Millennials and Gen Z are changing the retail game. How can retailers use temporary spaces like pop-ups and store-in-stores to up their customer experiences and engage the younger generation?
We speak with Andy Mills, General Manager of X-Factor Displays, our design blog‘s partner company and leading retail display and activation agency that designs and manufactures customized retail displays to guide brands in re-imagining their purpose and customer engagement strategies.
Andy Mills, General Manager of X-Factor Displays
RISE IN POPULARITY OF POP-UPS
Pop-up stores are proliferating across the retail sector and fast, according to a recent report by CB Insights, a strategic intelligence company, on the emerging retail trends in 2019. In Australia, it is a trend defying the gloomy retail landscape, enjoying an ubiquitous rise in popularity.
Where does the pop-up phenomenon come from and why is it here to stay?
While the pop up trend is just peaking down under, the pop up store concept isn’t new. Trendwatching.com coined the term back in 2003, with US mainstream retailer Target one of the earlier pioneers in pop-up concept spaces launched for their collaborations with fashion designers like Isaac Mizrahi.
In the Australian youth market, the pop-up trend really started gathering momentum in 2009 when brands like Ksubi and Insight started gaining kudos for creating innovative pop-up retail spaces. Fast forward a few years, even department store Myer has jumped on the pop-up trend by opening temporary Myer-branded kiosks in public parks and railway stations in the lead up to Christmas.
A wide variety of brands are embracing pop-up culture: e-commerce retailers looking to establish a physical presence, content brands hoping to build brand affinity, and traditional retailers aiming to generate buzz and drive online conversions.
“In my experience working with fashion and lifestyle brands, pop-ups can be extremely successful if they are built around a specific goal,” Andy says. “The goal can be to test a new market or geography, or to expand audiences by collaborating with other brands. Whatever the goal, it’s important to keep it at the forefront throughout the planning process.”
Pop-ups directly feed on the experiential approach, which is the number one thing retailers need to invest in right now if they want to focus on drawing Millennials and Gen Z.
The rise of social media along with the shift of consumer attention from ownership to experiences have had a significant impact on the way brands market and sell their products.
Millennials’ annual spend is predicted to reach $1.4 trillion by 2020, accounting for almost a third of total retail sales. The new wave of shopping behaviours, greatly driven by the influence of social media and the ‘share & like’ culture, is fuelling e-commerce and transforming the dynamic of physical store spaces VS online shopping. And it’s reflected in total consumer spending. Over the past two decades, spending on clothing has declined by 20%, while spending on travel, hotels, and restaurants and bars is setting records in its rapid growth.
THE CHALLENGE: WHAT IS HAPPENING TO BRICK-AND-MORTAR?
Many retail brands are struggling – that’s no secret. Over the past couple of years, we have seen multiple high-profile, large-scale stores closing shop and going into liquidation. This is attributed to a number of reasons – the growth of e-commerce impacting in-store sales, rising minimum employee wages, unreachable rent costs, etc.
“In 2019, consumers are more empowered and ‘in charge’ of their shopping behaviour than ever before – transparency in pricing, easier access to product comparisons, and a much wider marketplace pool to choose from,” Andy says.
Despite doomsday predictions, brick-and-mortar isn’t drowning but, instead, has found a new role in the retail shopping ecosystem. Physical store spaces are less focused on stocking and moving inventory, shifting their attention to communicating brand values, collecting customer data, and providing personalised product experiences.
TEMPORARY SPACES AS A SOLUTION
Andy praises the cost-efficiency and simplified setup process of pop-ups.
“To roll out a pop-up, only about 20-25%% of the setup costs needed for traditional physical retail outlets is needed,” he says. “Not only is it considerably more cost-efficient than designing and delivering longer term spaces, but it’s also much simpler in terms of planning, documentation and build.”
Chadstone, an Australian shopping mall has been at the forefront of the pop-up retail movement in Melbourne since 2017. They have had several fantastic executions that showcase the value of a temporary space in elevating brand image and customer experience.
A stand-out example was the collaboration with Cartier to bring Australians the first Cartier Cinema experience where shoppers were escorted inside the giant Cartier red box for an immersive cinema experience.
Last year, Chadstone had another interesting pop-up event, “Shop ’til You Drop” where Chadstone First member got to experience complimentary treats throughout the day at the “instagrammable” Private Booth.
Recently, Chadstone was home to a pop-up booth by Cadbury Dairy Milk that ran for three weeks in July, providing a multi-sensory 3D-printed chocolate experience where customers could design their own treats by choosing from a selection of chocolates modified with letters, symbols and shapes and watching it being brought to life right in front of them.
Cadbury Dairy Milk’s 3D-printing pop-up store invited shoppers to custom-design their own chocolates.
Taking a localisation approach, the series of shapes and symbols included unmistakably local icons like the Australian kangaroo.
“This pop-up provided a fun way for the brand to engage with their customers, building in-person relationships,” Andy says. “Looking at the design, the layout was super simple. It just had the basics and was relatively small – definitely a very cost-efficient design.”
He reckons this concept proved so successful because it had that x-factor that immediately draws the attention of people passing by.
“The kids loved it, so of course, the parents love it. This was an excellent initiative from Cadbury’s side to drive engagement.”
Photo: Weekend Notes
And, when we talk about engagement, it always leads into the subject of social media exposure. ‘Instagrammability’ is a term all retailers need to add to their marketing vocab if they’re serious about engaging Millennials and Gen Z.
According to Andy, the ‘agenda’ in this regard is not so much changing the behaviour of the younger shoppers but rather encouraging retailers to give consumers a better reason to visit stores.
“If you can find everything you need and want online, there’s no need to visit a physical store,” he says. “But online methods cannot provide the same level of engagement as in-store, so no matter how good the online shopping experience is, something will always be missing. Pop-ups are the solution for this ‘something missing’.”
HOW DO BRANDS CHOOSE A POP-UP MODEL THAT WORKS?
From a design perspective, the planning stage is the most important in delivering pop-ups. Cadbury did this well planning this roll-out to launch on World Chocolate Day, feeding on the buzz around this celebration.
“Since the pop-up concept offers a different retail experience compared to the typical brick-and-mortar location, retailers must start the planning process at least three months before opening a pop-up space.”
The value of temporary spaces lies in their sense of exclusivity and ‘urgency’, thus requiring retailers to plan far in advance to cover all facets of merchandise buying, location, design and marketing.
For retailers unsure about setting up a standalone pop-up location, the store-within-a-store concept can be a viable alternative. Several brands have partnered with major retailers, such as Myer or David Jones, to showcase and sell related relevant items in-store. These partnerships enable brands to introduce their products in an atypical store offering, with the goal of broadening their appeal among new consumers.
What is the difference between standalone pop-ups and store-in-stores?
Andy explains store-in-stores as a better solution for the goal of driving sales, while pop-ups tend to be more experience-focused.
“Traditional standalone pop-up stores suit retailers that want to stay in control of all aspects of the store design without having to gain additional approvals through a third-party store operator,” he says. “Projects of this nature require a great deal of planning: finding the right location, ideation and planning, design and procurement, approvals and installation… In an ideal world we would love more than three months to ensure a seamless execution. Anything shorter than this normally causes compromise, which is the last thing we want.”
Arguably, location is the most significant factor to consider when building a pop-up shop. With limited time in the spotlight, pop-ups need to be located in an area that will attract the right attention from targeted shoppers. By collecting and analysing shopper data from online purchases, retailers can pinpoint the best location to open a pop-up.
It’s all about the brand’s target market, Andy says.
“Who is your ideal customer? If they are Millennials, you’re more likely to benefit from a CBD or inner suburb location, or an area surrounded by other stores popular among younger shoppers. Rather than tailoring your location to heavily populated areas, opt for places where your unique target market already exists and drive footfall that way.”
MEASURING SUCCESS & DELIVERING ON THE PROMISE OF SUCCESS
Traditionally, transactional numbers are the best metric to evaluate the success of a retail roll-out. But Andy prefers a different approach.
“Yes, the traditionalist in me would measure success translated through revenues and profit, but the number of customers walking through your store proves their interest in and awareness of your brand, which is just as valuable as making a sale,” he says.
The potential of a customer to become a loyal follower of a brand is thus just as important as the transactional act of selling a product.
Footfall is often just as important as transactional success measured through revenue and profit.
Social media coverage also serves as a valuable metric for successful engagement. In the digitally-driven age, pop-ups are ideal for social media engagement. Brands are looking for compelling content to share and consumers are looking for compelling content to engage with. An event might get 30 000 people to attend, but it holds potential for another 300 000 impressions online.
Andy was amazed to see how many people – especially the younger crowd – were captured by these pop-ups at Chadstone.
“The pop ups were getting everyone talking. They were creating something new. Nintendo treated the gamers to a gaming pop-up with 16 screens showcasing the new Super Mario Maker 2, and Cadbury presented a sweet escape for chocolate lovers celebrating World Chocolate Day.”
The Star Wars Jedi fighting experience pop-up captured the attention of fans of all ages.
The Jedi fighting experience by Star Wars however stole the show. Visitors could test out their lightsabre skills with ‘Jedi Masters’, snap a photo inside the Rebel Alliance X-Wing Resistance Fighter or with statues of character favourites like Chewbacca and Kylo Ren, and dress up with props like the iconic Darth Vader Helmet.
This pop-up prompted Chadstone to collaborate with a handful of luxury houses to bring their take on ‘Fashion meets Fantasy’ to life. Star Wars also teamed up with brands like Lego, adding to the experience by building and displaying the massive 7 500-piece Millennium Falcon Lego set – the largest of its kind to date.
The pop-up showcased for three days in Melbourne’s Chadstone shopping centre, duly capitalising on the notion of exclusivity.
“A truly incredible experience throughout the centre – this extreme level of theatre was absolutely outstanding! I’d love to see more of this commitment to customer engagement,” Andy says.