By Roxanne Foidonicolas
Introduction
As a small business owner, finding new and innovative ways to get your products into the hands of customers is exciting but also challenging. A pop-up shop is an effective strategy for engaging with potential and current customers in person, boosting sales at the same time.
It provides your customers with an opportunity to interact directly with your products and brand, creating a connection that online platforms cannot replicate.
A pop-up shop is not just a sales space; it’s a creative and engaging way to tell your brand’s story, allowing your customers to physically immerse themselves in your brand’s world.
So, whether you’re an experienced seller or a budding entrepreneur, use this comprehensive guide to help you succeed at your upcoming pop-up shop.
Read on to learn:
- What is a pop-up shop?
- What are the benefits of a pop-up shop?
- Types of pop-up shops
- How much does it cost to open a pop-up shop?
- How to set up a pop-up shop in 4 easy steps
- Questions to ask before booking a pop-up shop space
- Examples of pop-up shops
- Marketing tips to make your pop-up shop successful
- How to evaluate the success of your pop-up shop
What is a pop-up shop?
A pop-up shop is a perfect opportunity for emerging digital brands to experiment with a temporary retail space. Also known as “instant retail,” it allows you to meet your existing customers where they live and put your brand in front of new customers.
Pop-up shops are also a direct way to encourage sales without having to spend more money on customer acquisition online. Pop-up shops can look like regular stores, but many brands use them to create a unique and engaging physical shopping experience.
If you’re interested in testing a business presence for your company but hesitant about the financial risk and commitment of a permanent store, a pop-up shop could be the solution for you.
Quick Start Guide to Pop-Up Shops
Thinking of hosting a pop-up shop? This free guide includes 3 checklists to help you define what you want to achieve with your pop-up shop, different types of pop-up shops, and design ideas to help you get started.
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What are the benefits of a pop-up shop?
Creating personal connections with customers
While technology makes purchasing more affordable and convenient, there is no substitute for face-to-face service and personalized shopping experiences. A physical store allows you to connect with your customers on a human level and build a network of loyal, engaged customers.
Building buzz and awareness
Scarcity is a proven tactic that motivates customers to take action through their desire to purchase exclusive or limited products. A temporary pop-up shop with a defined end date encourages customers to visit before they miss out on the opportunity.
This strategy works particularly well when promoting new products or collections, launching major campaigns, or simply when you want to raise overall awareness of your brand.
Balancing customer acquisition costs
The pandemic forced retailers and their marketing budgets online, increasing the cost of customer acquisition through paid search and social media. However, as e-commerce has grown, the gap between digital acquisition costs and rental expenses has narrowed.
Rising commercial property vacancy rates have led to commercial rental prices dropping to record lows – 37.5% lower than they were in 2019 in places like the Soho neighborhood of New York City, according to CBRE. To address vacancies, landlords have reduced lease terms and sought to host temporary tenants just to keep their shops active. According to Reuters, in New York City, residential property prices have risen again, but commercial rental prices remain low compared to pre-pandemic levels.
Therefore,
There is still an opportunity to test the commercial waters and diversify your marketing to include urban traffic alongside web traffic in a low-risk, lower-cost environment.
“Soon, actual impressions will be more expensive and of higher quality than digital impressions,” says Ben Seidel, founder of Neyborly, a platform that matches brands with commercial spaces.
Market testing for a permanent physical location
Pop-up stores require limited initial investment, making them a good testing ground. A successful pop-up store can be a strong indicator that your business is ready to expand into actual retail. If your store is not as successful as you had hoped, you may need to regroup and find a new way to test your expansion plans. (We will look at some metrics later on).
Boosting sales during peak periods
Black Friday, Cyber Monday, and any other peak sales period are excellent times to open a pop-up shop. A pop-up store can help retain customers after the store closes and the holiday season ends, turning seasonal shoppers into lifelong customers. If you regularly host seasonal pop-up stores, you will build a sense of anticipation among your most loyal customers.
Testing new markets and gaining momentum in existing markets
One of the most important things a new business must do is check for demand for its products, and validating the actual product only happens when money changes hands. Whether you want to test new goods, pricing, or product bundles, a pop-up shop can be a way to measure customer demand before investing in larger quantities. If you have an idea for a new line or product set, for example, start with just one or two products to see if they have appeal.
In-person selling increases the opportunity to receive direct and unfiltered feedback from customers by seeing their initial reactions and determining whether they are willing to spend money on what you are selling (and how much).
Clearing out old inventory
Holding on to old inventory is more costly than you might think. Not only are you missing out on sales, but you are also incurring carrying costs and tying up money that could be invested elsewhere in your business. Additionally, inventory can become stale and unsellable over time, resulting in lost revenue and capital.
Pop-up shops are a great way to revive old inventory—especially short-lived seasonal products—by using special offers like buy one get one free or bundling items together.
Types of Pop-Up Shops
Permanent Pop-Up Shops
Sometimes, pop-up shops do so well that they become permanent stores. Permanent pop-up shops emerge from successful experimental or temporary pop-up stores that generate enough traffic and sales to justify the long-term cost.
Storefront operates as a leading online marketplace for short-term retail space rentals.
Storefront also runs a pop-up to permanent program that helps retailers identify pop-up locations to test temporary commercial spaces and discover whether actual retail is right for them.
Some brands, like Chicago Makers, opt for semi-permanent pop-up shops. Anna Romo and Monica Little, the owners of Chicago Makers, launched their first temporary shop during the 2020 holiday season. In early 2021, they began a semi-permanent location in the Pucktown neighborhood of Chicago.
Transitioning to a permanent or semi-permanent model can also result from vendor demand. “Our recent expansion has been thanks to the ongoing interest from local artisans and creators looking to sell their products,” according to Anna Romo, co-owner of Chicago Makers.
Stores
Pop-up Shops as a Marketing Event
Brands often use pop-up shops as marketing events to generate buzz around a new product launch, a redesign campaign, or a company announcement.
According to the Event MB blog, “There is a marketing aspect to all events, but there are few events that have the unique setting to grow word-of-mouth marketing.”
Just as you would create a marketing plan for your pop-up shop, a pop-up shop can also be a marketing strategy for your business overall. Launching a pop-up shop is as much a marketing strategy as it is a business strategy.
Seasonal Pop-up Shops
Seasonal pop-up shops leverage seasonal characteristics to increase foot traffic and sales. The seasonal holiday pop-up shop is the most common type of pop-up shop. These shops capitalize on the peak shopping season that represents, for some businesses, a third of their annual revenue.
An example of a seasonal pop-up shop is the Chriskindlmarket in Chicago. Running from mid-November through the end of each year, Chriskindlmarket provides an interactive holiday experience for consumers, showcasing locally made goods from many vendors available for purchase as gifts.
Experiential Pop-up Shops
One of the main reasons brands launch pop-up shops is to experiment with new products, new markets, retail experiences, or marketing techniques.
Experiential pop-up shops typically offer something a little different from the company’s main offering, allowing the business to gather valuable data on customer feedback and reactions.
If you’re considering expanding your online business to physical stores, launching a new product line, or targeting a new market, a pop-up shop may be the best way to conduct your experiment.
Virtual Pop-up Shops
Virtual pop-up shops give your customers a chance to browse your products in a digital store. They allow your customers to wander virtually through your shop and browse your products, similarly to how they would interact with your brand in person.
Unlike a traditional e-commerce website, virtual pop-up shops provide a 360-degree interactive shopping experience.
Sub-Pop-up Shops
A sub-pop-up shop is a shop set up inside an existing store. Retailers typically rent a section of a larger store or a small store as a space to sell their products. A sub-pop-up shop markets your business to the traffic of the larger store and helps you save on rent and decor.
For example, the youth fashion brand Plant Man P hosted a sub-pop-up shop for its products at The Sill in New York. “We decided to design a T-shirt that says ‘Plant care is self-care’ with an infinity symbol because we believe that plant care is self-care, and vice versa,” shares John Birdom, founder of Plant Man P.
“We love that we are able to get out and meet people in the community and help them in any way we can, whether that’s through plant care, self-care, or anything in between,” adds Birdom.
How Much Does it Cost to Open a Pop-up Shop?
Popertee, a retail analytics company, estimated the cost for a 30-day pop-up shop to be €29,085 (about $32,000), while Inkbox, a temporary tattoo company, estimated the cost for a pop-up shop lasting two weeks in 2016 to be around $15,000, plus $3,000 for furniture that could be used for other purposes.
Unfortunately, there is no clear answer regarding the cost of a pop-up shop. Location, duration, and size are some of the factors that can determine the total cost. The sky’s the limit for how much money you can spend, but you can also execute a pop-up shop for a short period for as little as $1,500.
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It is important to note that experts expect pop-up shop costs to be significantly lower for 2021. Historically low commercial rental prices mean that the majority of your costs – rent – are 11% lower than they were in 2019.
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