, and it requires a fundamental shift from product-centric to consumer-centric retail models."
author: "鲍跃忠"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2017-04-12"
language: "en"
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---

# The Biggest Danger for Retail Stores Today: Declining Customer Traffic

> The biggest problem facing retail enterprises today is the decline in customer traffic, which is the root cause of all other issues. Data shows that hypermarket traffic has dropped over 40% compared to normal years, and Japanese convenience stores have seen five consecutive years of slowing growth, with negative growth in the last twelve months. This trend is dangerous as it indicates consumers are leaving, and it requires a fundamental shift from product-centric to consumer-centric retail models.

What is the biggest problem facing retail enterprises today? What is the most fundamental issue? In my view, it is the decline in customer traffic. This is the primary source of all problems.

Data shows that hypermarket traffic has dropped over 40% compared to normal years. According to data from the Japan Franchise Association, convenience stores including 7-Eleven and FamilyMart have seen five consecutive years of slowing traffic growth, with negative growth in the most recent twelve months.

The continuous decline in customer traffic is very dangerous, indicating that consumers are turning away from you. **It must be clear: Sales = Customer Traffic × Average Transaction Value.** The sustained decline in traffic not only severely impacts current performance but, more critically, will pose even more serious problems for the survival and development of the retail industry. If the issue of declining traffic is not resolved quickly, it will be very troublesome for retail stores.

Moreover, this decline has persisted for some time and continues to trend downward.

In response, many companies attribute the cause to external factors such as e-commerce diversion and industry competition. Some still use traditional approaches to identify reasons, such as product issues or service problems.

All problems can lead to declining traffic. However, in the context of a widespread decline across the industry and multiple formats, **we need to calmly consider: What exactly is causing the decline in customer traffic?**

**Changes in Consumers:**

**Analysis shows that the main reason for the sustained decline in traffic is changes in consumers.** Most importantly, the post-80s, post-90s, and post-00s generations, who have become the main consumer groups, have seen significant changes in their consumption concepts, methods, and priorities. These main consumer groups number as many as 500 million. Whether it is a greater emphasis on quality over price, a preference for personalization and fashion, a focus on health, sports, culture, and entertainment, or a preference for staying at home, instant gratification, and fragmented consumption, their consumption patterns have undergone major changes.

In short, their consumption has changed significantly. Currently, descriptions of consumption changes are relatively abstract. Nevertheless, we must recognize the changes in these main consumer groups.

Overall, this round of consumption changes is very complex. It is difficult to analyze and grasp these changes using previous methods, and it is hard to directly link the changed consumption demands to specific product categories. This is because the changes may not only be in products but also in new consumption demands derived from changed consumption concepts.

However, from the perspective of retail operations, there has not yet been a real shift to analyzing and researching consumers. Whether in retail formats, product assortments, or marketing strategies, they still follow previous thinking, techniques, and methods. There is a severe lack of attention to the changed main consumer groups, still adhering to a self-centered and product-centered philosophy.

**Problems in the FMCG Industry:**

Retail is the end link in the FMCG industry chain. But because it directly faces consumers, it perceives consumer changes most quickly, sensitively, and directly. However, **the problems in retail are not solely within retail itself; its transformation requires the coordinated action of manufacturers and channels across the entire chain.** In the face of this round of change, we must consider the transformation of the entire FMCG industry chain under the current consumption environment and the new internet environment.

Currently, the entire FMCG industry, including brand manufacturers and channel distributors, is experiencing severe problems of market shrinkage and declining brand penetration. The whole FMCG industry, from manufacturers and channels to retail terminals, is facing problems, including a sharp slowdown in online retail growth. They are all facing the same issues.

International and domestic FMCG giants including Nestlé, Coca-Cola, P&G, Wahaha, Tsingtao Brewery, Master Kong, and Uni-President have all encountered serious problems. With the same markets, same products, same sales teams, and same customers, their sales performance has plummeted, with some companies seeing declines of 30-40%.

Clearly, in the face of changing consumption patterns, FMCG manufacturers have lagged in transformation. In the harsh market environment, most manufacturers are now facing systematic transformation of products, channels, and terminal models.

In the future, FMCG will inevitably undergo a model reconstruction based on the reconstruction of consumer relationships and terminal models.

But currently, most manufacturers have not yet found the direction of change. A considerable number still lack awareness of the severe situation, and many are still immersed in past eras, waiting for the situation to improve.

**Problems in the Retail Business Model:**

This round of retail crisis, mainly manifested by a sharp decline in customer traffic, fully exposes serious problems in the retail business model.

The traditional retail business model is merely a simple buying and selling relationship with customers. The relationship between retail enterprises and consumers is very loose. According to Nielsen data, the retail industry has the highest customer loss rate, followed by the banking industry.

Currently, this simple retail business model is no longer suitable for the current business society, the social relationships under the internet environment, the consumption changes under the internet environment, or the new consumption concepts, methods, and demands of the new main consumer groups. It can no longer strongly stimulate new main consumers.

Therefore, the current retail transformation requires in-depth research on consumption changes and the reconstruction of new retail models based on the new social environment. Retail transformation requires a change in the essence of retail.

**Problems Existing in Retail Enterprises:**

Indeed, many retail enterprises still have fundamental problems, such as store planning, fresh food operations, product assortment, display, promotion, and operational efficiency. These problems are indeed key factors affecting store performance. But we cannot continue to focus on these issues to the extent that it seriously affects the analysis of the current key problems.

Currently, homogenized competition in retail is indeed a very serious problem. "A thousand stores with the same face" and "a thousand stores with the same products" have lost their appeal to consumers, let alone satisfying the new consumption changes of the main consumer groups.

What is even more frightening is that some companies are closing stores while continuing to open such stores. Isn't the continuous wave of store closures a strong enough market signal? Isn't the year-on-year decline in customer traffic seen by managers strong enough? Isn't the change in customer structure observed daily in stores, with the reduction of young main consumer groups, strong enough? Are they still hoping to regain their former glory one day?

**We must be highly清醒: the consumers we serve have undergone profound and significant changes; the core elements of retail enterprise operations have completely shifted from the product side to the consumer side.** In a sense, this is the change in the essence of retail.

In this severe situation, some companies have tried to reverse the passive situation by increasing promotional efforts, following previous thinking, but with little effect.

More companies have tried to change their passive situation through product adjustments. For example, department stores have tried to attract customers with product and brand adjustments, using product stickiness; hypermarkets have tried to strengthen fresh food operations to retain customers, but with little effect.

Some companies have tried store renovations and upgrades, developing premium supermarkets, but with little effect.

For a while, discussions about community supermarkets and small formats were very lively, with many focusing on the fresh food orientation of community supermarkets. From a comprehensive analysis, this is still based on traditional thinking about retail transformation, completely detached from an accurate grasp of current and future consumption changes, and completely detached from in-depth analysis and research on future retail transformation.

Community supermarkets, small formats, and fresh food orientation of community supermarkets are definitely not the direction of future retail transformation. They will face the same fate as current retail formats. The decline in customer traffic at Japanese convenience stores represented by 7-Eleven has fully proven this trend.

Retail transformation requires deep-level and systematic change. The core of the change is to alter the essence of retail: from product-centric to consumer-centric; from operating products to operating customers; in the future, department stores, hypermarkets, supermarkets, and convenience stores divided by format will no longer exist.

**Source: Lianshang.com News**

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