What does the Traffic Index of a store actually do?
I know it's supposed to "attract demand" to a store or something, but it's perfectly easy to build stores at just 9 Traffic and get them operating at full capacity.
My guess is that Competition is where it comes into play, when there are multiple companies in the same market. When a market is saturated with Sales Capacity, does the Traffic Index of a store allow it to grab a larger slice of the pie when it comes to the city's demand for a product?
And does this happen on a Per-Store basis, or is it Per Sales-Unit?
In a competitive environment, will I attract more customer traffic with 4 Stores with 1 Sales-Unit each, or 1 Store with 4 Sales Units?
What does Traffic Index actually...DO?
-
Hans_Lemurson
- Level 2 user
- Posts: 41
- Joined: Tue Feb 18, 2014 11:06 pm
-
David
- Community and Marketing Manager at Enlight
- Posts: 9356
- Joined: Sat Jul 03, 2010 1:42 pm
- Has thanked: 17 times
- Been thanked: 48 times
Re: What does Traffic Index actually...DO?
Please read this article for more info: https://www.capitalismlab.com/new-conte ... hancement/
-
Hans_Lemurson
- Level 2 user
- Posts: 41
- Joined: Tue Feb 18, 2014 11:06 pm
Re: What does Traffic Index actually...DO?
It says:
One thing that definitely creates demand is having a superior overall quality. The better it is than your competitors, the faster sales pick up in the store, and the larger the share of the market you can command. Stores with a better "Traffic Index" certainly seem to have their sales rise faster, and can still manage to sell products well even in a competitive market.
In fact, I've even seen high-traffic stores sell products that were well below average in their quality as if they were 10-15 points higher.
This leads me to my Hypothesis: Traffic Index adds extra "Rating Points" to products sold in their store.
This leads either to higher-than-expected sales figures for the city, or perhaps more crucially, can allow a store to charge higher prices for the same product.
My working guess, since the effect isn't ridiculously massive, and Traffic Index seems to go up in multiples of 3, is that "Every 3 points of Traffic Index results in +1 Overall Rating". Of course, there's also the "Retail Demand Bonus", but I think it's probably all gonna add together linearly to have the same effect.
I'll have to see what sorts of equilibria can be achieved when comparing specialty/non-specialty stores, and stores with higher and lower traffic ratings.
The question I'm going to explore first is: How much higher can the prices in a store with 45 Customer Traffic be than a store with 12 Customer Traffic, and still end up with the same sales figures?
What I don't fully understand though is how Demand is determined. Although I do have an idea of what might be going on...Stores located in areas with high customer traffic benefit from greater demands for their products.
One thing that definitely creates demand is having a superior overall quality. The better it is than your competitors, the faster sales pick up in the store, and the larger the share of the market you can command. Stores with a better "Traffic Index" certainly seem to have their sales rise faster, and can still manage to sell products well even in a competitive market.
In fact, I've even seen high-traffic stores sell products that were well below average in their quality as if they were 10-15 points higher.
This leads me to my Hypothesis: Traffic Index adds extra "Rating Points" to products sold in their store.
This leads either to higher-than-expected sales figures for the city, or perhaps more crucially, can allow a store to charge higher prices for the same product.
My working guess, since the effect isn't ridiculously massive, and Traffic Index seems to go up in multiples of 3, is that "Every 3 points of Traffic Index results in +1 Overall Rating". Of course, there's also the "Retail Demand Bonus", but I think it's probably all gonna add together linearly to have the same effect.
I'll have to see what sorts of equilibria can be achieved when comparing specialty/non-specialty stores, and stores with higher and lower traffic ratings.
The question I'm going to explore first is: How much higher can the prices in a store with 45 Customer Traffic be than a store with 12 Customer Traffic, and still end up with the same sales figures?