Earlier this month, I wrote about pop-up retail stores—temporary brick-and-mortar extensions of online retail sites—and about my recent conversation with Melissa Gonzalez, founder and CEO of Lion'esque Group, a pop-up retail consulting firm in New York. The portion of the conversation I covered in that post left me with an appreciation for the worthwhile nature of these pop-ups, but I wanted to look deeper into the value that Lion’esque Group adds to the equation.
To that end, I opened this portion of the conversation by noting that according to a Forbes article from about a year ago, the average pop-up that Gonzalez’s company works with sees a 35 percent increase in sales from doors open, to six months after doors close. I asked Gonzalez if that’s the span of time that’s typically used to calculate ROI in the pop-up retail world. She said it depends on the brand:
I always tell our clients, it’s not about the sales they make while the doors are open—if you limit it to that, you’re kind of selling yourself short. For new and emerging brands, every dollar counts, so the time they’re open in the pop-up means everything to them. But you always need to approach a pop-up by considering more than just what you’re selling when the doors are open—it’s also what you’re doing to create brand awareness, to learn about your customers and product fit, and how you’re using that to fine-tune the next couple of quarters so you can continue to improve your ROI, with both marketing and merchandising strategies.
I asked Gonzalez whether there’s a benefit that can be identified and measured after the next couple of quarters are over. She said there is, and she gave an example to illustrate her point:
We have a pop-up client right now, Nora Gardner. Some of it’s tangible, some of it’s intangible; some of it’s qualitative, and some of it’s quantitative—it depends on what you do with it.
So with Nora Gardner, we did a pop-up with her in December 2013 as a collective, and she’ll even say it wasn’t the most successful pop-up for her. Part of it was because she was in a collective, and part of it was because she wasn’t targeting the right customer—that pop-up, while the doors were open, was not profitable for her. But she learned a ton—she learned that her target customer wasn’t the person she thought it was. It wasn’t the girl right out of college—it was an older woman, 35-plus, more established in her career, who knew herself better.
Her marketing and merchandising strategy all changed because of that first pop-up, and she fine-tuned it for the next nine months. In September 2014, she opened a one-month pop-up, and she broke even in the first week. She’s been seeing growth ever since, and continues to come back to use this strategy, and she’s now considering a long-term lease. So her ROI was like a year, but it was hugely impactful for her whole business, because she was able to sit and listen and learn from the people who were coming into the space, so she could re-strategize her business.
As for the biggest mistakes pop-up retailers tend to make, Gonzalez said cutting corners in the wrong places is all too common:
They jump on a location because it’s free, not because it’s the right fit. There’s opportunity cost in everything, and it’s all about location. You need to be in the right space with a pop-up, even more so than with a long-term lease. Don’t go for the cheapest space—you have to go for the right space. I’ve seen that mistake made plenty of times, because you’re fighting an uphill battle on foot traffic by not being in front of the right customer.
I also see people skimping in the wrong areas when it comes to budget. So maybe they do invest in the right space, but then they don’t spend the right amount for the right store staff. That’s huge, because your store staff become an extension of your brand. Customers walk into a pop-up store with a different mindset than walking into a regular store. They’re going in there to be surprised and delighted, and to have an experience and to discover something new. Part of that discovery is the experience they have with the in-store staff. So not adequately investing in quality people, and not spending the time to really train them to understand the value of your brand, and what’s interesting about each product, really can hurt the customer.
Finally, I asked Gonzalez if she could have one do-over as founder and CEO of Lion’esque Group, what it would be. She said she should have heeded her own advice sooner:
I think everything’s a learning experience, but a trap that happens in the beginning is you say yes to everything. I think in the beginning it was very distracting to me as a CEO, because we were so eager to take on projects, I didn’t take time to think all the factors through. Everybody needs a brand filter, and homing in on our brand filter—what is our value proposition, and who is our target customer—I tell my clients to do that all the time, and I took a long time to do that for myself. We’re getting there, but I wish we could have done that sooner.
If you’d like to take an even deeper dive into all of this, you might want to check out Gonzalez’s book on the subject: “The Pop Up Paradigm: How Brands Build Human Connections in a Digital Age.”
A contributing writer on IT management and career topics with IT Business Edge since 2009, Don Tennant began his technology journalism career in 1990 in Hong Kong, where he served as editor of the Hong Kong edition of Computerworld. After returning to the U.S. in 2000, he became Editor in Chief of the U.S. edition of Computerworld, and later assumed the editorial directorship of Computerworld and InfoWorld. Don was presented with the 2007 Timothy White Award for Editorial Integrity by American Business Media, and he is a recipient of the Jesse H. Neal National Business Journalism Award for editorial excellence in news coverage. Follow him on Twitter @dontennant.