How pop-ups are paving the way for intrepid entrepreneurs and established online retailers
It has been more than three decades since Joe Marver carved out a niche for his seasonal Spirit Halloween store, yet, like most successful inventions and innovations, the former San Francisco-based dress retailer’s temporary pop-up shop wasn’t
created to pioneer a new retail trend but rather to solve his own problem: sluggish sales. Realizing the potential in selling costumes as the Halloween holiday approached, he sought to turn a quick profit by taking advantage of the low-cost option of temporary lease space in shopping malls. His brilliant and lucrative concept didn’t catch fire in the greater retail world, however, until the early 2000s, when the apparel industry took notice of the Japanese fashion label Comme des Garçons, which successfully operated a large number of pop-ups between 2004 and 2009. In obscure places and spaces, these nameless and eclectic makeshift boutiques appeared for no longer than a year and offered exclusive goods sold without price tags in an environment evoking delight and surprise.
Diving in feet first
Thanks in part to Marver’s successful Spirit Halloween store concept and the push from the apparel industry, pop-ups began to gain widespread popularity in the retail sector and by 2015 became not a force to reckon with but a proven concept that enabled even apprehensive and under-funded entrepreneurs and startups entry into the retail waters without the need to dive in the traditional way: lease-locked, long-term and head-first. In fact, Pop Up Republic estimated that by 2016 the pop-up industry had reached approximately $45-$50 billion, with no signs of a decline in sight. It’s an ironic twist, this “about-face” back to brick and mortar, when considering how consumers across the globe have embraced online purchasing, which has undeniably played a significant role in the demise of big brands such as Macy’s, Sears and Radio Shack. But according to The New York Times, it is because of the vacancies resulting from these store closings that landlords are becoming more receptive to pop-ups, which are breaking the mold of typical years-long lease agreements, with some merchants signing on for as short as a week. Meanwhile, taking a lesson from the big-box retailers, pop-ups place the emphasis on providing customers with a unique and more intimate brand experience rather than just a place to make a purchase. And it seems to be working—so well in fact that Amazon, the King of the Internet jungle, is venturing out into the real world with pop-ups that showcase everything from tech products to bookstores, even testing the idea of a temporary liquor bar in Tokyo in October 2017.
Connecting with brands face to face
As the pop-up concept continues to evolve with the increase of new players and online-only brand giants such as Indochino, Bonobos and the beauty retailer Madison Reed, customer experience is reaching new and creative heights. Consider IRL—In Real Life—which made its debut this year at the swank Water Tower Place in Chicago. With help from The Lion’esque Group, renowned for matching digital retailers with landlords seeking to fill vacancies, the pop-up hosts a collection of brands by theme and rotates them every few months. Immersing visitors and shoppers in tangible activities such as playing on Killerspin ping-pong tables and eating in dining-room settings, IRL takes the shopping experience to a whole new level without an exclusive commitment to one brand.
Making it real
By the year 2020, the consumer intelligence firm Walker predicts customer experience will overtake price and product as the key brand differentiator. Inside its recent report, Customers 2020, 300 customer experience professionals from large, multinational B2B organizations spanning a wide range of industries weigh in on the future, suggesting that customer expectations, derived in large part from changes implemented decades ago, have raised the stakes significantly as more consumers expect companies to intuitively understand their individual needs and personalize their shopping experiences. And they are not alone. In addition to research giant Gartner’s 2016 report titled Customer Experience Is the New Competitive Battlefield, which states that greater competition and growing consumer power is forcing companies to adapt to stay competitive, Kampyle, a leading expert in customer feedback, found that 87 percent of customers think brands should focus more on providing an authentic and engaging experience. Immediate gratification via the Internet is no longer enough. That’s why even the world’s biggest online-only brands are making a move back to brick and mortar to provide the concrete experience consumers have begun to crave—again.
Defining a clear path to the evolving retail industry
Pop-ups like IRL and dozens of others are not only inspiring a new generation of entrepreneurs as well as online retailers hoping to bridge the gap between virtual and physical, they are also demonstrating that real success is achieved and sustained by providing a consistent customer experience across all channels, both virtual and physical. Even Amazon is beginning to understand the vital importance of building a memorable and entertaining physical experience—and getting it right the first time. Those who fail are likely to end up in the retail graveyard alongside a growing roster that includes Mervyn’s, Sports Authority and Circuit City, which is set to reboot for a third time. Entering the market with newly designed small-format stores, Circuit City is taking cues from the past, present and future, with a sharper focus on facility management (FM), which has become mission critical to a brand’s reputation.
Forward-thinking retailers are increasingly relying on facility managers to provide strategic leadership in facility development and multi-site maintenance, particularly as more and more landlords and brands seek new ways to temporarily transform four square walls into whimsical rooms where shoppers can lose themselves in unexpected experiences. As retailers place more emphasis on lower-cost physical location options to attract, engage with and retain customers, facility managers are contributing significantly to the influence a brand wields within its market. Whether staging multiple art gallery or ice-cream-parlor pop-ups across the country, consistency in design, execution and maintenance provides brands with the ability to test product sales, learn buying habits from the customer and increase their physical presence with less risk and capital. It’s that kind of strategy Canadian retailer Kit & Ace credits for enabling it to open 63 locations in just two years.
Though Spirit Halloween has been expanding its physical footprint since the ’80s, with some 1,300 temporary locations now scattered across North America and Canada, many hopeful retailers—from mattress manufacturers to single moms—have the ability to test their retail resiliency one day, one week or one month at a time. With pop-ups defining the new entry fee into an industry that is evolving at rapid speed, it is a welcomed and revolutionary shift bringing all stakeholders full circle.
About Joseph Scaretta: With more than 15 years of experience as a serial entrepreneur, innovator, investor and leader of facilities management and construction companies, Joseph Scaretta is adept at growing organizations by developing creative niche service offerings. By providing legendary customer service and fostering a “get it done” team culture, Scaretta—along with fellow co-CEO and co-founder, Moses Carrasco—Scaretta develops and drives CS Hudson’s strategic vision and delivers all company goals, both internal and external.
Client-centric and believers of high-touch support and communications (“red carpet treatment—always!”), Scaretta and Carrasco were featured in Peter Shankman’s 2014 book, “Nice Companies Finish First: Why Cutthroat Management Is Over—and Collaboration Is In,” in which Shankman attributes the overall success and sterling reputation of Empire Facilities—a company that Scaretta and Carrasco founded in 2003—to the pair’s ability to listen to clients’ needs and turn them into support opportunities.
After nearly a decade of building Empire Facilities to be an industry-leading retail, restaurant and commercial facility maintenance and management company, the duo recapitalized with private equity and moved onto their newest venture, CS Hudson.
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