Just Don and Mitchell & Ness pop-up at Lollaplooza – Photo: @St.Vnthony via Twenty20
Is it time for retailers to create a tech strategy for pop-up shops?
The pop-up shop is the ultimate expression of a trend whereby retailers reach beyond their stores and put themselves in front of consumers instead of waiting for them to show up at a store. It’s also much more than that. E-tailers are perfecting the art of using temporary physical stores as proving grounds to reach new kinds of consumers. When staid department store retailers like Macy’s are remodeling stores to include areas that have more of a permanent pop-up market feel, you know a trend has reached the status of well-established.
The tech side of making pop-ups happen, though, leaves a lot to be desired. Retailers basically have two choices: roll out big heavy registers and all of the infrastructure that enables store operations or go so lightweight as to lose sight of loyal customers and sometimes even the ability to manage returns from pop-ups. Neither of these options will serve if pop-up shops become an enduring strategy for retailers — which already seems likely.
Here are four challenges that a tech strategy for pop-ups must overcome:
- Deployment. Full PCs with cash drawers and all the peripherals — plus a local LAN to enable a mini offline store — require an enormous amount of resources to deploy. Going with something very lightweight, however, has its own challenges.
- Data. Retailers who choose to go low-tech with POS to support pop-ups often do so at the expense of an integrated experience for consumers. Customer lookup? Nope, not available, let alone an omnichannel experience. And sometimes retailers lose sight of even basket-level data, choosing to take a report out of the whole event as a single line item to bring the transaction back into the enterprise.
- Localization. Especially if you’re implementing a roving pop-up, it’s important to keep up with rolling through multiple tax codes. That’s not the only localization challenge. Making sure you put the right local “home” store for each customer on the receipt helps keep customers connected to the brand long after the event itself is over.
- Offline Resiliency. Taking commerce technology on the road poses challenges. Some retailers try to address this with mobile hotspots or cellular-based devices, which can experience dropped connections. As soon as that happens, both consumers and associates get antsy about whether the sale went through — which is not a good experience for anyone.
Discussion Questions
DISCUSSION QUESTIONS: Is it time for retailers to create a tech strategy for pop-up shops? What do you see as the biggest challenges facing retailers and consumer brands setting up pop-up shops?
Poll
BrainTrust
Shikha Jain
Partner, Simon-Kucher & Partners
Ralph Jacobson
Global Retail & CPG Sales Strategist, IBM
If the goal of the retailer is to put the consumer at the center, then pop-ups are the way to go. You can reach new consumers you might not have before (especially for e-tailers going offline), be agile and nimble in your operations without the burden. Pop-ups also match the theme of the next generation of shoppers which revolve primarily around impermanence (think Uber replacing car ownership). As is the case with new formats, the logistics and data will continue to evolve and become more sophisticated but I will not be surprised in 20 years when the pop-up format will represent a sizable channel for retailers.
A successful pop-up strategy requires retailers to be agile and nimble to take advantage of opportunistic pop-up locations and events. Agility is not a core competency for many retailers and the last thing you want is problems with technology at a pop-up. For those retailers that are focused on expanding their pop-up presence, a technology strategy is imperative.
The greatest technology challenges for pop-ups are getting the right technology quickly and the reliability of the Internet service.
Simply put: if the tech employed by pop-up retailers can’t keep up, the opportunity for connection is lost. As they say, “you never get a second chance to make a first impression.” Tech deployment must be given as much thought as the experiential expression of the brand.
The fact is that this is not rocket science. We had developed a strategy for this specific problem a few years ago. The critical components are a cloud-resident, possibly SaaS merchandising and browser-based, mobile (read,”small footprint”) POS system, access to Internet service (in malls, to be provided for the mall). These components are not outside the reach of almost any retail enterprise. The up-front cost does not have to be prohibitive, and the implementation time does not have to be protracted because the software only has to be activated at the centralized level.
Great timing in bringing this up Nikki. Pop-up shops are certainly a trend that is becoming more permanent IMO. However, I think the big chains are more likely to follow Macy’s lead of “pop-up” environments inside their own footprints or more permanent smaller formats (e.g. Nordstrom Local) vs. true pop-ups that require a different tech strategy. That said, a clear strategy around the four areas you detail is smart for small- to mid-sized companies that are looking to differentiate via a new store format.
I’d say the data piece is the biggest challenge for retailers and brands as that is the very reason to set up such an environment – to learn about shopper preferences around product and experience. If the tech doesn’t provide the necessary data to glean insights from – it’s a lost opportunity.
The short answer is “yes.” They need to develop a strategy to deal with all of the things addressed in the article. I’m not being flippant about it – in my opinion, this is really difficult. It lies at the heart of why retailers move slowly in the first place. They all have infrastructure that they rely on, and a set way of collecting data which helps the rest of the organization understand what the consumer wants/needs.
Having said that, pop-ups aren’t going away, and retail is going to move even faster than before. Building a core strategy, and then keeping a toolbox of good, agile tools will help organizations satisfy as many factors as they can as they continue to evolve.
Bloomingdale’s 59th Street has a great pop up set up, complete with video walls. The Design Director tells me it takes less than 24 hours to do a complete turn around. It is also part of the digital transformation of the commercial brokerage business – making short term leases easy and fast.
Pop-ups (as well as limited-time offers, store-within-a-store) are great ways to promote one’s brand, connect with customers and create excitement. This is yet another reason for retailers to modernize their systems and infrastructure so that associates have necessary info and the ability to complete transactions wherever, whenever.
Many retailers have little or no documented strategy for tech for their primary business(es), and even fewer have one for pop-up shops. Developing a clear strategy is critical in order to fully leverage the great opportunities presented with pop-ups. The innovation experimentation is limitless with this channel, and most every retailer can take advantage. However, it must not be a “shotgun” approach. We’re seen many pop-ups fail without a clear business and technology strategy.
If we’re asking the question, the answer is most definitely yes. Consumers have a high bar when it comes to experience — and they should given all that’s available today. As retailers we need to make sure we engage (or develop) the appropriate solutions to support that.
Trying to create a tech strategy for a temporary retail location (this is what pop-ups are) is self-defeating. Pop-ups are short-term reflections of consumer’s needs. Pop-ups don’t have to be small, or tech focused, but instead should be nimble and flexible. This is at the core of their model. If you are trying to focus on a tech strategy you are shifting to an additional requirement which will only increase the burden of the pop-up model. The key here is to have the ability to create an environment which reflects the needs of the consumer who is in your store at that moment. This does not necessarily require a tech strategy, nor should it.