Deals on Wheels: Why More Retailers Are Taking to the Streets

Many of us have experienced grabbing a quick bite to eat from a food truck, one of the original forms of a mobile business.

And it’s no wonder — food trucks have taken on a pervasive role in pop culture. That, and more and more food businesses are opting to serve their meals on wheels. In 2015, annual revenue from food trucks in the U.S. reached $1.2 billion, a steady 12.4% increase over the previous five years.

And while many of us are familiar food trucks, the idea of a mobile business is spreading to non-food industries. Over the last few years, businesses of all kinds have been hitting the road, from a financial planner in Charlotte to a full-service grocery store in St. Louis. Even Amazon launched its Treasure Truck in Seattle that connects digital mobile with physical mobile.

According to the American Mobile Retail Association (AMRA), the mobile business industry has grown to nearly 1,000 trucks across the U.S.. Established brands and retail hopefuls are outfitting trucks, trailers, buses, and recreational vehicles as a more cost-effective solution to launching a traditional (and stationery) retail storefront.

In addition to cost savings, there are a number of compelling reasons why both existing and new retailers would experiment with a business on wheels.

Here, we’ll explore the benefits and examine some successful examples of mobile businesses.

5 Reasons Why Retailers Are Setting Up Mobile Businesses

Less Upfront Investment

Start-up costs for a brick-and-mortar store can vary based on a number of variables. Inventory for a 500-square-foot mid-range retail store, for example, comes in at around $20,000, according to PFS Financial Services in Chicago. And that doesn’t include the costs to rent such a space, purchasing displays and equipment, hiring staff, etc.

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According to one account from Forbes, aspiring retailers should expect to invest around $100,000 for renovations on your desired space and the cost for your first round of inventory to stock your store. While you might not require that much to start or expand your current business, who has even half that amount of cash sitting unused in a bank account?

That can be well beyond what a retailer just looking to enter the scene can afford. In 2015, research from the mobile industry showed 82% of truck owners paid under $9,000 for their trucks or trailers, and 91% spent under $9,000 to retrofit them. That’s well under the initial investment necessary to open your own stationery storefront.

Overhead costs — including insurance, inventory and maintenance — are also much less expensive than those of a storefront. Take into consideration the money saved on advertising alone. Traveling retailers are often hard to miss, and your storefront is what introduces you to your customers first.

The Ability to Test and Iterate

Mobile retailers have the luxury of working with a smaller amount of real estate and a smaller inventory. As a result, they can be agile in their approach by testing the waters of a particular market before committing to something more permanent either in location or with inventory.

They’ll also have a better grasp of what merchandise leads to purchases and offer products that are customized to the neighborhood or city they’re selling in.

Businesses with an established storefront can also test mobile retail experience as a new revenue stream to offload unsold inventory or pilot test new stuff.

One example of this is Canadian high-end retailer Holt Renfrew, who endeavored to catch the attention of digitally savvy millennials. In 2016, the retailer curated a line of seasonal looks and took to the streets of Toronto to show them off in a specially outfitted mobile truck.

Connect With Your Customers Anywhere, on Your Own Time

If a flexible schedule isn’t attractive enough, mobile business owners can be where their customers are when they’re likely to be there (unlike their landlocked friends).

In a recent survey from PwC, 58% of respondents rank convenience as the number one reason for shopping online. What’s more convenient than rolling right up to your customers? Think of the presence your brand can have stopped near a park where young professionals eat lunch, or at an outdoor community event in your target neighborhood.  

Appeal of the Experience

The growing ecommerce market has forced retailers to rethink the ways they capture the attention of shoppers. As competition between online and brick-and-mortar continues, retailers have shifted their focus to something online merchants might have trouble replicating — a fully immersive retail experience that appeals to all of their customers’ senses.

Despite what some claim, the retail experience isn’t dead. Seventy-two percent of shoppers still consider the in-store experience as the most important channel when making a purchase.

Mobile retailers are in a position to offer a unique and fun retail experience that stands apart from fixed storefronts. 

Image Credit: Wanderlust

An example is Portland, Oregon-based retailers Wanderlust. The owners of this vintage clothing business retrofitted a 1969 mint green trailer with wood paneling and other retro touches. Now the mobile business visits community events and art fairs across the country to show off their vintage duds — all in their sweet trailer.

Set the Stage for Impulse Buying

Behavioral psychologists agree that a sense of urgency often causes us to suspend rationality in lieu of acting quickly. FOMO (fear of missing out) is very real when it comes to experiences and our purchasing behavior.

Whereas most shoppers have become wise to the traditional “now or never” tactics of sales associates, a mobile retailer can help sway even the biggest skeptic. Not only is there limited inventory in a mobile retail truck, but there’s nothing more fleeting than an exclusive business on wheels.

This will play a key role in the purchasing decisions of your customers.

Case Study: Bra Fitting Meets Nomadic Retail

Born from an awkward in-store experience in 2013, True&Co. founder Michelle Lam is on a mission to re-shape how women shop for their intimates one perfectly-fitted bra at a time — and it’s all based on data.

Women go online to take a fit quiz and receive personalized recommendations beyond just band and cup size. As more women take the quiz, the algorithm is fined tuned to allow for the many nuances that make each woman unique.

In February 2016, the company dipped its toe into physical retail for the first time with a 24-foot “Try-On Truck.”

Image Credit: True&Co.

Throughout the year, the truck stopped in cities across the U.S. including Chicago, New York, and Boston. Shoppers who visited the truck could take the fit quiz and try on an assortment of bras from True&Co. and other lingerie brands. When shoppers made a purchase, the merchandise was shipped to them. The idea was to create an experience similar to that of being in the comfort of your own home.

After the huge success of the truck, True&Co. launched a Try-On Tent (think “glamping”) which Lam considers “the next generation of retail.” The nomadic fitting room is making cross-country stops so shoppers can try their brand of “fit therapy” firsthand.

Image Credit: True&Co.

Is it Your Time to Hit the Road?

Traveling retailers might have a lower barrier to entry, but they also have a unique set of obstacles most storefronts don’t need to consider — one of them being undefined policy around the mobile retail industry which often leads to permit issues.  

Despite the existing ambiguity, mobile retail is still an attractive alternative to those wanting to start their own business.

According to AMRA, 36% of mobile retailers in the U.S. hit their break-even point in under two years.

Would you consider creating a mobile business? Share your thoughts and ideas in the comments below.