What is based on?

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Your crowdedness rating is based on the average crowdedness value of the tiles where your customers stand on.
In build mode you can toggle the crowdedness overlay (see image) to see where your store is crowded.

How to improve?

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You can improve crowdedness by having wider walkways, more options to get around (like placing multiple stairs/elevators instead of 1) or by spreading out your shelves around your store.