Masterclass recap: The power of the pop-up

Pop-up shops are an increasingly useful route to take for raising brand profile and awareness, launching new lines and as a testing ground for brands and online retailers looking to dip their toes in to a bricks and mortar “experience” - without getting their fingers burnt on lengthy and costly leases that they can’t get out of.

TheIndustry met with experts in the field at W London – Leicester Square this week to discuss the pros and pitfalls. Speaking first was Natasha Frangos, a partner at haysmacintyre, a UK top 30 firm of chartered accountants and tax advisers, who heads up the creative, media and tech team at the firm – working with scale-ups and the entrepreneurs behind them.

Frangos, who has assisted and guided numerous fashion brands through the minefield of costs, budgeting and other key factors to nail down before embarking on a pop-up shop, talked extensively about the benefits and risks, cementing that success is “all in the planning.” She said: “We tend to advise our clients across their lifecycle, so we get in relatively early and we’ll be with them for a whole host of services along the way.

“We’re accessible and we want our clients to succeed. The creative element of what we do is a lot of fashion and ecommerce. We’ve had the pleasure of working with a lot of lovely brands, often from when they’ve just started, such as Erdem and Sophia Webster.”

Frangos also revealed some interesting, and surprising, statistics and said that it’s fair to say that the media has exaggerated this pending “apocalypse” that’s going to happen in retail. “For sure it’s a time of challenge, and you have this constant friction between online and offline. The key takeaway is that this is not a time for brands to be complacent, and actually there’s lot of opportunity and examples of people being really creative about what they do with their brand.”

According to Frangos, while shopping online is clearly a growth area, it still only accounts for 18% of total UK retail sales. “There’s nothing that compensates for the customer interaction that a store brings,” she commented. “The experiential impact is something that consumers are actually wanting at the moment. There’s been a recent study that shows that spend on experiential-related services has grown 1.5 x faster than overall personal spend, and 4 x faster than expenditure on goods. The concept of retail as a service is also a key theme, consumers are looking for a more personalised experience.”

Another survey that’s come out says that 24% of 2,000 respondents said that they would pay more for a product that was embedded in a “meaningful experience”, and 43% stated that they are likely to spend more with a retailer that creates a meaningful instore experience. A further 66% said they are more likely to shop at places that have cafes, restaurants and bars. “I think these stats are really telling of the kind of environment that we are in with regard to the retail space,” offered Frangos.

“Consumers are constantly bombarded with content and choices, but actually what they are looking for is an experience that’s really going to resonate with them, and they’re going to buy in to that experience. All of which sets the scene nicely for pop- ups.”

While temporary stores may have started out as a bit of a fad to launch a new collection or as some kind of stunt to interact with consumers, and there is definitely good reason to do such one-offs to spark interest and creative a buzz, the power of the pop-up should not be underestimated.

Says Frangos: “They are a very credible way for brands to launch their bricks and mortar offering, and they offer the opportunity to create that experiential interaction that consumers are searching for. They are also an accessible route for young brands to interact directly with their consumers, without the massive investment and long-term commitment of having to do a store fit out and committing to long-term rent. There’s a flexibility to doing a pop-up, and the fit out is a fraction of the cost to a permanent bricks and mortar offering.”

Though it is crucial that the fit-out reflects the DNA of your brand, something that may be better achieved in a smaller space, so more budget can go into really hammering the brand message and identity across.

Another key point Frangos raised, is that pop-ups play an important role in the “omnichannel experience of your brand,” as consumers are learning about brands through social media, search engines and different types of print. “Just having a very complementary offline offering, to complement your established online offering, can work really well if it’s done consistently, and it’s a great way of building up your loyal core of shoppers.

“The other benefit, undoubtedly, is that it’s a chance to get unfiltered, true, feedback on your brand and, if that data is taken and listened to, what it should lead to is a way of making much more informed and effective decisions about your business. Such as ‘is this product working?’, ‘can I test different price points with my consumer?’ or even ‘who is my consumer?’ – so you’re really getting to know who the person is that your brand is appealing to.”

Natasha Frangos, Partner at haysmacintyre

As unfamiliar territory, a first-time pop-up does not come without risk, and Frangos advises to speak to people who’ve done it before – other brands in your reach. Cost overruns can also be a potential banana skin. Over-reaching on vision and delivery is an easy mistake to make, as the emotive factor of representing your brand kicks in. It’s also easy to set expectations too high. “Set yourself some easily measurable targets,” advises Frangos.

Choosing the right location for your brand, are going to where your consumers are, is also a key factor. Also, monitoring a street’s footfall on different days, and on different times of the day. is recommended before you jump in to a short-term contract. The more knowledge you have on how your pop-up is likely to perform before you step-in is invaluable. Something else to consider is whether the other brands in the location area are complementary to your brand.

Once you’ve decided to go for it, create a buzz on social media well before you launch. The more excitement and expectation that can be generated is vital. “The brands that do really well on social media are the ones that are interacting with the posts,” says Frangos. “They are responding to their consumers, and it shows that their consumers are being listened to.”

Frangos then passed the reigns to her colleague, Sarah Wilson-Nolan, a business tax manager at haysmacintyre to talk through all the various tax implications involved with doing a pop-up and what capital allowances you can legally claim for. “For tax, we can’t deduct any expenditure that’s going through a P&L (profit and loss) for depreciation,” said Wilson-Nolan.

“So, when a company is writing off the cost of their capital assets, we can’t deduct that for tax. So, instead, the tax man came along and put in capital allowances because he wasn’t happy with how subjective depreciation can be. We can only claim capital allowances on plant and machinery, which is basically anything tangible in your business which you are using for your activity.”

Actual buildings don’t qualify, so if you are putting up walls and shifting things around in the layout of the building, then that cannot qualify for capital allowances. But what you can claim on is fixtures and fittings. “Equipment, such as any computers, any payment tills that you are going to need in your shop – they are the sort of assets that do qualify,” said Wilson-Nolan.

“They go in to a company’s tax return. You have 12 months to do a tax return, and then another 12 months to do an amended tax return, so realistically you’ve actually got two years in which you can make your claim for capital allowances.” Anything that is removed after your residence to be used again, or not as the case may be, certainly can be a cost consideration for capital allowances.

Last up to talk was Emeline Ancelot, head of key accounts at Birchbox, ‘the beauty company of the future’, which created a standalone pop-up on London’s Carnaby Street. As a strong online subscription beauty box-based business from the US, its first venture in to bricks and mortar in the UK had to be delivered quickly and “on brand”, to capture the imagination, and spend, not just of Birchbox’s loyal customer fanbase, but a new audience too.

Ancelot commented: “Birchbox is a beauty subscription business that actually pioneered the beauty box concept. It launched in the US in 2010 and has since moved in to five other markets, which are the UK, Spain, France, Belgium and now Ireland. We are now the UK’s number one beauty box seller.”

According to Ancelot, when they were starting out the founders of Birchbox did some research in to the beauty industry, and found that online beauty sales actually only represented 10% of all beauty sales. “So, there was a huge opportunity to develop that and redefine the experience of buying beauty online – bringing the beauty counters to life in the comfort of people’s homes, merging that with an online shop - selling emerging and established beauty brands - and a ‘Beauty Editor Best Friend’.”

A physical store trial must have always been something the brand needed to experience, and the opportunity for a pop-up arose to take a Carnaby Street unit, where footfall is high, in November 2016, initially for three months which ran in to an additional two months due to the availability of the unit, and because it was so successful.

Ancelot said: “It was great because we got to see what trading was like during a really busy time such as pre-Christmas, where footfall is always going to be higher. But then we also got to see how a normal month would be trading-wise. “We definitely saw that during the Christmas period sales were heightened. People were coming in and buying 10 boxes at a time for friends and family. The beauty box is a great discovery present.

“We did see in January there was a slight dip, but then we see that online too. However, we also managed to leverage specific moments and occasions such as Mother’s Day and Valentine’s Day – holding events in store, which kept the momentum and buzz up. Social media was so important.”

Ancelot points to Birchbox always looking to be a bit disruptive and innovative, and always looking to offer its customers, and the brand partners it works with, something new. “We had done a few pop-ups before in Selfridges, as test environments for our ‘build your own Birchbox,’ concept, and they had worked really well. So, doing a standalone bricks and mortar store was the next step. We really wanted to bring to life the whole trial and buy concept in one building.”

Rounding up on what do consider when looking at doing a pop-up, Ancelot is now in a position to offer words of advice. She and her team only had six weeks to execute the Carnaby Street shop concept and, while it worked out amazingly, that is not something she recommends. Always give it plenty of time and consideration.

Lauretta Roberts and Emeline Ancelot

“I would say, very much have a plan and a target,” she offered. “Have two or three targets that you really want to achieve – and make them achievable. Also, keep tracking them. We wanted it to be a revenue driver, and it was really important to break even in the end, which is what we did. That was a win, because we did it mainly for the brand awareness, which was another box we ticked in terms of coverage and reach.”

In terms of pop-up opportunities, it’s certainly a good time to get a favourable deal on the rent for a short-term let on an existing empty unit. Landlords know that having a space filled short-term is better for attracting a long-term client – who will have to pay the full going rate of rent.

“It’s certainly a time to get a deal,” concluded Frangos, who said that contacting Appear Here for a suitable short-term space is a good starting point. Indeed, Appear Here launched over 300 London pop-up stores in December 2018, which made it the largest occupier in London. And more than 200,000 major brands have used it. In the words of its founder, Ross Bailey, “the high street isn’t dying, it just needs a new model.”

Though deals on rents for short-term lets may be available if you talk to the right people, unfortunately there’s no leeway on paying the going business rates. But then that’s another retail issue altogether.