If you walk into Costco this fall and wonder why there’s a designated space for Lovesac sectionals in a random section of the store, don’t panic. It’s supposed to be there. In fact, about 700 Lovesac pop-up stores will appear inside Costco warehouses across the U.S. for 10 days.
Starting with 200 pop-ups in 2017 and ramping up that number to 500 last year, these store-within-a-store setups, garner significant revenues. Believe it or not, no less than 10% of Lovesac Co.’s annual sales come from pop-ups.
Interestingly, about three years ago, pop-ups were namely used for experiential marketing, fashion-week promotional stunts, or online brands trying out the brick-and-mortar scene.
“I would get calls from a lot of emerging brands that were on Etsy and barely had their own website, and they wanted to do a one-off holiday pop-up for two weeks.”
Today Gonzalez get’s calls from companies like Amazon and Nordstrom, as well as direct-to-consumer brands wanting to do 3-to 12-month pop-ups to test the viability of stores in certain markets.
In part, the appeal of pop-ups’ is that they pose little risk. Retailers can commit to an eight week stint and see how things go. So instead of launching a collection nationwide, or betting the whole tamale on a 10-year lease, everything—from new locations to new concepts—can be tested short term.
Experiential marketing is closely entwined with sales and location testing. Take, for example, makeup e-tailer Glossier Inc. While the brand does have permanent stores in New York and Los Angeles, the startup ran three weeklong flash stores in three cities in 2017. In 2019, Glossier attracted a fair amount of media buzz with six to eight week pop-ups in London, Boston, Seattle, and Miami—it has one more planned for Austin this fall.
To ensure successful pop-up ventures, social media engagement is essential. “Booking a space with high foot traffic is not enough,” says Mohamed Haouache, CEO of TheStorefront.com—a company that runs a large pop-up space listing. Brands also need to have a lot of followers. Many celebrities and influencers with large followings have joined the pop-up game, including Taylor Swift, who recently opened a pop-up store in New York for her fashion collaboration with Stella McCartney.
There have, of course, been plenty of pop-up failures. In most cases, it’s a result of companies not having adequate manpower to expand to a store. “Brands have to have the operational infrastructure to handle the growth of their e-commerce and also have a store, or else it becomes a very big hit to their bandwidth,” admonishes Melissa Gonzalez.
While online shopping represents 14% of all U.S. retail sales, well-executed pop-ups—or pop-ins, as shops within another retailer are sometimes referred to—persuade customers to return in person, diminishing the long-predicted domination of e-commerce.
By way of example, the first floors of Bloomingdale’s locations in New York, L.A., and San Francisco feature the Carousel, a 1,500-square-foot pop-in. Merchandise and design switch out every two months, with the latest theme being a “Window Into Seoul”, featuring Korean brands with a K-pop aesthetic.
“One of our big focuses is to create these ever-changing and very exciting elements to continue to drive customers to our stores. I really think that for the future of retail, it’s important to make brick-and-mortar a place where the customer really wants to come.”
~ Justin Berkowitz, men’s fashion director, Bloomingdale’s Inc
From Lovesac and Amazon to Glossier and Bloomingdales, it’s clear that pop-up stores are evolving from their original marketing roots into a key driver of sales and location testing for retailers big and small, as well as online and brick-and-mortar brands.
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