Tag Archives: retail channels

Pop-Up Shops as a Marketing Tool for Retailers

Pop-Up Shops are short-term, temporary retail events that are “here today, gone tomorrow”. It is the temporary use of physical space to create a long term, lasting impression with potential customers. “The pop-up retail phenomenon, once known as flash retailing, has grown in recent years” say experts at Gordon James Realty, a local property management firm. Retail space for pop-up shops is rented for a fraction of the cost of a long-term space and is a cost-efficient way for a retailer to increase its brand awareness and make a profit.

Pop-ups are changing how commercial property owners are leasing their spaces; how big brands are launching new products and how online retailers are marketing the merchandise they sell online 1. Inquisitive customers enjoy pop-ups because there they can learn more about product they are buying – e.g. where, how and by whom the products were made. Online customers can enjoy the shopping experience by visiting Pop-Up shops of online retailers. It offers a physical space to touch, smell and try-out products that they’d searched online.

What are Pop-Up shops?

My first memory of a Pop-up shop was as a little boy at a school bazaar. The local fish-and-chips fast-food retailer has setup a stall, with the necessary fryers and other equipment from his store at the school. The sounds and smells that were coming from his pop-up stall will always stay with me. However, more formally:  A distinguishing feature of pop-up retail is its temporary nature, intentionally springing up, and disappearing quickly 2. Consequently Pop-up shops can further be described as follow:

  • The shops usually involve one retailer rather than a group of retailers, and are usually found in trade shows. The latest trend however, is that they are setup in unused open spaces, storefronts, or within existing stores.
  • They are a way for promoting selected products or brands in a temporary location and on a smaller scale than trade shows;
  • Pop-up shops may be open in only one location, and are designed to be open a few days to a year;
  • Customers are allowed to have unique, personalized interactions and experiences with brands at the shops; and
  • Pop-up shops employ brand representatives who have a lot of knowledge about the brand.

The benefits of Pop-up shops are according to Sriram Subramanian writing in ShoppinPal:

  • Low overhead costs – retailers can take advantage of prime retail space at the fraction of what it normally cost;
  • Lower risk – short term monthly leases, low initial expenses and flexibility in operations reduce the risk for retailers;
  • Higher brand awareness – people are interested in the sudden appearance of a store, especially if it offers something different;
  • Increase sales – by taking your store where your customers are and making it more convenient from them buying from you;
  • Extended reach for established retailers – reach into different locations and new market niches without having to establish new stores in those locations.

Let’s take a look how retailers may use pop-up shops strategically to their advantage.

 Bricks and Mortar retailers use Pop-Up Shops to stay competitive

The battle for Brick and Mortar retailers to survive against the virtual onslaught of their online counterparts has been discussed many times by this author (e.g. “Crossing the digital threshold – adding Clicks to Bricks for sustainable retail outcomes“). Hence some Bricks and Mortar retailers had to resort to Artificial Intelligence and using the Internet of Things to integrate digital technology to the physical stores.  However, resolute Bricks and Mortar retailers have found another innovative way to enhance the shopping experience of dwindling customers.

Pop-up shops that are strategically placed on shopping floors are appreciated by customers because of the positive hedonistic aspects thereof 2. Here they enjoy the excitement of the experience and the exposure to new, unique products. The Pop-up shop offers an interactive environment where the customers may communicate with knowledgeable brand representatives to gather information and share their perspectives.

A pop-up shop placed inside the retailer’s store can be used as a hub where customers can get more technical information about products and services. It gives them the opportunity to buy the retailer’s products online while they are in her shop.

Online Retailers use Pop-Up shops to let their customers feel, smell and taste their products

One of the big drawbacks that online retailers have is that their customers can’t feel, smell or taste their products online.  However, pop-up shops may help online retailers to bring their customers in touch with their products. Pop-up shops are ‘mobile’ and can relative easily be assembled in places where customer traffic is high.  They can be erected in shopping malls, at trade fairs etc.  Further, online retailers that sell niche products may choose to setup the pop-up shop close to their target customers.

The big online retailer Amazon.com has started to launch pop-up shops in multiple locations across the USA, according to Eugene Kim of the Business Insider. The pop-up shops reflect the company’s growing drive to reach consumers directly . Amazon.com does it through a variety of access points including retail storefronts, home delivery, and innovative devices.

Amazon’s Pop-up Shop

Concluding

Although pop-up shops are not new to retail, they are nowadays used more strategically as a marketing tool. Therefore retailers should ask themselves what they want to achieve with pop-up shops. Are the additional costs and benefits worth the effort? Also, the roll-out of pop-up shops need to be preceded with a focused marketing strategy. Therefore, tell the people in the vicinity of your planned pop-up shop about it . They need to know what they can find there, and what the benefits are for them.

Finally, the rise of pop-up shops can partly be ascribed to the ongoing digital disruption taking place in the retail marketplace.

Notes

1 Baras, J. 2015. Popup Republic: How to Start Your Own Successful Pop-up Space, Shop, or Restaurant. John Wiley & Sons.

2 Kim, H., Fiore, A.M., Niehm, L.S. and Jeong, M. 2010. Psychographic characteristics affecting behavioral intentions towards pop-up retail. International Journal of Retail & Distribution Management, 38(2):133-154.

Images

flickr.com

Retail and the Internet of Things

The Internet of Things (IOT) may be an opportunity for Bricks and Mortar retailers. The proliferation of connected devices coupled with less-expensive technology platforms can be used by retailers to get customers back into their shops…

Jonathan Gregory, Managing Director – Accenture Strategy says IOT offers retailers opportunities in three critical areas: customer experience, the supply chain, and new channels and revenue streams.

Before discussing the opportunities of IOT, we must first explain what IOT is.

What is the Internet of Things?

There are many complicated, high tech definitions for the IOT. However, Jacob Morgan contributing to Forbes puts it simply – IOT is the concept of connecting any device with an on/off switch to the internet (and/or to each other).

How many things can you think of that has an on/off switch? In your home – TV sets, air conditioners, lights, alarms, stoves, geysers, garage doors – the list is never ending. Now imagine connecting all these devices to your smartphone or, connecting them with each other.  And then connecting everything with other persons…

The IOT is a giant network of connected “things” (which also includes people).  Hence the relationship will be between people-people, people-things, and things-things, suggests Jacob Morgan.

Let’s get back to the opportunities that IOT render for retailers.

What opportunities do the Internet of Things offers retailers?

The author of this blog has previously mentioned the challenge that Bricks and Mortar retailers have to stay competitive in the digital economy (http://bricks2clicks.co.za/retailers-can-remain-competitive-turbulent-times/). How can the IOT help retailers with their activities?

Customer experience

The customers of retail are adopting digital devices at a staggering rate. They are eager users of smartphones, tablets and digital watches.  Digital devices make their lives easier, and they want the same experience from them in shops as what they get at home or at their workplaces.

“The digital transformation of retail is driven by customers” says Tony Stockil, CEO and Founder, Javelin Group. Most customers want to experience shopping as part of their entertainment.  Shopping is now a form of entertainment, available 24/7, wherever people are. Retailers therefore need to ensure that the brand experience is seamless and constant at all touch points.

James Wilson, Baiju Shah and Brian Whipple did an open-source analysis of IOT user behaviour (“How People Are Actually Using the Internet of Things”, HARVARD BUSINESS REVIEW, October 28, 2015). They found that consumers want an IOT that provides personalized services that can be adapted to different contexts.

The data show that the most heavily used IOT programs are ones that make home life easier, more distinctive, and more pleasant. According to the results, customers show a big preference for services that don’t require them to go out of their way to make something work.

The supply chain

Connected devices and products provide retailers with the opportunity to help optimize operations in the face of a more complex supply chain, increasingly important digital channels, and a more demanding customer.  By utilizing the IOT, managers can track inventory more easily, and adjusting pricing in real time using smart tags.

IOT allow small retailers operating an eCommerce channel to automate their warehouses. By upgrading to automate warehouse retailers will be able to process orders rapidly, accurately, and in real time says the OPEX Corporation. The upgrading may put retailer’s service and standards on par with the “big boys” in their retail sector. The cost benefits of a goods-to-person picking system are that it saving time and it is accurate. The system ensures getting the right product at the right time at the right place.

Automated warehouse system

Automated warehouse system

Creating new channels and revenue streams

The power of the IOT lies in the opportunities it presents to retailers to create new revenue streams or build entirely new channels. As such, household appliances, home security and comfort products, even health and wellness products are all becoming part of the IOT ecosystem.

Some retailers are taking further advantage of the wide array of connected products by becoming an integration “platform.” According to Jonathan Gregory, the idea behind these platforms is to make it easier for customers to make all of their in-home devices talk to one another.

Grocery retailers may partner with the suppliers of connected platforms that would give them  direct channel to customers. Subsequently  a potential gold mine of customer data can be created – information associated with almost every aspect of the household, from utility usage to consumption trends.

What are the dangers of the Internet of Things?

Jason Bloomberg, President of Intellyx writing in Wired, gives seven reasons he thinks the IOT is doomed:

  1. Security – with products and people connected, savvy hackers can easily access important information about you and the way you live.
  2. Privacy – it is about ‘Big Data’. Therefore, the more IOT you have, the more Big Data they collect, and the more Big Data they collect, the more they know about how you behave.
  3. Digital fatigue – too much social media, too many smartphones, too many YouTube videos to watch. There are also too many apps to download, too much of everything digital and wired and online.
  4. Ecosystems – with the IOT the battle is starting again to dominate this technology ecosystem. There are many dealers, both large and small,  trying to establish a foothold, hoping to create their own ecosystem.
  5. No Killer App – so far, the IOT has no Killer App. However, the Killer App could be just around the corner. They have a nasty habit of appearing on the market suddenly with no warning.
  6. Enterprises will mess things up – for an enterprise to succeed with the IOT or any other part of their Digital Transformation initiative, there are no shortcuts – only hard work.
  7. Rather put customers in control of the IOT – let the consumer control the security of each device. Let them determine what data the devices upload to the Big Companies.

Are you ready for the IOT?

Customers want IOT programs that make home life easier, more distinctive, and more pleasant. Also,  the IOT gives small retailers the technology to do their logistics more efficiently and cheaper.  Further offer the IOT retailers the opportunity to collect data from their customers at their homes and place of work.

There are however a couple points about the IOT that should be considered before using it:

  • Is the IOT system developed and secured enough to use without facing financial of legal liabilities?
  • Are you certain that by using the IOT it will be done ethically?

Lastly, let’s hope that the IOT will add value to both retailers and their customers not long from now…