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The British retail statistics firm keeps track on the direction of  consumer economy

During a visit to Hong Kong recently, rogue economist and author of Freakonomics  Steven Levitt  explained his theory of applying seldom-used statistics to illustrate a macroeconomic trend, such as finding correlations between traffic patterns and the strength of the economy.

'If people are driving to the countryside at 1pm on a work day, the economy is probably not doing very well,' he said.

A similar practice could net British private technology firm FootFall an up to GBP45million ($618.6million) public listing next year.

Established in 1991 as a technology company selling customer-counting equipment to retailers and shopping malls, the company branched out into developing its own algorithms to add value to statistical data pooled from video cameras installed in more than 600 shopping malls worldwide.

Since 2000, the firm has used its British data as an indicator of regional and national consumer confidence.

The FootFall Index, cited widely in newspapers and used by the Monetary Policy Commission as one metric to decide recommendations on interest-rate changes, has gained popularity thanks to the relative tardiness of official government consumer-spending statistics, which are published after a four-week time-lag.

FootFall's instant access to some of the country's largest shopping malls means the firm's data can be ready at a day's notice.

Gary Whittemore,  FootFall Asia's  general manager,  said the index gave retailers a way of quantifying a downturn or upturn in virtual real time.

For example, in the week of the London terror attacks in July, the national footfall at shopping centres was down 4.3 per cent, but down a whopping 18 per cent in central London.

'If retailers were down 10 per cent in central London, then they were doing pretty well in the circumstances. It's all about benchmarking,' Mr Whittemore said.

For the time being, FootFall's focus in Asia remains on helping individual retailers and shopping malls drive operating efficiency. In Hong Kong, Swire's CityPlaza has more than 200 camera installations, and FootFall also lists Pacific Place and Langham Place as marquee customers.

The principle is relatively simple. Video cameras placed at exits, escalators and other key locations reveal the total number of visitors to a mall, shopper density and traffic flow.

This data is used by operators to determine the rent levels on different floors, or to judge the attractiveness of anchor tenants, such as Lane Crawford and Seibu in Pacific Place.

'Typically, the anchor tenant is offered discounted lease terms because they are regarded as the pull-factor for the shopping mall. So the operator has to quantify how many shoppers are visiting the anchor tenant to justify that discount,' Mr Whittemore said.

But the technology comes into its own when used by individual retailers in conjunction with their point-of-sale data.

'Sometimes retailers mistake a decline in sales with external factors, such as a fall in visitors to the mall, but often the opportunity exists within their store to improve sales. Customers could be coming in but not buying anything, so the problem is staff not converting sales opportunities rather than external factors. But you couldn't reach that conclusion if all you had was point-of-sale data,' Mr Whittemore said.

The technology of counting customers has changed in the past decade, most notably with the addition of thermal cameras to FootFall's hardware armoury. But the main challenge is to develop algorithms that create even more value from the data collected.

Adverse weather conditions, the impact of shopping mall promotions and other one-time events can now be factored in at a macro-mall level and an individual retailer level, providing marketing teams relevant data to plan campaigns and year-on-year footfall comparisons, all available in real time from the FootFall website.

The data can also have an impact beyond business and economics.

In the Pacific City shopping centre in Taipei the technology is used to aid compliance with health and safety regulations on crowding. When the number of visitors reaches a certain level, the mall's management receives SMS messages to alert them  to the need to restrict entry.

Mr Whittemore said the company continued to expand in Asia, with China at the top of the list.

'Very sophisticated shopping mall management exists in Asia, especially Hong Kong and Singapore. It is beginning to come through in China but there are a lot of owner-developers there that are not sophisticated,' he said.

Eye in the sky

Shoppers entering and leaving a shopping mall are tracked by cameras. In the case of multiple entrances, algorithms are used to determine the number of shoppers in the mall at any time.

On the move

More cameras inside the shopping mall near lifts, escalators and outside key stores measure the attractiveness of different floors and shops. This data can be used by mall management to set rental prices and judge the lure of premium tenants.

Fancy footwork

Thermal cameras record the footfall of customers of each shop. When this data is added to checkout data, shop management can calculate the average revenue per visitor to the shop.

Looking good

More complex equipment can track shoppers as they move around each store. The data compiled helps with queue management and measures the impact of displays.

There to serve

FootFall can collect data from all its shopping malls and store in a central server, where algorithms compensate for adverse weather and other conditions to indicate the state of consumer confidence.



FootFall finds traffic niche