Understanding The Full ROI Of Implementing A Pop-Up Store
By Arnaud Cazaledes, Samsung SDS America
Pop-up stores are one of the hottest trends in retail today, and for good reason. These short-term physical locations are being used across industries to drive sales and take advantage of seasonal (e.g. holiday themed) or event-related (e.g., a concert) selling opportunities. To help demonstrate the ubiquity of the trend, consider the fact that everyone from Sharper Image to Penguin Publishing to IKEA to Kanye West has tried their hand at pop-up stores. It’s become clear that pop-up stores are a great way to help boost sales in a short period of time.
However, if you’re only diving into the world of pop-up stores to boost seasonal or event-driven sales, you’re missing the true value they can add to your business long term. Data and consumer feedback are two of the most valuable commodities in modern retail. Connected pop-ups enable you to cultivate data, test ideas, and engage customers like never before. From testing new product launches to capturing customer data for enhanced CX, pop-up stores provide retail businesses myriad unique benefits. In this piece, we’ll provide a crash course on understanding the real value of a pop-up store, so you can better evaluate the true ROI it can bring to your business.
Sales
We won’t spend much time on this one since the takeaway here is clear. One of the apparent benefits of a pop-up store is the ability to sell product directly to consumers. Given the right time of year or event, businesses can move a lot of product in a short amount of time by launching a pop-up store.
Consumer Engagement
When properly executed, a pop-up shop is more than just a short-term version of a brick-and-mortar retail location, it’s a direct to consumer approach that consumers will respond to and remember. Not only can this make a pop-up store an attraction to passersby, but it can also drive engagement on other platforms and complement regular retail and online channels as well. A well-executed pop-up shop will be “high touch” and lead to consumers engaging with your brand in different ways, such as following a hashtag on social media, downloading an app, or signing up for a subscription service.
Enhanced Market Insights
Due to their inherent flexibility to define when, where and how pop-ups are executed, they are an excellent test bed to generate meaningful information. Enhanced insights into consumer behavior and market information may be the most significant benefits when it comes to launching a connected pop-up store. What makes pop-up stores unique is they are a means to start an experiment with products, services, and geographical locations at significantly lower costs and in a shorter amount of time than launching a full-blown retail location. To help quantify just how much easier starting a pop-up shop is when compared to a brick and mortar location, consider that renting a physical space in a high traffic area like SoHo in New York City can cost up to $150,000 monthly and it can take up to 18 months to launch a retail location. A comparable retail store, benefiting from short-term leases and agility, can have rent as low as $25,000 and be ready for launch after 90 days. Flexibility mitigates risk and increases your ability to experiment with new ideas and learn about your consumers’ preferences, unlocking your ability to test, learn and grow.
If you want to gauge market demand for a given product, you can quickly launch a pop-up store and assess how consumers respond. If sales look promising, you continue the experiment. If it’s a flop, you learn from it and iterate without worrying about breaking the bank for the next test. The same applies for capturing data from each geographic location that makes sense for the opening of your next brick-and-mortar location, how your customers will respond to a new service or design, or which product displays are the most engaging. A connected pop-up shop allows you to capture empirical data and enhance your decision-making. In short, connected pop-up stores enable you to obtain real-world data from your target market in a given location. This increased market knowledge can be far more valuable than any short-term sales boost.
Getting The Most Out Of Your Pop-Up Store
To get the most out of any venture into the world of pop-up stores, you need to first understand what they can do for you. By keeping in mind that the full ROI of connected pop-ups goes much further than seasonal sales uplift, you can better position your business to get the most out of this exciting new form of retail.
As Director of Solutions Business Operations, Arnaud Cazaledes is a vital strategic force at Samsung SDS America. His key areas of focus include corporate strategy, marketing strategy, business development, technology sensing and analysis, strategic partnerships, and cross-cultural collaboration. He holds an MBA from INSEAD, a Masters in Computer Engineering from GeorgiaTech and a Masters in Computer Science from the leading French engineering school Supelec. A self-described globetrotter originally from Montpelier, France, Arnaud has spent time in over 40 countries and has lived in 5 different countries across Europe, North America, and Asia. In his spare time, he enjoys reading, eating, drinking wine in true French tradition, and spending time with his wife and two young children. Read more insights and inspiration on the Samsung SDS Innovation Blog!