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ROE beating ROI as pop-up metric of choice say experts

Pop-up stores are now primarily used to deliver a return on experience (ROE), rather than the more traditional return on investment (ROI) metric, in recognition of changing consumer behaviour and more complex relationships with retailers.

“Many brands now look at return on experience or ROE rather than ROI. Short-term income is demoted in favour of creating authentic long-term relationships with consumers,” says RPA: Group head of design James Breaks. “They are seeking to develop relationships that are based on trust and the loyalty garnered from generosity of the brand experience and face-to-face contact, which can only be delivered in a physical retail environment.”  

James Breaks, head of design, RPA: Group
James Breaks, head of design, RPA: Group

Pop-up space specialist Storefront operates in 'apex' cities such as London, New York, Paris, Amsterdam and Hong Kong, procuring short term retail sites for brands that are seeking to access that ROE. It currently has 10,000 listings on its platform. When a brand is considering pop-up space, there are important choices to be made and criteria to be considered, says Storefront UK director, Matthew Greenwell.

“We have found that retailers book one of three options depending on their requirements,” says Greenwell. The first is traditionally under a month and is very PR-led, with a clear objective: “These are all about creating a buzz, with celebs and influencers and an emphasis on marketing.”

Matthew Greenwell, UK director, Storefront
Matthew Greenwell, UK director, Storefront

The second option offers temporary spaces for a range of between one month and a year. “This is the fastest growing type of pop-up and is so popular because it is all about reducing the risks, while testing the brand within a specific neighbourhood,” says Greenwell.

The third option is all about showrooming, with brands booking private places to build an experience for their customers in a tangible physical space. This can include an apartment that is taken over to showcase a brand, or space within an existing store.

Greenwell says that around 10,000 pop-up stores now spring up annually on UK high streets. “At the moment, things for retail are very tough – they have to be excellent to succeed. Average cannot compete with online any more. To be in the excellent category they need to be in the right position, and they need to be very careful about that.”

Data and research can help with this, with online retailers having the added advantage of being able to harvest vital information about their customers. They are thus able to assess customer demographics and purchasing patterns to define target store locations.

Online brands can also be free of preconceptions on behalf of customers, allowing them to be more experimental, says Breaks. “Pop-ups are ideal to trial a format or a location prior to developing a final incarnation of the store,” he says.

An example of this is luxury outerwear apparel brand Mackage, which RPA: Group worked with to deliver its first UK standaline store, as a pop-up on London’s exclusive Sloane Street. Over a six month period, the space is providing a platform to launch a permanent store, testing response to location and demographic, while being flexible enough to create an engaging and adaptable retail environment, to facilitate brand awareness and growth.

Greenwell stresses that although the right location is one of the most important factors in pop-up effectiveness, retailers also need to fully understand their audience and what they want their brand to achieve. “Brands who don’t have a clear knowledge of what they want to accomplish are likely to fail, even with a pop-up in the middle of Carnaby Street,” he warns.

The use of influencers to draw attention to a short-term space is a growing trend. “This really draws customers and helps make them more attached to the brand. It is very powerful,” says Greenwell. As an example, Storefront created a series of pop-ups for Gymshark in New York, London, Paris and Amsterdam, each of which had sports celebrities on-site. This created a real buzz and helped enhance brand connectivity and authenticity with the customers.

It is in creating physical interactions with the customer that lasting memories are created and a loyal bond develops between customer and brand. “The more human we make a brand, the more we emotionally relate and engage – physical presence is one of the strongest drivers of this”, says Breaks, but he cautions that pop-ups need to be part of a total retail experience, working seamlessly with the online retail offer and social media platforms. That can lead to technology playing second fiddle to human experience in pop-up stores.

“I think the importance of technology is the opposite with pop-ups, because pop-ups allow the brand to go back to the basics and make it super personal. It is all about delivering the human element and excellence,” says Greenwell.

The reason why consumers respond so well to pop-ups may be that the experience is human led, and offers something authentic and real, in a worlds where our interactions increasingly take place in a virtual space.

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