10/06/2015

Pop-up Stores Popping Up for the Holiday Season

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pumpkins

The pop-up store concept has grown in popularity in recent years as short term real estate arrangements have experienced exceptional growth1. A pop-up location is considered a shop or event that opens for a temporary amount of time. Temporary real estate has continued to grow at a rate of 16% year over year as companies experiment using these locations for various endeavors. Businesses can benefit by signing short-term leases when opening in new markets. Consumers also benefit from these locations by gaining a more unique experience. Although these locations are only open for a brief period of time, these operations take a lot of planning to execute a successfully.

Test New Market Opportunity with Pop-Ups

Pop-up locations offer a variety of opportunities for businesses. Launching a pop-up location can be about 80% less expensive than launching a typical location2. Some utilize this temporary location to test a new geographic market before establishing a long-term lease. Others choose to use these locations to launch a new product and gain insight on its performance before considering other opportunities that could involve more substantial risk and significant investment.

Tis the Season

About 61% of shoppers have listed seasonal products as the main reason they shop in pop-up locations3. These locations help businesses broaden their market, increase flexibility, and promote more sales. Halloween and Christmas are among the most popular seasons for pop-up retailers. Christmas displays are out earlier this year than ever before. Traces of Christmas décor have already begun to line store aisles. These pop-up retailers offer additional ways to sell inventory and also gives consumers a sense of urgency knowing that these products won’t be available in that area for long.

Supply Chain Planning for Pop-Ups

Businesses prepare for their holiday pop-up shops month in advance. Popular pop-up stores begin their preparation up to eighteen months before the location opens for business. Depending on the size of the store, planning should begin no later than three months in advance. Once locations for the stores are found and negotiated, they begin planning out their distribution center locations and filling these locations. Many of these seasonal pop-up locations make its entire annual revenue in the three months its stores are open. Therefore, it’s important to have a strategy and the right supply chain partner when it comes to moving inventory throughout the entirety of the operation.

Delivering Success

Having an in-depth logistics plan makes for a successful pop-up location. Months of planning goes into ensuring that inventory flows through the locations. So how do these stores pull it off? While they are choosing their retail location, they are also choosing their distribution center (DC) locations. These DC locations are critical to ensure that timing remains a priority. Some pop-up retailers will have a main DC and then have additional regional DCs based on store locations. In the beginning phase of the season, the regional DCs will support the store, but towards the end of the season the main DC will ship directly to stores to move any remaining inventory. The stores base their inventory on demand. Sales will dictate when they receive shipments; therefore, companies also need to have transportation operations readily available.

Pop-up locations are expected to continue to grow. As consumers take advantage of accessible inventory, businesses will be taking advantage of accessible space. Regardless of the location or timing, strategizing logistics will be crucial to success.

Sources

  1. http://fortune.com/2014/05/20/5-ways-companies-can-leverage-pop-up-stores/
  2. http://www.retailtouchpoints.com/features/special-reports/pop-up-stores-become-more-than-just-a-trend
  3. http://www.retailtouchpoints.com/features/special-reports/pop-up-stores-become-more-than-just-a-trend