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What are pop up shops and how do they work?

Author: Chris Gates, director of retail at Hitachi Consulting UK provides his thoughts on pop up stores.
 
If new products can come and go, then why can’t the stores that display them do the same?
 
It has been reported that one in six premises now stands empty across the UK, compared with just one in twenty before the start of the recession. With more empty spaces on the high street than ever before, many retailers are taking advantage of the opportunity to increase brand awareness and test new products or services by opening pop-up shops.
 
A pop-up shop is the short term let of a property by a retailer in a good or unusual location for a nominal rent. Pop up shops can enable retailers to trade in new markets during key selling periods – such as Christmas – and take advantage of an increased footfall, without the large costs associated with a permanent presence of a high street store.
 
As the name suggests, these initiatives generally have a tendency to ‘pop up’ unannounced. They quickly draw in the crowds, and then disappear or morph into something else. Most importantly, they allow the retailer to target exiting and new customers in a fresh and innovative way, whilst also maintaining an element of surprise.
 
We have seen a few examples recently of pop ups opening on the UK high street, but two in particular have stood out to us as being successful. Toys R Us opened a pop up in Whiteleys (Bayswater) to capitalise on the gap left by the Early Learning Centre during the Christmas toy selling period and John Lewis opened up a pop up in Exeter, ahead of their new department store opening. Both of which drew in massive crowds, generated positive brand recognition and increased the retailers venues.
 
Pop-up stores not only add benefit to retailers, but can also benefit landlords with void property to find a temporary usage for that space. This tenant can then in turn, cover the service charge and rental fees. It can therefore be a win-win for both new businesses and landlords alike.
 
Pop ups don’t just benefit those existing high street retailers looking to set up elsewhere. In fact, a pop up store can create a new and unique shop front for a brand that has only had internet or catalogue presence in the past, as we have seen Amazon trial in recent months. As such, the customers are able to connect to the outlet in person and provide a physical presence to something that had in the past only been viewed though a computer screen. In addition, pop ups can create new destinations for click & collect services, which are becoming increasingly popular for consumers.
 
In terms of setting up a pop up shop, the retailer will either implant a team from an existing store, or recruit specifically for that pop-up. Of course, they may however pursue a combination of both. Either way, they will need to make sure that they have experienced staff on the ground, who know the products, understand the store layout and can bring the brand to life in that new location.
 
Generally the retailer will deploy standard EPOS and store systems in the pop up. They may even introduce internet ordering kiosks or devices, so that the consumer can attend the pop up in person, yet order the product online and get it delivered at a more convenient time. Not only can this help the consumer on their multichannel retail journey, but it is also a great way for the retailer to engage with the consumer after the pop up visit and track their data.
 
The main difference between temporary stores and a high street store is that the size of the pop up is often much smaller than the high street store, meaning that some selective ranging is required. In addition, the back of house may be smaller than the normal store – requiring more frequent deliveries to maintain stock availability. This means that the staff really need to keep on top of things, ensuring that the right stock is in store at the right time and that nothing runs out. Frequent deliveries will therefore be essential and if this cannot be accommodated in the existing delivery fleet, the store may also have to look into costs and timings for third party carriers.
 
Our recent ‘shopping particle’ research revealed that that even if a product is ranged to store at a price the consumers are willing to pay, 86% of customers are willing to walk out, if either the product is not in stock and needs to be ordered in, or if the customer service is poor, or even if they have had a previous bad experience within the store. Certainly, having relevant items in stock will be one of the most important way to improve shoppers’ experiences – followed by having competitor price comparisons available in store, improvements to the in store environment, and sales assistants having more information available at their fingertips. Delivery times, regularly restocking and planning store ranges will therefore need to be carefully thought out.
 
In terms of planning the store ranges, there are a number of things that need to be taken into consideration.  For instance, product departments will need to decide which products go into each store and to what depth. Merchandisers will then need to select suitable lines within each department. Also reviewing the sales and stock position closely is key to enabling the retailer to tune the range to make the most of the limited space, as such good business intelligence will be integral.
 
Generally pop up stores can be deployed very quickly. Exeter’s John Lewis pop up, for instance, only took eleven weeks to open and as such the retailer can start reaping the benefits quickly. Here John Lewis took a creative approach to visual merchandising, using fittings and signage that looked intentionally temporary, so minimising sunk cost and time. Planning is just as important as in a normal store opening – however, there is the potential to have more of a trial approach, and to allow the teams to use their creativity. Key though is establishing what your objectives are for the pop-up, and making sure all involved are aligned behind them. Is it brand awareness, revenue, profit, or simply connecting with new customers?
 
Certainly, pop-up shops can provide a retailer with a very wide range of benefits and market opportunities, without the burden of having to enter into a long term property commitment. Set up properly the format works very well. Get it wrong and you might find a painful sting in the tail will also ‘pop up’.