By Charlie Pool, CEO, Stowga.
The World Cup is up and running. With nations of the world going head to head, retailers will be facing a different competition of their own: their supply chains being able to cope with increased customer demand.
The UK is a nation where people love an excuse to celebrate. When quizzed about their shopping habits during the 2014 World Cup, 35% of respondents said they planned to spend more than £50 on entertaining during the event. Multiply this by the number of people with an interest in football, and you can start to make sense of the sharp spike in sales the day before this year's FA Cup final, with hundreds of thousands more customer than usual and grocers taking £415 million over 24 hours.
This desire to spend and join in on the festivities during national and global events is great for revenue, but naturally adds pressure on a retailers' logistics infrastructure. With these events lasting days or even weeks, retailers can find it difficult to deal with sharp peaks in demand over such short periods of time.
A sharp spike in spend
Predictions for the 2014 World Cup suggested that if England had made it to the final, then fans would have spent more than £2.5 billion on souvenirs, sportswear, new televisions or celebrating at home or in the pub. That's about 50% more than if England makes it through the second round.
For the 2018 World Cup, although hopes aren't too high for our national team, the bookies haven't completely ruled out England's chances of reaching the final. Hence, if a miracle does happen and we do make it to the final, retailers could find themselves with a surge in demand they need to plan for.
And with customers expectations set to same or next day delivery, retailers who sell the desired items like sportswear, flags and even new TVs could find themselves with a very sharp increase in orders which need to be delivered quickly. This puts strain on the supply chain, particularly if these orders are being placed from all over the country. That new TV isn't much use if it gets delivered after the final football match!
So is there a way for retailers to accommodate these short, sharp, predictable surges of demand, while still being able to deliver on time and keep their fans happy?
Cue on-demand warehousing. This new solution to an old problem offers the fix that most retailers will need to manage these peaks in demand by allowing them to secure short term and flexible warehousing space. By using historical data from previous big events like the Euros, Royal Wedding and past World Cups, retailers can estimate their overspill needs and easily book the space required via industrial warehousing marketplaces.
On-demand warehousing also allows retailers to capitalise on their warehouse space by letting the unused space to other companies for the time that they need it, whether it's three weeks or three months.
The current lease model for warehouses doesn't allow retailers to flexibility manage their space throughout the year, especially during short term events like the World Cup where demand might only peak for a few weeks. Leases are generally longer than five years in tenor and represent large investments for retailers. Using an on-demand model, retailers can find warehouse space with a few clicks using a specialist database. A warehouse can be found within a few hours and inventory can be moved in within a matter of days in some cases. This allows retailers to increase space during unexpected peaks in demand and decrease it as demand falls, without having to take on a new lease nor the liability that comes with it.
On-demand warehousing could be the key for retailers wanting to score big this summer. Whether it's the World Cup or Wimbledon, we're likely to see in a peak in demand which logistics operations need to accommodate. This model enables retailers to better manage uncertainty while reducing costs. And obviously, fingers crossed, we make it to the final.