This article is part of CMO.com’s Industry Spotlight 2019 collection. Click here for more.
Look at the difficult headwinds facing brick-and-mortar retailers—including competition from e-commerce giants, expensive leases, and a decrease in foot traffic—and it’s no wonder that leading brands are rethinking the way they sell their products.
As alternatives to the flagship store, pop-ups are offering retailers a lifeline: a new way to build brand awareness, expand and deepen their consumer reach, and ultimately drive sales.
A pop-up is a temporary store in an unused space where the retailer has yet to establish a presence; it is often operated on a seasonal basis. It’s not a new phenomenon, but the pop-up store has evolved from being a marketing tool to a revenue driver in its own right.
The pop-up store is transforming retail in three ways: It is reworking the brand/consumer connection; it’s allowing retailers to explore new ideas, products, and locations; and it’s helping brands identify new patterns in consumer behavior.
Shifting The Brand-Consumer Connection
Retailers can’t count on destination shopping alone. Rather than waiting for consumers to come to stores, brands need to go to the consumers. And because consumers want to interact with a brand when and how it suits them, leading retailers must travel the extra mile to meet their needs.
Pop-up stores not only provide extra flexibility for the brand to reach the consumer, they also provide more touch points in a variety of spots—at hotels, train stations, and even office spaces—giving retailers an inexpensive way to forge deeper customer connections. Pop-ups also enable brands to expand quickly in locations that are flourishing, giving them greater agility in the market and helping them connect with more consumers.
For these reasons, pop-up stores are now a go-to for global luxury brand Louis Vuitton. To launch its 2019 men’s fall collection, the brand created a New York City pop-up covered entirely in neon green, with interactive new product displays. This is not dissimilar to the launch of its 2017 spring summer collection, when Louis Vuitton launched African-inspired pop-ups in London, Hong Kong, New York, Sydney, Milan, Tokyo, Beijing, and Berlin to match the safari feel of its latest product line.
The flexibility of pop-ups also allows brands to maintain revenues during a regular store renovation or unexpected closure. When a store closes, we know it has a negative impact—not just on immediate in-store sales, but also on online activity due to the impact that an empty storefront has on a consumer’s perception of the brand. Pop-up stores can help keep the brand front and center during these times of change.
Road-Testing New Products And Locations
Pop-ups allow brands to try out new ideas, products, and store formats. They help retailers figure out which products resonate with the consumer without the need for the major upfront investment of a permanent site, making them highly popular with startups.
In practice, this means retailers can open a pop-up in an underexplored location to monitor consumer engagement. So when they start thinking about whether to invest in a full-time presence in the area, the company can turn to a wealth of invaluable data to support the decision.
We can expect to see more and more brands using pop-ups to explore potential new locations before establishing a permanent presence. Japanese brand Muji, for example, was able to successfully test the Canadian market in 2017 by opening a pop-up before investing in a longer-term store in the area. In fact, demand for the initial pop-up was so high that the store operated on a reservation system to manage customer demand.
Identifying Patterns Of Behavior
Beyond exploring new products and locations, retailers are using technology to spot emerging patterns in consumer behavior. And implementing this technology in pop-ups is helping them go far beyond the traditional “clipboard” approach to gathering consumer insights. To test the popularity of a new clothing line, for example, retailers can place beacons and sensors on the garments to find out which pieces attract the most interest and also how much time consumers spend with each item.
Moreover, video analytics and heat-mapping technology can measure the traffic around a pop-up, and analyze how and when people interact with products. All of this insight is collected in the cloud automatically, giving retailers a better understanding of consumer behavior.
Retailers today have to go beyond a country-level understanding of their customers to zero in on a particular region and even ZIP code. Opening a number of targeted pop-up stores in different areas allows retailers to collect and analyze demographic data at a granular level, enabling them to identify different consumer types and adjust their marketing strategies accordingly.
London florist Freddie’s Flowers is a great example of this. By using insights from online sales to map key target areas, the digitally-native brand has been able to establish key locations that would benefit from a short-term physical presence. Each pop-up is then tailored to the local neighborhood—think everything from sign-up discounts to flower arranging courses—to maximize engagement with both new and existing customers.
The pop-up movement is growing so quickly that we now hear of startups setting up “pop-ups as a service” for retail brands. These services are helping brands to create the perfect pop-up concept for their consumers, drawing on a combination of experiential marketing, customer insights, and creative solutions to deliver a memorable experience.
This approach requires a fresh way of thinking about how the retail industry engages with consumers. Pop-ups provide a way to not only meet consumers on their turf, but also gain valuable insight before signing a long-term lease in a market.
By embracing pop-ups, retailers can forge a deeper connection with their consumers.