Foundations: Traffic Only Goes Up

I frequently refer to the “Traffic Only Goes Up” era of retail, abbreviated TOGU. So I thought I would put together a post explaining exactly what that means.

If you are a long time reader, you may recognize this post. It has been modified and republished from my old Substack newsletter. But I mention it so frequently that I thought it was worth re-publishing here.

The Recent History Of Retail Traffic

From 1985 or so through the great recession in 2008, retail foot traffic only went up. Traffic started to fall off after the great recession, especially in malls, but it would be several years until the declines rendered the average retail store P&L unprofitable.

From around 2010 through 2018, organic or low-cost internet traffic only went up. In the beginning, this was due to an acceleration of people adopting online shopping, getting connected to the internet, buying mobile phones and generally spending time online.

Then the low-cost traffic bonanza was supported by social networks like Facebook giving away underpriced impressions to drive both user acquisition and publisher adoption. Several media companies rapidly rose and fell on this wave.

If you’re fortunate enough to look through the web analytics history of an eCommerce store operating from the early-to-mid 2010’s through today, you’ll see the volume and number of organic referrals taper off year after year. If the brand failed to invest aggressively in SEO, you’ll see organic search taper off too.

Why Retailers Struggle: Trash Bear Theory

When Traffic Only Goes Up, your job as a retailer is to plant yourself in the middle of that traffic and optimize your assortment to capture as much of the traffic stream as possible.

The glory of exploiting mid-90’s mall anchor traffic arbitrage.

You are a bear searching for a good spot near the river so you can pluck spawning salmon out of the water. Most of today’s Fortune 500 retail executive candidates have spent their entire careers as this bear.

In the post-TOGU era, the river has become a babbling brook and many salmon have opted out spawning in favor of scrolling through Instagram. So the bear needs to make a major behavioral adaptation or it will die.

Sad bear needs to eat!

To put it more plainly, a retailer must now generate their own traffic to survive. This requires a completely new set of core competencies that are alien to the way most retailers operate.

Trash bear knows how to make his own luck (traffic).

When traffic is cheap and plentiful, a retailer differentiates itself via its merchandising strategy and supply chain wizardry. This is why “merchant princes” have dominated the executive suites of major retailers for the past few decades.

When traffic is hard to get, merchandising is still very important. But without a strategy to consistently bring in traffic there is no one to buy the merchandise. In today’s retail and media environment, traffic = attention. Standing out requires a mix of technical marketing chops, creativity, storytelling and, yes, merchandising.

Traditional retailers struggle because they have been slow to adapt to this reality. Merchants and planners in executive roles continue to assume that traffic “just happens”. And many marketing leaders continue to view their goal as “driving traffic”, without much understanding of how the audience relates to the assortment.