Consider This Before You Get Physical

pop op shop melody townsend, active creatures online retail
By: Melody Townsend | Director of Active Creatures

Last week I read a jaw-dropping statistic. That being that over the last two financial years, over 2,100 retail businesses closed their doors or went into administration. 2,100. It’s a significant number and I was troubled by it over the weekend.

Reasons were offered as to why bricks and mortar retailers, of all sizes and life stages, battle for survival, yet what struck me was that the reasons being offered remain very much ‘channel agnostic’. Every brand needs to be relevant to their customers, every business needs to perfect the art of strategic planning and timely execution, and every organisation, irrespective of size, must equip itself with the technology it needs to provide a seamless user experience.

 

Why then is the challenge seemingly so great?

As online businesses are we more like alley cats, able to flex and react at speed when interventions are required, to ensure prosperous nine-life innings. I think that we have developed some sharp street smarts, no doubt about it. But sometimes, some of us are seduced to the dark side.

It’s the side that says, “Online is great. But it’s only 7.1% of the traditional bricks and mortar retail sector, so why not jump over the fence and try your hand at running a physical store?”

And here’s what happens next… Online businesses, with a clear brand proposition, a focused sales and marketing strategy, and underpinning processes and systems to deliver a sound online experience, go out in search of a pop up store.

The rationale often being, a pop up shop is a terrific foray into retail. “If my pop up store goes well, then I know that I can successfully transition into a fully-fledged retail store.” But sometimes, it’s a misguided, misdirected deviation from the business strategy.

I maintain that in most cases, online businesses attempt a pop up store without two essential elements:

  • Enough capital to create a retail experience that is reflective of their brand proposition; and
  • Clear and measurable business targets and performance indicators that will ultimately determine whether it’s the right time to transition into physical retail.

Most of the time, the appeal of a pop up shop is reduced rent, for a temporary period of time and the promise of foot traffic. Yet what a customer experiences is a pop up shop that’s reminiscent of a stark, half-merchandised room, sometimes with a compromised energy, despite friendly and accommodating store staff.

If you take notice of any new pop ups in your local area, you may observe that after a number of weeks, the discount-led retailing will often commence. Signage that screams 70% off, 10 days to go. It doesn’t present as a sound strategy worthy of investing your future growth in, because it isn’t one.

But it’s not to say that bricks and mortar should be ignored or dismissed. While I am an advocate of omnichannel retailing, I believe there are smarter ways to test the market and grow your retail presence as an e-commerce business, before you step into physical space. I’ve observed a number of online businesses that sell to consumers, start their transition by defining modest wholesale targets, and then seeking out niche retailers who they can learn from and grow with.

Over time, their approach has resulted in increased brand and product recognition amongst customers, while internally enabled them to streamline their processes and invest in the right technology to scale their business.

It’s a smart approach because later, the business has options. Grow wholesale. Raise capital. Open retail stores. Whatever the decision, it’s made from a more strategic and rational lens.

Let’s learn from the 2,100 retail businesses that faced the pain of shutting their doors over the last two years; may we reflect on where it unravelled for them, so that we can future-proof our own businesses in the year ahead.

 

Leave a Reply

Your email address will not be published. Required fields are marked *

PowerRetail Extra Enewsletter