How pop-up stores bridge the gap with physical retail
Pandemic challenges status quo with reduced, disrupted attendance supply chains, and a distant recovery. Retailers with a purely physical presence face greater challenges with customers moving online at an unprecedented pace. The pandemic has transformed a customer’s entire shopping experience.
Ravi Shankar, CEO and Country Director, ALDO Indonesia, discusses how pop-up stores can bridge the gap with physical retail on the occasion of Seamless Asia 2021: The Future of Commerce in Asia.
Problems faced by retailers
With social distancing standards in place, gloves, masks and disinfectants marking entrances everywhere, customers are reluctant to return to stores. Brands and retailers are facing many challenges as a result of the pandemic:
– Restricted / low footfall in physical stores due to foreclosure and change in customer behavior. People are reluctant to go out, which affects footfall in physical stores.
– As companies are not efficient, they are faced with the problem of high operating costs.
– Higher exit cost due to long term rental contracts.
– Unexpected blockages.
– Global brands are also facing delays in the supply chain due to congestion in ports.
– Consumer behavior has changed completely. Their buying habits have also changed because they don’t leave their homes. For example: As people work from home, ALDO’s formal footwear category faces the heat.
– Demand volatility is a major concern for brands and retailers.
– Slow digital penetration and high stock are other issues faced by brands.
Pop-up Stores: the need of the hour
To meet the challenges facing brands and retailers, pop-up stores are the need of the hour.
Touch and feel – Consumers still largely prefer physical stores. Customers buy from online retail sites at an average rate of 2.2 times per month compared to malls, where an average purchase is 4 to 5 times per month. Likewise, the average time spent in a physical store is 54 minutes, but the average time spent on a single retail website is only 38 minutes. The tactile factor in physical stores helps convert consumer spending into a larger basket. Therefore, brick and mortar is still the dominant factor.
Small is the best bet – Department stores have higher operating costs than exclusive outlets or small stores. In many countries, many brands are closing their department stores. So, small stores are better and pop-up stores are the best solution to this problem. People prefer a minimalist lifestyle and sustainability leading to conscious consumption. Pop-up stores are a branded mini showroom where you can sample a bit of the collection, but digital in-store catalogs can be used to order their entire inventory. These pop-up stores can also be used as e-commerce pickup and return centers.
Flexibility – Pop-up stores can be set up per location on demand – per hour / day / week / month / season / year and have a low cost of ownership. This makes it easier to test a new market and launch a new product. And since it is smaller, it is therefore flexible to build an omnichannel business and integrate technologies such as AI and ML, virtual reality, augmented reality, and mobility-ready formats, providing a great brand experience. while promoting the product. Even collaborating with complementary designers and brands becomes easier.
Compelling opportunity – Pop-up stores provide an attractive opportunity for existing brick-and-mortar retailers looking to expand their footprint; digital merchants who want to reach new consumers and product manufacturers who want to explore D2C opportunities; service providers who wish to be exposed directly to potential customers; and marketing agencies who want more visibility for their clients.
How to start a pop-up very effectively
To effectively start a pop-up store, choosing the best location and optimal operating window is of the utmost importance, which will provide a low cost structure, a robust gross margin and a profitable output.
The economics of experiential retail
Retailing isn’t just about selling products, it’s about delivering an experience. Once the customer and product experience is excellent, consumption or response to the product or service will increase dramatically.
Brands are expected to deliver sensational retail entertainment that includes a meaningful experience, an immersive engagement approach, people-to-people connections, and virtual personal shopping.
Different types of pop-up stores
Keeping the pandemic in mind, brands can opt for different types of pop-up stores such as: –
– Pop-up store on wheels offers easy mobility, on-site trial and purchase service, user-friendly locking and overall provides a fantastic on-demand physical shopping experience.
– Pop-up shops behind the wheel are a good option for food retailers to explore.