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The power of the pop up – how to make your next temporary venture a success

Lauretta Roberts
20 June 2018

I was fortunate enough to sit next to Michael Ward, the Managing Director of Harrods over a Walpole dinner a couple of weeks ago. Whilst enjoying the delightful company, one of the many topics we discussed included the resounding success of Harrods’ recent pop up venture in collaboration with NSPCC. Not only was it in aid of a great cause but their customers and network loved the concept, with the store’s landlord also gaining plaudits for supporting the initiative.

Appear Here, a platform that helps brands and businesses find retail space to rent, and its founder, the youthful Ross Bailey, are two winning names that have cropped up on several occasions in a number of competitions that celebrate entrepreneurs, including Young Guns and Startups Awards. Appear Here has raised a reported $20m to date and is being hailed as the “Airbnb for retail” with international expansion now well underway. Not only is Appear Here a great idea, but its success is a sign of the times.

Ecommerce sales are expected to account for 18% of total retail sales in 2018. Consumers have much more choice at their fingertips but with the recent turmoil on the high street, those brands and stores that can’t keep up with the experiential demands of modern consumers are likely to be left behind. The unfortunate demise of House of Fraser has been watched by many with a sense of sadness but the department store’s fall is indicative of today’s hostile retail climate and a clear message to all that times are changing – even the UK’s high street greats aren’t immune.

However, it is not all doom and gloom. The emergence and rise of pop up stores over the last few years has been attributable to many factors including risk aversion of brands to costly leasehold commitments and rates. These temporary stores were initially seen as a great way to deliver a stunt or launch a special collection. Today they are increasingly being seen as a no fad route to a bricks and mortar offering.

Pop ups provide flexibility, an opportunity to test a local market and allow brands to collect more detailed knowledge about the consumers in new locations without the need for costly store fit outs or committing to long term rents. There are also benefits for department stores that dedicate floor space to these initiatives as they create a varied offering to their existing customers, giving them a reason to make an instore visit to see the latest brands and collections that their go-to department store is championing. The benefits of these initiatives to brands is clear; gaining floor space in the likes of Selfridges or Harrods instantly appeals to a whole plethora of consumers, given these store’s global reputations.


The Corner Shop at Selfridges: used for temporary themed collaborations and residencies

When deciding whether to launch a pop up, brands need to have clear objectives from the outset. Pop ups can be a great way to meet specific goals on brand awareness, increasing sales or to boost the existing customer base, but having a clear and well communicated launch plan will give the relevant teams a clear focus and will also help to generate the best return from such ventures.

One of the key initial considerations when launching a pop up store is location, and position. Both need to be coherent with the brand, its audience and its messaging. Whilst this sounds relatively simple, even the slightest positioning or location error can be a deciding factor on the success of a pop up and may even prove very costly. Demographic considerations are also key when deciding a pop up location. If you are looking to launch an edgy, urban brand, choosing a lot in a seaside town high street will mean your brand won’t be exposed to its preferred audience. Ultimately, different communities will require different inventories, styles and store formats. Integral to it all will be a strategy to drive other, more permanent revenue streams, all of which require investment.

It is crucial for businesses to seek advice on negotiating lease terms and premiums, and budget for capital works. These costs will need to be factored into cash flow forecasts. The business should keep detailed records of the fit out work to maximise a capital allowance claim. Capital allowances are available to all companies and are a great way to reduce a company’s corporation tax liability following the purchase of assets for use in a company’s trade. Unfortunately, it is often the case that adequate breakdowns are not kept for the refurbishment spend, and items that could qualify for capital allowances are simply missed, so good bookkeeping from the outset is a must.

When planning the aesthetics of a pop up store, it is important not to overreach. Producing an experience that is true to the brand and what the consumers would expect needs to be front of mind. The store experience should be consistent with brand messaging and should filter through all other mediums, including other stores as well as the website.

Other costs to consider in cashflow include inventory management systems, staff training (particularly with staff dealing with customers directly) and which technology systems to invest in. Give due consideration to what payment systems to use; these may be significantly different to online systems and could require extra investment. Brands should have clear metrics on sales conversion to cover the upfront investment that is required from the outset. Once up and running, actual performance should be closely measured against the budget and will require an agile strategy to drive sales if performance is not first as planned.

For online businesses, a pop-up may be the first venture into employing UK staff and as such, putting in place employment contracts, operating a payroll and registering with HMRC is essential. Meeting minimum wage requirements is critical. Another additional cost and complication to factor in is pensions auto-enrolment that will affect new employers, depending on when PAYE income is first payable.

There are clear benefits to pop up ventures but the key to success is sensible and strategic planning. The allure of attracting new customers, instant feedback and data collection as well as the flexible, short term opportunity to support the local high street and put something into the community are powerful. Getting it right can reap great rewards but getting it wrong can be detrimental to both the bottom line and brand reputation.

Natasha Frangos

Natasha Frangos

Natasha Frangos is a partner and head of creative, media and technology at haysmacintyre. Natasha is one of the speakers at our next Masterclass on the morning of 9 July (8am, W London - Leicester Square), which looks Inside the Investor's Mind offering advice to start-ups and scale-ups on how to raise finance to power their next stage of growth. For more information and to book tickets, click here.

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