How Foot Traffic Can Reveal Market Trends and Shape Investment Decisions
The ability to predict market trends for trading and investment decisions is a coveted skill. Traditionally, this process has relied on financial reports, surveys, in-depth analysis, and expert opinions. But in 2024, traders and other investment professionals are relying on foot traffic data to make faster, better decisions.
Foot traffic data, collected through smartphones and processed through Unacast’s rigorous cleaning and machine-learning modeling process, reveals the physical movements of people. And as demonstrated in our new report, Can Foot Traffic Predict Business Performance?, foot traffic can be a powerful indicator of revenue and, by extension, market trends.
The Predictive Power of Foot Traffic Data
Unacast analyzed data from various industries, revealing a clear correlation between foot traffic and revenue for businesses that rely heavily on in-person transactions. Hotels, movie theaters, casual restaurants, and car rentals all showed strong connections between increased foot traffic and rising revenue.
This makes sense for these types of businesses, as customer visits translate directly into sales. The more people walk through the door, the more money flows in.
Based on our analysis, traders and investors can utilize foot traffic data as one reliable input into their models for predicting revenue and analyzing trends for many brick-and-mortar businesses.
Data Beyond the Brick-and-Mortar
We also found that foot traffic data can offer valuable insights even for industries with a significant e-commerce presence. For example, computer and consumer electronics stores, despite online sales dominating, still show a relationship between foot traffic and in-person revenue. This indicates that brick-and-mortar stores remain relevant and contribute to overall sales.
This means traders and investment professionals can still use foot traffic as one input in their analyses, even when looking at businesses that have only part of their revenue coming from in-person transactions.
Foot Traffic Use Cases for Traders and Investors
Predicting Future Trends
This ability to forecast is where foot traffic data becomes truly exciting for investors and traders. By monitoring foot traffic patterns, analysts can get an early glimpse into a company's performance, potentially predicting revenue fluctuations before they hit the quarterly reports. This allows for informed trading decisions, giving those with access to the data a potential edge in the market.
Real Estate Applications
Foot traffic data isn't just for stocks. Real estate investors can also benefit from understanding movement patterns. Studying foot traffic trends around specific locations can inform investment decisions, helping identify promising areas for development or potential areas for divestment. Additionally, monitoring traffic changes can provide valuable insights into the health of local economies and predict future trends.
Limitations and Considerations
Of course, no data source is perfect. Limitations include the dependence on accurate location data and the need for a large enough sample size. Additionally, external factors like economic conditions can impact the relationship between foot traffic and revenue.
Therefore, it's crucial to use foot traffic data in conjunction with other information and analysis for the most accurate picture.
The Future of Foot Traffic Insights
The potential of foot traffic data is vast. With its high accuracy and predictive power, foot traffic data can be a valuable tool for businesses, investors, and real estate professionals. As data collection, AI, and machine learning analysis techniques continue to evolve, we can expect even deeper insights and more sophisticated applications in the years to come. Unacast has already built machine learning models to power its foot traffic datasets, and uses generative AI to power its location analytics platform.
In conclusion, using foot traffic data for trading and investment can allow investors to gain a competitive edge. Businesses can make more informed decisions, and real estate professionals can navigate the market with greater confidence. This is the future of data-driven decisions, and the time to start exploring its potential is now. Book a meeting with us to learn more.
