Retailers are having a foot traffic problem

Just as department stores were aiming to get back on their feet this holiday season, shoppers walked in the other direction.

Driving the news: Net sales rose in 2021 compared to pre-pandemic levels, but department store chains can't yet claim full recovery: Foot traffic has fallen sharply.

Why it matters: Investors are paying more attention to foot traffic, especially because a number of department stores are splitting off the e-commerce businesses that are now fetching higher valuations.

• "The holy grail in retail investing is the retailer with positive [foot] traffic," Ryan Cotton, Bain Capital's global head of consumer and retail, tells Axios.

By the numbers: Traffic for all apparel stores is down 5% for the year (as of Dec. 6) compared to 2019, according to data provided to Axios by Placer.ai.

• In the month of November, apparel suffered a 9.4% decline in foot traffic versus November 2019.
• Traffic at Macy's and Kohl's, both of which are being targeted by activist investors, was down 19.1% and 12.6%, respectively, from January through November.
• JCPenney and Belk saw foot traffic at their chains drop by 28.1% and 21.9%, respectively, over the same period.

On the flip side: Saks Fifth Avenue saw traffic actually grow 6.2% in 2021 from 2019.

State of play: November marked a significant setback in retailers' push to bring more people in the door. Much of this was due to the receding role of Black Friday in shoppers' lives — and retailers like Walmart opting to close on Thanksgiving Day, Ethan Chernofsky, VP of marketing at Placer.ai, tells Axios.

The big picture: Declining foot traffic is the persistent retail trend, Cotton says.

• "The traditional mall stands as one of the starkest examples of this phenomenon — the place we all couldn’t wait to go in our teens is now the place we all work to avoid," he adds.

The bottom line: With price increases skewing year-over-year sales comparisons, foot traffic may become a better barometer for measuring retailers' health and determining valuations.

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