Introduction
Many companies are shifting their operations online, reaching broader audiences and improving efficiency and profits through enhanced brand recognition. Iuiga is a new online store with its base in Singapore. Iuiga focuses on initiatives to maximize consumer value by providing a carefully curated selection of premium goods in the “home and living” area at reasonable costs (Iuiga, n.d.). In contrast to other e-commerce sites, the newly formed company handled storage, transportation, distribution, and marketing in addition to selling its own products (Chandukala et al., 2020).
The start-up purchases identical goods from China-based original design suppliers, which are manufactured for well-known international brands. It sells the goods through its online store and mobile app under its unique brand (Chandukala et al., 2020). However, the main issue with Iuiga is the viability of the omnichannel approach. However, improving online sales and focusing on management, inventory systems, and merchandising strategies can help improve the situation.
Background
At first, Iuiga did not experience major setbacks, but it operated successfully. Despite a strong beginning in May 2017, Iuiga’s sales have already reached a plateau eight months later (Chandukala et al., 2020). Jaslyn Chan, Head of Marketing at Iuiga, suggested launching a pop-up store as an advertising vehicle to create increased company visibility and consumer interaction (Chandukala et al., 2020).
Typically, the use of pop-up stores can help mitigate the effects of issues such as poor brand recognition and limited market penetration in highly competitive markets. Although physical retail was unknown ground for the team and needed additional funds to acquire the necessary resources and build experience, it was decided to proceed with the pop-up store (Chandukala et al., 2020). Due to the explosive success, Iuiga pursued a longer-term brick-and-mortar retail strategy. By 2019, it had opened nine locations, which accounted for 80% of its overall sales, and engaged more than 40 salespeople (Chandukala et al., 2020). Thus, the pop-up store initiative initially aimed to boost brand recognition, which led to success.
Issue
Nevertheless, while the initiative was deemed adequate, there were still financial and management issues associated with pop-up stores. On the one hand, Chan believed that establishing conventional retail locations would give Iuiga a more long-term answer for its customer-facing platform (Chandukala et al., 2020). However, more concerns were being raised since it was necessary to look at the short-term positive effects and long-term outcomes.
Similar to the pattern of Iuiga’s online sales, the pop-up store’s sales increase may temporarily stagnate (Chandukala et al., 2020). A company strategy that relied heavily on inventory also carried the danger of running out of money and suffering product loss or damage in the event of low turnover (Chandukala et al., 2020). Still, such concerns expressed by the management and Chan are valid.
Consequently, the company’s financial burdens would lead to seeking investments, debt, or cutting expenses, which would limit growth opportunities. As a result, the main issue is whether being physical had been worthwhile and, more crucially, what it meant for Iuiga’s next retail strategy. It is vital to determine whether the company should continue to broaden its physical reach, how it would affect sales, and whether the idea is sustainable.
Evaluation of the Issue
When evaluating the issue, it is first necessary to point to the overall objective of the new strategy. The goal of the pop-up shop was to engage with Singapore’s broader offline audience as quickly as feasible to provide Iuiga with market penetration (Chandukala et al., 2020). Yet it is plagued with many concerns, starting with the price of renting a real location, recruiting salespeople, marketing, and connecting the retail establishment with its online portal (Chandukala et al., 2020). Indeed, opening a physical store, even a semi-permanent one, would raise Iuiga’s operational expenditures. Thus, Iuiga would have to cut its profit margins to continue offering its lower prices compared to the higher-end brands it used as a benchmark (Chandukala et al., 2020).
Additionally, because the Iuiga team lacks expertise in physical retail, the firm would need to hire other professionals in addition to teaching its current staff (Chandukala et al., 2020). After implementing the initiative, several issues have been recognized, such as lower outlet turnover, negotiating with manufacturers, and managing the inventory. Moreover, customer acquisition was shown to be better in online sign-ups.
Still, it is possible to make the idea of pop-up stores viable since the initiatives have many benefits. The physical location acted as a collecting location and allowed for simple exchange and return by streamlining the procedure and improving user-friendliness (Chandukala et al., 2020). The turnover in two offline stores showed that the second store earned even more than the first (Chandukala et al., 2020).
Moreover, the initiative opened up the potential for cross-selling and impulsive purchases in a product line that was otherwise better suited to scheduled purchases (Chandukala et al., 2020). Additionally, it would allow it to store more of its inventory and deliver the entire range of its goods and services while maintaining steadily fixed operating expenses, which could allow offline sales to reach online sales (Chandukala et al., 2020). Thus, Iuiga has to modify several of its ideas when the retail industry moves from online to offline to make the idea viable and profitable.
Suggested Alternatives
There are several suggested alternatives for Iuiga to resolve its issue. The first alternative is to focus on the use of both online and offline retail practices. This will increase risk management’s effectiveness and provide several revenue streams. Such an approach will also enable a positive integrated experience across customer channels, benefiting brand recognition and market penetration (Chernev, 2019).
Another alternative is shifting focus toward increasing its online sales and improving its stores’ inventory management system and merchandising strategy (Chernev, 2019). As mentioned in the case, there are significant concerns regarding inventory practices and the capacity to manage them effectively. In addition to the practices above, the company would need to focus on employee engagement and improve the presence of talent within the firm. Such an approach will help the business add value to the team and create specific expectations.
Recommendations
The recommendation for Iuiga is to concentrate on improving online sales along with merchandising and inventory strategies. The company should focus on expanding its presence with more pop-up stores in locations with high traffic and ample available space. Moreover, to reduce spending, the business can hire part-time employees during busy seasons to help retain professional full-time workers (Pride & Ferrell, 2019). This way, Iuiga can maintain a balance in its revenues and expenses by reducing the overall cost of the workforce (Pride & Ferrell, 2019).
Furthermore, to ensure the initiative is profitable, it is crucial to focus on selling the goods in demand according to local preferences (Pride & Ferrell, 2019). In other words, the sourcing team should target not the global trends or manufacturers’ best-selling items but local customers’ preferences.
Action Plan
Finally, regarding the action plan, the first step should be developing an employee engagement framework. The framework’s goal should be exploring and implementing recruiting and retaining talent, setting expectations for the team, and guaranteeing transparency (Pride & Ferrell, 2019). Another step should be to hire an in-house consultant to improve visual merchandising and store displays, which can reinforce brand awareness and further market penetration. For instance, it can be decided to include an interactive RFID screen in stores to facilitate easy and quick access, which could help with customer feedback (Myerson, 2020).
The next step should be negotiations with leasing companies or owners to improve conditions and terms, since, as mentioned, this remains an issue for the business. Finally, market research will be crucial for the business and its growth (Pride & Ferrell, 2019). Here, a marketing team must research all trends and local demand in the Singaporean market.
Conclusion
Hence, the practicality of the omnichannel strategy is Iuiga’s central problem, but the problem may be solved by increasing online sales and concentrating on administration, inventory systems, and merchandising methods. The pop-up store strategy, which proved successful, was first intended to increase brand recognition. It is critical to assess if the business should keep expanding its geographic reach, how it would influence sales, and whether the concept is viable. Iuiga is advised to put more effort into enhancing online sales in addition to merchandising and inventory tactics. The business should concentrate on growing its footprint by opening more pop-up stores in areas with plenty of foot traffic and open space.
References
Chandukala, S., Osinga, E. C. & Mittal, S. (2020). Iuiga’s challenge: Is Omni-channel worth it? Ivey Business Publishing.
Chernev, A. (2019). Strategic marketing management: Theory and practice. Cerebellum Press.
Iuiga. (n.d.). About us. Web.
Myerson, P. (2020). Omni-channel retail and the supply chain: Working together for a competitive advantage. Taylor & Francis.
Pride, W. M., & Ferrell, O. C. (2019). Marketing. Cengage Learning.