Top 4 Business Benefits to Having a Pop-Up Shop

Pop-up shops, also known as temporary retail, are an effective way to build brand awareness for your retail business.

But did you know that pop-ups can benefit your business in other ways? From building deeper relationships with your customers to testing new markets, pop-up shops offer brands the opportunity to build an offline arm to their business — all without breaking the bank.

It’s understandable why more brands want to get in on this $10 billion industry — this strategy has staying power and is only set to grow as time goes on.

If you’re considering taking the leap into physical retail, here are 4 business benefits to having a pop-up shop.

1. It will Engage Customers Online and Offline

Go Multichannel With a Pop-Up Shop

If you run a primarily online business, pop-ups are a chance to interact with your customers in the offline world. And in today’s retail landscape, it’s crucial to engage shoppers both online and offline with a multichannel sales strategy.

Multichannel sales help retain 89% of customers, and those customers are more valuable over time: Shoppers who engage with brands on four or more channels spend about 9% more than their less-engaged counterparts.

“Brands must appeal to those who love to go into the store to see, touch and smell what they’re going to purchase, as well as those who love the ease of one-click buying,” says Melissa Gonzalez, founder of pop-up architecture firm The Lion’esque Group, in her book The Pop-Up Paradigm.

Studies show that 94% of of all retail sales still happen IRL (in real life), so having an offline presence is wise in the shifting retail industry.

Demo Products and Share Your Story

Pop-ups also allow retailers to engage customers with product demonstrations and answer questions on the spot. Brands benefit from this face-to-face interaction, and customers learn more about your products and get immediate answers to any pain points they may have.

“Pop-up shops have given retailers the opportunity to interact with customers, express the inspiration behind their collections, and tell the story behind their products,” says Dr. Charlotte Shi, a fashion marketing and branding lecturer at Nottingham Trent University.

Retailers who invest in a pop-up shop can do just that: Authentic engagements with your customers offline allows you to share your story. Shoppers can learn about your brand and the story behind your products — and this authenticity can build brand loyalty.

For more examples on how offline interactions can help sales, check out our article on building customer loyalty with a pop-up shop.

2. Pop-Ups Are Cost Effective

As you might have guessed, pop-up shops are also a desirable offline sales strategy because they can be high-impact while simultaneously being cost-effective.

Big and small brands alike are taking advantage of the cost savings. It only takes an average of $2,000 to set up a pop-up versus around $98,000 for a stationary brick-and-mortar store. And even though pop-ups cost a fraction of full-scale storefront, they’re no slouch when it comes to sales: On average, pop-ups earn $1,230 per square foot compared to $341 in permanent stores.

Pop-up shops are less expensive than traditional retail storefronts for multiple reasons, including:

  • Less square footage: Because pop-up shops tend to have a smaller retail footprint, rental rates are far more reasonable.
  • Shorter rental period: Traditional storefronts typically require retailers rent a space for anywhere from three to 10 years. But pop-ups have a shorter lifespan — think anywhere from three days to six months. That means shelling out less cash for rent in the long run.
  • No extra storage needed: Pop-up shops are temporary by nature, so brands usually offer a limited amount of inventory during a pop-up’s lifespan. That means retailers don’t need extra storage on-site for inventory.
  • Lower overhead: Again, temporary retail means your general overhead is far lower. Expect to spend less on inventory, staff, rent and utilities, etc.

A soft commercial real estate industry has also contributed to a “renter’s market” when it comes to finding spaces to lease. Higher-than-average vacancy rates in chi chi neighborhoods, malls and typically permanent storefronts have helped brands get great rates at prestigious addresses.

Eager to get tenants, commercial real estate brokers are giving in to the rising tide of temporary retail and their shorter leases.

“Landlords have their backs against the wall right now,” said Samantha Elias, co-founder of the secondhand clothing company The Vintage Twin, in a recent New York Times article. “I tell them that some money is better than no money, and I promise not to bother you.”

3. You Can Test Out New Markets

Pop-up shops require a much smaller financial commitment, so they’re ideal to use when testing the waters in new markets.

Whether you’re an online-only retailer ready to dabble in offline sales or you’re interested in expanding your physical presence to a new city, pop-ups are a low-risk way to gain traction.

When dipping a toe into a new market, pop-ups help build brand awareness before brands commit to a full storefront. Brands can root themselves in a community to find their target customers within an area. Use face-to-face interactions to engage customers (like the methods highlighted above) and build trust prior to fully investing in a new market or full offline sales strategy.

Everlane tested out new markets with pop-ups and experimental spaces, before opening its first permanent location in New York last Winter.

4. It’s Easy Experimentation

Try Out New Products and Soft Launch New Collections

Because the financial commitment for a pop-up is significantly less, brands can use temporary retail to experiment with new products or collections.

Rather than conducting a formal (and expensive) market research study, simply ask the customers visiting your pop-up.

Pop-ups can serve as your own way to poll your target customers offline. Sell new products alongside your usual inventory and ask for customer feedback on the spot. Does your new product or collection resonate with them? How does it stack up against the products your customers know and love?

Brands can also send home free samples of new products for customers to try. In exchange, ask them to complete a short survey online to gauge their responses to your yet-to-be-launched line. Then you can use that information to perfect and polish those new products before launching them to the broader public.

Explore Immersive Retail Experiences

The newest generation of shoppers favors purchasing from brands that provide memorable experiences. More than two-thirds (78%) of Millennials prefer to pay for experiences rather than things, and almost all (98%) customers are more inclined to make a purchase after visiting an experiential activation.

Savvy retailers can give consumers the best of both worlds via a pop-up shop. For example, WonderBra recently hosted a pop-up shop in Montreal that offered free bra fittings and hair styling for shoppers.

Image: Retail Insider

Moving Forward With Your Own Pop-Up Shop

Now that you’re filled in on the many business benefits of hosting your own branded pop-up shop, learn how to do it with our ultimate guide to opening a pop-up shop >