The term isn’t new and neither is the concept. The online phenomenon of “flash mobs” has hit the streets and continues to become more evident, so much so that television host and producer Howie Mandel devotes an hour each week to air his show “Mobbed” on Fox.
Yet, there’s a different kind of flash mob in town and this one doesn’t involve swarms of dancing people. Otherwise known as “flash demand,” the model refers to the pressures that such reality TV shows as “Fashion Star” and “Project Runway” create in the retail space. And let’s not forget the impact that utilizing social networks to grow a brand name and create product awareness—in any segment, not just retail—has on the market.
Hosted by Elle Macpherson, NBC’s “Fashion Star” gives designer contestants a chance not only at the money but to launch their collections in retail giants Macy's, H&M and Saks Fifth Avenue. At the end of each episode, viewers and consumers have the chance to immediately purchase the winning designs showcased on the episode that week. And what viewers see on TV that night will be on the streets and in stores immediately.
Now, whether the search for the next big fashion brand interests you or not, the potential supply chain impact of the show is worth noting.
Whichever form factor it may be—whether a reality TV show that releases designer creations the next day or an overnight NBA sensation who creates a surplus of sports memorabilia market demand—it is important to understand what such “flash demand” drivers mean across all supply chain processes and players involved.
Examining the logistics
“The term ‘flash demand’ really came about when we started thinking about what retailers observe in the market in terms of new demand signals and how quickly they emerge—and then how they read those demand signals,” explained Guy Courtin, Director of Industry Solutions, Supply Chain for Progress Software Corp., a business process management software provider based in Bedford, Mass. “But then also integrating this whole notion of the flash mob and how these really spring up from a ground swell. It’s something that is really adding a little complexity for retailers that some may have trouble dealing with.”
Suffice to say, the number of challenges facing retailers is not few and far between as many of them continue to struggle with consumer price sensitivity and unpredictable demand swings while at the same time working to identify new market opportunities and implement effective supply chain strategies.
And while a number of these unpredictable demand swings are left in the past—the Kathie Lee Gifford child labor allegations or the pressure grocery retailers faced in meeting carbohydrate consumer demand during the 2003 Atkin’s Diet craze—the challenges and opportunities that “flash demand” creates will only continue to develop as technology advances and consumer demand grows.
“If we break down retailers into three categories—perishable goods, durable goods and consumable goods—this notion of flash demand will impact each of them differently,” Courtin continued. “A grocery store won’t have the same fluctuation and demand as a demand signal that comes from another retail sector. And while these types of demands put a lot of strain on retailers, these occurrences will only increase as the manufacturers try to take advantage of current situations,” he said, e.g., a spike in demand for sports memorabilia, such as what occurred when Jeremy Lin reached nationwide stardom.
Addressing the challenges
Ordering too much inventory leaves stores with unwanted surplus. And not having enough inventory when consumer demand hits its peak can conjure negative publicity not only for a retailer but for the brand of product that is being requested. So how can executives and managers along the supply chain prepare themselves for such “flash demand” that shows like “Fashion Star” create?