Over the last few years, pop-up retailing has gained popularity among retailers, from large international chains to small start-ups. As a temporary retail phenomenon, pop-up stores have emerged in shopping malls, urban street fronts, central business districts of small communities and other vacant spaces. Experts predict that the growth of the pop-up retail format in Canada will continue to gain momentum into the future, and that 2018 is the “Year of the Pop-Up”.1 Show
Upon completion of the chapter, readers will be able to:
Setting the Context
VIDEO The following video presents a fictional meeting between a consultant and an entrepreneur who sells loose leaf tea online, but who wants to use a pop-up strategy to test the possibility of opening a permanent location, while building awareness about the brand and a great experience for new customers. 1. Pop-Up Shop Formats1.1 Consumer Motivations & Pop-upsFrom a customer’s perspective, a pop-up shop can be intriguing because its temporary presence creates a sense of urgency, making the customer feel that they should shop before the pop-up shop disappears. Businesses interested in leveraging the pop-up retail format, however, must think, plan and execute their pop-up store operations strategically. An important aspect to consider is consumer psychographic characteristics, which include those related to “individuals’ values, attitudes and lifestyles”.2 Many studies have assessed the effects of psychographic attributes on various aspects of consumer behaviours, such as retail format choice3, online auction behaviour4, shopping orientation and product/brand preferences5 and decision-making styles6. Psychographic Characteristics: an individual’s values, attitudes and lifestyle When planning a pop-up retail experience, research suggests focusing on these three psychographic factors: consumer innovativeness, market mavenism and shopping enjoyment.7 These factors may help drive the choice of pop-up format to implement. Consumer innovativeness refers to a customer’s predisposition to seek out new and different products/brands and/or shopping experience rather than simply adhere to routine consumption patterns.8,9,10 The unique and novel aspects of pop-up shops, such as limited-time operation, non-conventional location/store atmospherics and guerilla marketing approaches are appealing to innovative consumers due to the sensory stimulation provided in the shopping experience. Market mavens are those influencers in marketplaces “who have information about many kinds of products, places to shop, and other facets of markets, and initiate discussions with consumers and respond to requests from consumers for market information”.11 In the world of digital communications, they are sometimes referred to as “Local Guides” as they are active reviewers of a large quantity and variety of products/services in the marketplace. Market mavens are of critical importance to pop-up retailers, who usually rely on word-of-mouth to promote a pop-up shop. In order to leverage market mavens, pop-up retail strategy should always include a devoted effort to monitor and manage social media communications. Shopping enjoyment is a key factor that affects a customer’s acceptance of pop-up retail.7 A customer may derive pleasure from the entertainment, experiential, educational or interactive aspects of a pop-up shopping experience. The excitement of finding bargains may also contribute to a customer’s positive perception of a pop-up store. 1.2 Experience Co-Creation MapPop-up shops, as a new means of communication and type of distribution channel, offer great potential for value co-creation between a company and its customers.12 As Figure 2.1 below shows, pop-up shops provide the company with the ability to:
Figure 2.1 Experience Co-Creation Map (adapted from Spena, Caridà, Colurcio, & Melia, 2010) For customers, the pop-up shopping experience enables them to:
Through pop-up operations, values co-created for the company are:
Pop-ups also co-create values for the customers, such as the ability to:
Value Co-Creation: the process by which consumers and pop-up shops develop relationships and experiences together. In the value co-creation context, a pop-up shop is viewed as “a place of consumption, experience, customer interaction and cognitive and sensory involvement”.12 Thus, pop-up shops promote a two-way learning process between the company and customers. Through the process, companies get to develop more effective and customized relationships with customers, while the customers internalize their experiences with the company through high levels of involvement and participation.12 Pop-up shops have been implemented in many different ways. Due to their temporary nature and short time span, pop-up shops face challenges and constraints in terms of limited budget, space availability, space setup, merchandise assortment selection and other factors related to operation and logistics. Meanwhile, pop-up shops also provide opportunities for new product/service incubation, inventory liquidation, as well as customer engagement. There are a few ways to categorize pop-up shops, based on design/structure, mobility/location and objectives. 1.3.1 Design/ConstructionShort-Term Standalone Store: usually mobile or fixed, and oftentimes by an individual brand. May be located in an indoor structure, such as a mall or community centre, or outdoors. For example, Samsung created a short-term standalone pop-up store to promote the launch of the Galaxy S3 phone leading up to the holiday season. Billed as a “Premium Pop-up Experience”, this movable structure with two-way mirrored glass provided consumers a chance to interact with innovative Samsung solutions using the features of the Galaxy S3 phone. The design reflected the brand as a pop-up. Short-Term Kiosk: often in the form of a cart, which is a non-permanent and portable unit designed to fit small spaces, and usually placed in a high traffic area. For example, the Barefruit Juice kiosk pictured here is situated under an escalator. Pop-In Store: appears to be a “store-within-a-store”. For example, Google opened a pop-up within a PC World store in London to promote Chromebooks and related accessories for 3 months leading up to the holiday season. Invisible Pop-Up: using augmented reality and geo-location technologies, businesses take a scavenger hunt approach to allow shoppers in the designated area to use their own mobile device to order virtually available merchandise for a limited time.
Video As you’ll see in the brief video, Airwalk created a virtual pop-up shop in New York City and Los Angeles for mobile-equipped consumers to pre-order special edition items. It generated $5 million in press, resulted in the busiest day for their e-store and re-established street culture. Virtual Wall: a wall or floor in a high traffic area that is turned into a virtual catalogue page with 3D images of popular merchandise to bring QR-based shopping to life. Virtual walls allow shoppers to purchase select items using their mobile phones to scan a QR code from the walls and/or floor. For example, Walmart and Mattel formed a partnership and created virtual walls and floors for about four weeks leading up to the holiday season in Toronto’s Union Station and PATH as well as other locations in Vancouver and Montreal. Collaborative Pop-Up: usually organized by a third-party company or trade association who rent short-term common area space and find small independent businesses to sublease the space as a co-op. The independent businesses oftentimes use the opportunity to test the market, promote brand awareness and expand their customer base with a goal to open a permanent kiosk of their own. For example, the Westfield shopping centre in Australia has created a collaborative pop-up space to incubate emerging designers, which in turn, adds diversity to the mall’s offering. 1.3.2 Mobility/LocationGuerrilla Store: its name comes from “guerrilla marketing”.13 A guerrilla store tends to employ non-conventional less costly guerrilla tools, “such as stickering, advertising on public transport, public relations, as well as mobile technologies using email and social networking sites”.14 Guerrilla stores are oftentimes strategically located in atypical urban settings, such as in front of a church or an art gallery, to engage the customers in a novel, hedonistic and exclusive shopping experience.14 Nomad Store: a pop-up shop that is mobile. A nomad store often uses a van, shipping container or store-on-wheels format (e.g., portable kiosk) and re-locates frequently. For example, Puma has 24 shipping containers that they send around the world, some of which combine and open up into a 3-story shop, cafe and office space. Pop-Up in Shopping Malls: can be a short-term standalone store or a kiosk located in a high traffic area inside a shopping mall. For example, this Momo kiosk or standalone store is set up in the atrium of a shopping centre in Hong Kong and is made of recycled materials with apparel for sale on the inside. Some independent retailers or small retail chains also take advantage of a short-term vacant store space in a shopping mall and operate a pop-up shop. In this case, the pop-up shop is not a permanent tenant, but holds a lease of a few months to a year at a significantly discounted rate. In other situations, a brand might use a pop-up shop as a marketing tool to bring awareness to its target customers while a long-term retail operation is in preparation. For example, Moose Knuckles launched its pop-up shop in Yorkdale Shopping Centre in Toronto, Ontario, Canada, a few months before opening its permanent branded store in the same shopping mall. Figure 2.2 Moose Knuckles’s pop-up store in Yorkdale Shopping Centre (CC BY – Hong Yu)Event-Driven Pop-Up: format used by retailers for special events, such as the celebration of a milestone for the company, new product launches, etc. For example, ALDO is known for operating pop-ups within international department stores like Galeries Lafayette in Paris and Selfridges in London. But for their milestone anniversary, they turned their own Montreal flagship store temporarily into an event space to promote the vision, history and core values of the company and featured several speaker series for consumers to hear from the company’s founder, designers, stylists, fashion editors and more along with hosting a DJ’d cocktail party at night. Figure 2.3 ALDO Turns 40, Pop-up Event Within a Store (CC-BY Sean Sedlezky)1.3.3 ObjectivesWarnaby et al (2015) identified some strategic objectives that pop-ups might set out to achieve.15 We have added one further type of objective: institutional. This recognizes that institutional pop-up programs may serve an important additional objective where not-for-profit organizations and communities develop plans to revitalize economic engagement within a specific area by attracting and promoting multiple pop-up shops.
2. Pop-Up Retail as a Marketing and Communication Tool2.1 Pop-Up Retail Affects Brand ImageThe temporal dimension, the promotional emphasis and the experiential emphasis are three key characteristics of pop-up retailing.18 The experiential-oriented brand-customer interaction within a temporary pop-up shopping setting can influence customers’ perception of the products and retailer brand. In the context of omni-channel retailing, most customers are involved in multiple channels during their shopping journeys on regular basis and cross-channel shopping is common. Hence, a customer’s prior experience with the brand/retailer in other channels can influence their perceptions of the pop-up shopping experience and vice versa. If a pop-up shop is a customer’s first encounter with a brand, then perceptions of the pop-up shopping experience will play a critical role in creating awareness and developing an overall brand image. For well-established brands, retailers can leverage pop-up shops to enhance brand perceptions and test brand images in newer markets. However, it’s worth noting that a customer’s prior knowledge of the brand influences their expectations of the physical attributes of the pop-up store and the kind of experience they expect to receive within. Dissonance between the expected and actual experiences can result in damage to brand perception. 2.2 Pop-Up Retail Impacts Word-of-MouthThe pop-up retail phenomenon “can be seen as one aspect of a broader trend towards unconventional forms of brand promotion”19: word-of-mouth. Traditional methods of marketing and communication, such as the classic TV commercial, radio ads, billboards, magazine ads, etc., primarily follow a push model where customers are passive receivers. The one-way promotion protocol has faced challenges of audience fatigue and indifference. In the age of experience economy, consumers are no longer only users of products and services. They expect to take on an active role in the production and distribution19 through participating in the processes of branding and promotion. Word-of-mouth, as an unconventional marketing method, provides the opportunities customers want. In additional to interpersonal communication in the physical world, consumers can also engage in word-of-mouth communication in the digital world. They can post reviews, pass on advertising they find interesting, share their experiences with products and services and respond to others’ thoughts, in public or within their virtual communities. Pop-up stores, as a marketing method connecting communication and selling19, oftentimes are associated with “viral”, “buzz”, “guerrilla”, “experiential”, “tribal” and “environmental” marketing20, which are forms of word-of-mouth communication and as such, have significant impact on brands/retailers. In an empirical study, Klein et al (2016) investigated the linkage between pop-up brand stores to brand experience and word-of-mouth in the context of luxury retailing in the US and the UK. They found that the pop-up store’s hedonic shopping value, store uniqueness and store atmosphere positively influenced consumers’ word-of-mouth intentions towards the brand. This supports the claim that pop-up stores are an effective experiential marketing tool to increase customers’ brand experience and positive word-of-mouth towards the brand.21 A pop-up store offers unique and highly experiential experiences to customers. Research shows that aspects that attract a consumer to a pop-up retail operation include the following:
The pop-up customers’ expectations provide golden opportunities for businesses to use pop-up retail operations as a prime vehicle for testing new products/brands and/or new business strategies. Because new product/brand/service offerings often require changes in shopping/consumption behaviour, pop-up shops allow retailers/brands to gauge the market’s reactions without having to incur significant investments. 3.2 Attract New Target MarketPop-up stores can also help retailers/brands attract new target markets. Niehm et al (2007) found that although young people and females of all ages are the core target market for pop-up stores, there is potential for a much wider audience. When attempting to expand its customer base, a company needs to raise awareness and address the customers’ needs for novelty, innovation and trial. Pop-up shops provide the opportunity for the company to experiment and learn with reduced risk. In recent years, many businesses have used pop-up stores as a mode for entering foreign markets. In this case, pop-up stores serve as a cost effective way to explore the foreign market and test its acceptance of products/brands and/or a retail concept. Picot-Coupey (2014) identified three motivating factors for businesses conducting international pop-up retail operations:
International pop-up retail operations can be a first step for a business to establish its long-term and permanent presence in a foreign market.23 3.3 Set Up Omni-Channel Retail OperationsIn the context of an omni-channel retail environment, pop-up shops are often included as one of the channels through which customers engage with a retailer or manufacturer brand. Research shows that consumers consider each channel of an omni-channel retailer as a holistic and complementary experience.24 The cross-pollination of channels and shoppers is a critical factor for retailers to develop strategies to achieve customer satisfaction and loyalty. In other words, customer satisfaction is no longer built upon on evaluation of just one channel, but is an accumulated assessment of the experiences encountered in the multiple channels used, such as bricks-and-mortar locations, e-commerce, and pop-up shops.25 Pop-up shops, as a unique distribution channel, should be strategically implemented to enhance customer retention and participation in other channels. 4. Pop-Up Shops for Inventory LiquidationPop-up shops as a means of inventory liquidation is mostly seen in the beauty, fashion and accessories and home furnishing sectors, as it’s a common practice for these sectors to clear out past seasons’ inventory so stores have room to bring in fresh merchandise. Often referred to as a “warehouse sale” or “sample sale”, the pop-up stores can be run by the brands themselves in a select store or a company warehouse location. In this case, the sales are normally with limited assortment/brands. They could also be planned and implemented by a third-party agency who specializes in inventory liquidation sales. In this case, the sales usually include multiple brands and product categories and take place in a massive showroom/exhibit hall in a conference centre or fairground. When selling the end-of-season inventory at greatly discounted prices, a pop-up retail operation is a most appropriate choice. Due to its temporary nature, it communicates a sense of urgency (i.e., buy now or it’s gone) and provides a unique hedonic shopping experience (i.e., the excitement of “bargain-hunting”). Meanwhile, inventory liquidation pop-up sales also enhance sustainability (by reducing waste) and democratize consumption (by making goods more accessible to more people).
In this chapter, you learned:
Key Terms:
ABC Inc. Situation: A European garment/swimwear manufacturer, ABC Inc., has no physical store, but wants to increase their marketing efficacy to gain awareness among their target audience. They have a limited budget and need to initially grow organically before considering major expansion. ABC Inc. decides to take the pop-up shop route on their way to reaching their goals. With a pop-up shop, they could strategically invest their resources, and control both the overhead costs of the endeavour, as well as the market that is targeted. Yet pop-up shops can be risky ventures and popping up in various cities and towns across the country, at various times, and for varying durations can be costly and fraught with risk. Additionally, ABC wants to know more about the major shifts in market trends, while making more people aware of their products. They need a way to both get their name out there and gauge their market to help predict future trends. Solution: ABC used their resources to open several pop-up shops with both a small format and large format. They used a communicational objective, focusing on awareness and communicating their value proposition rather than immediate sales and transactions. This strategy kept their costs down and allowed them to add a client-experience focus to each pop-up. ABC had potential clients trying on their apparel at the pop-up shops without the pressure to buy on the spot. Results: With a communicational pop-up strategy, ABC used an agile and focused platform to reach their target market, set up shop in their preferred areas and events, increase their awareness, gain insight into customer needs all toward creating more effective marketing plans in the future. The pop-up shops helped facilitate their intended organic growth, and has morphed into an asset, rather than a temporary cost Consider the following questions:
References
|