468 Retail and Channel Management Blog

Tuesday, January 31, 2017

Is Mobility the Next Trend in Retail?

Edmonton’s First Mobile Barbershop

As we have learned in class, one of the largest costs of running a business is the real estate a store operates in. When looking for retail space, the areas in the community with the most foot traffic are the most expensive to rent. This is what Fadi Farhat discovered when searching for a retail space in downtown Edmonton to open up a barbershop. At his ideal location, rent was approximately $7000 per month. This extremely high overhead cost would force Fadi to charge substantially more for his hair cutting services, which he approximated at $45 a haircut.

His idea for a mobile barbershop came from the abundance of food trucks in Edmonton’s downtown core. His idea to have a mobile barbershop is beneficial in multiple ways. First, it dramatically decreases the amount of overhead Fadi will have, as he will only need to pay for the van, insurance and gas. He also parks his van outside of Rice Howard Way in downtown Edmonton, which allows him to have a wider reach of customers. By operating downtown, he has a very wide trade area, as there are many people that work and live downtown that could require his services. His services are mobile, which does not limit him to staying in the downtown core, and provides the opportunity to move to different location he feels demand could be higher.

In addition, a mobile business increases the convenience level for customers, as many people working downtown could see the van and want his services.  His ideology with the business is to operate on walk-ins only, which makes it easy for customers to receive his services as an “unplanned purchase”. His competitive advantage is he can also offer substantially lower cuts from his van as opposed to if he had a brick and mortar retail space. He would have had to charge $45 a haircut if he was renting, and offers his services for $21 in the van. As he is the only hair stylist, this allows him to decrease costs for employee selection and employee engagement.

What could negatively affect this business is how the atmospherics are within the van. The van has to have good lighting, smell good, and overall have a degree of comfortability for the customer. Many people are accustomed to ordering food from a food truck, where Fadi drew his inspiration. The difference is people only interact with the food truck from the outside. There could be a lot of consumers uncomfortable with the thought of getting their haircut inside a van. It also may not feel spacious enough to some customers that are used to having their hair cut in a traditional brick and mortar barbershop. In addition, there are no complimentary businesses where he parks, as Rice Howard Way is made up exclusively of restaurants.

Ultimately, this article intrigued me because mobile services are vastly increasing as customers want more convenience and business owners are looking for a way to decrease overhead costs. Although this idea may not be extremely popular now, it does raise the question if more business people will follow suit as a way to make additional revenue. In my opinion, I think in the future, more companies will adopt this idea as it is a convenient alternative for customers receiving services and a good way for companies to remain competitive on price while still maintaining profitable margins.


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