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GUEST COMMENT The rise of the pop-up: why temporary distribution operations are becoming a permanent fixture

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Pop-ups: nothing new, but set to revamp retail
Pop-ups: nothing new, but set to revamp retail
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Pop-up stores, while temporary, are here to stay: what does that mean for retail?

Joe Farrell, Vice President of International Operations at PFS
Joe Farrell, Vice President of International Operations at PFS

It is safe to say the pop-up phenomenon is changing the retail landscape as we know it – and there is no sign of this slowing down. Over in the US, PopUp Republic estimates that pop-ups generate $50 billion in sales annually. Thanks to affordable short-term leases and advances in technology, the concept of pop-up facilities in retail is presenting brands in the UK with an agile alternative to traditional commerce operations.

 

Advancements in omni-channel shopping, the growth of social media, and the need to breathe fresh life into traditional brick & mortar retail are all contributing factors that have led to the success of the pop-up shop in recent years. Global retailers such as Birchbox, IKEA and Pantone are just some of the brands using pop-up stores – not only to raise brand awareness but to gain valuable feedback from their customers.

 

However, whilst retailers large and small have been embracing the modern pop-up since 1999, the concept of the pop-up distribution centre is still a fairly new one. Temporary fulfilment operations such as these can be rapidly deployed and de-leverage the fixed cost of a year-round distribution centre and as a result are becoming increasingly popular as an alternative fulfilment solution. Here are just a couple of reasons temporary distribution operations are becoming an increasingly permanent fixture in today’s evolving retail landscape…

 

A flexible approach to distribution

With service level expectations only getting harder and harder to meet – having a flexible approach to order fulfilment is crucial. Not only do today’s consumers expect an entirely seamless order experience, but they want it quick and at the best value possible. For the majority of consumers, next day delivery is a standard requirement and retailers who can’t keep up with this risk losing out to the competition.

 

Due to their flexible nature, non-traditional fulfilment methods such as pop-up distribution centres and space-on-demand warehousing could provide a flexible and cost-effective solution to this. Pop-up distribution centres can be deployed anywhere across the globe and help online retailers get their products closer to the customer. The effective positioning of a distribution centre is crucial for enabling not only faster but cheaper delivery and providing a seamless customer experience. Current ambiguity over the effect Brexit will have on cross-border trading, means that it is more important than ever for brands to be agile and able to respond quickly to the growing needs of today’s consumer.

 

Pop-up and decentralised distribution centres enable retailers to remain flexible and agile in the face of this uncertainty, especially for retailers who don’t want to commit to moving their inventories overseas permanently if they don’t have to.

 

From scale-up to pop-up

Alternative fulfilment technologies can also be extremely effective when scaling up. Thanks to advances in technology and a rise in social commerce, today’s brands can trade with little more than an Instagram page. Whilst social media can offer brands an easy and quick way of reaching their customers, it is also transforming current expectations in relation to delivery. If customers can order products at a click of a ‘Buy Now’ button, then they expect the delivery experience to be just as quick and seamless.

 

Pop-up shops in this instance could be the answer for brands who may not have the right infrastructure, ability or expertise in-house to react to customer demand. The flexibility of this solution can also allow growing brands to test the waters in new geographies and approach new audiences without having to commit to a permanent facility, reducing initial capital outlay and representing better value for money.

 

Preparing for peak

Keeping up with peak demand can be extremely challenging for e-tailers big and small. Often brands will find that their current facilities will not support peak volumes and that extra warehousing will be needed. Designing and implementing another permanent facility can be costly and extremely time consuming, requiring highly accurate volume projections in order to be effective. For small to mid-size businesses peak demand can be difficult to predict and often brands will find themselves with very little time to react. Pop-up distribution centres take little time to implement and at a low cost can be tested during off-peak periods.

 

Brands preparing for seasonal events such as Christmas, Black Friday and Cyber Monday, can use pop-up distribution as a short-term solution to expanding fulfilment capabilities without making a permeant investment and ensure they are prepared to keep up with peak season trading. They can also be used to support short periods of increased demands around promotional campaigns.

 

Non-traditional fulfilment methods are here to stay

Whilst it could be perceived as a ‘short-term’ or ‘temporary’ solution to online order fulfilment, the pop-up distribution centre is a very necessary tool for the multitude of businesses looking to compete in the current volatile retail landscape. Due to their flexible and low-cost nature, retailers embracing pop-ups will be able to enter new markets without the need for permanent investment and see increased customer retention from being able to serve customers quicker and more accurately, representing strong ROI. Research shows 58% of shoppers didn’t place an order when delivery information was not forthcoming, or the timeframe was too long.

 

For retailers of today, it is no longer enough to simply meet customer fulfilment expectations. The implementation of non-traditional fulfilment methods, underpinned by technology, will be key to success in today’s fast-paced and competitive retail landscape. By bridging the gap between online and offline marketplaces and allowing brands to remain agile, retailers can provide their customers with a completely seamless order experience. Ultimately, being able to reach customers quickly and efficiently will be key to successful growth in the retail sector.

 

Author

Joe Farrell is Vice President of International Operations at PFS

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