13 Dec 2016
Of course, even in a rapidly digitising world the balance between physical and virtual has been consistently shifting. Physical continues to have a role, albeit a different one: “We are seeing internationally and in New Zealand a move by online only stores to establish a bricks and mortar presence,” Retail NZ spokesman Greg Harford says.
"How do businesses keep up with customer expectation around the retail experience while maximising sales? "
Briar McCormack, BlueNotes contributing editor
“This is because customers increasingly want to be able to go into a store. They want to be able to touch and feel the goods in many cases, and have a personal interaction.”
There is no doubt online shopping continues to boom, with record spending forecast for the Christmas period. Shoppers across Australia and New Zealand are expected to spend around $NZ11 billion on online purchases, 12 per cent higher than last year.
Compare that to high street retailers, where figures from Black Friday – one of the biggest retail events of the year in New Zealand – saw spending in Christchurch increase 15 per cent. Auckland had an 8 per cent rise, while spending in Wellington declined by 7 per cent year on year.
The bricks and mortar of today is though different to yesterday. And will continue to be renovagted. So how do businesses keep up with customer expectation around the retail experience while maximising sales? Enter the age of pop-up retail.
“Digital and bricks and mortar are now seen as a channels to the customer,” Harford says.
“You are no longer an online store or a bricks and mortar store you are a retailer and the way you reach your customers is through both those channels. A pop-up is a way businesses can do that without incurring the fixed overheads of a longer term tenancy.”
For Best Ugly, an artisan bagel business, pop-up retail allows them to utilise one of the strongest human senses – smell - as a way to draw in customers.
This sensory experience harks back to how owner Al Brown first fell in love with bagels over 30 years ago.
After coming across a bagel store on a trip to Montreal, and standing watching bagels being made – something he had never seen before - he bought a freshly baked bagel and knew he needed to bring the idea to New Zealand one day.
“At all our pop-ups we are toasting bagels and the bagel that we really like to toast is our cinnamon raisin bagel because it has such a distinctive smell,” Best Ugly National Operations Manager Jeremy Coombes says.
“It has a feel good, cinnamon, hot cross buns on Easter morning emotion it seems to generate.”
“The other thing to get across is to talk people through our point of difference in that all our bagels are hand rolled and cooked in a wood fired oven.”
For Best Ugly, there are a couple of the group always considers before committing to a pop up.
“The most important thing is to think, is this event my demographic? Because there are a whole lot of different events out there with different demographics and locations and bits and pieces,” Coombes says.
“Go along, do your research, go to a bunch of them and look and think hey what are the businesses and what are the stores that are really cranking that have the big lines that are really moving some product and look at why that is, what is making it successful.”
It’s also important to make it easy as possible for people to spend money with you.
“Something else we always focus on thinking through is what [the payments] system is on the day,” Coombes says. “At a lot of those events you’ll have some peaks where the line might be 10-people deep.”
“If you have an ungainly system or if they can’t engage and connect and really transact with those customers quite quickly and quite efficiently then they won’t wait around unless you have got some super-duper amazing product.”
Best Ugly bagels are handmade, hand rolled and boiled, then fired in a purpose-built stone oven. Coombes says the commitment to quality which sets them apart from other brands in the marketplace comes with challenges.
“A lot of supermarket customers are basically shopping on price and if they haven’t experienced Best Ugly in one of our branches it is kind of hard to connect and it’s kind of hard to put across the value proposition of our bagels and why they are so much more expensive.”
“But if we can actually connect to them face to face, and whether that is in one of our stores or in a little pop-up, get them to try the bagels and talk them through the story you know it is a much easier sell,” he says.
Pop-up retail is a relatively new concept for New Zealand. By definition it is “a shop, a restaurant, a collection of shops, or an event that opens quickly in a temporary location and is intended to operate for a short period of time”.
Following the Christchurch earthquake local businesses took advantage of the trend with the re-start mall in Cashel Street, which proved to be an effective way of getting people back in to the CBD and businesses back on their feet.
Now NZ is seeing a range of stores literally ‘popping up’ all over the country as businesses get much smarter about how they connect with customers and adopt agile marketing strategies to build both a brand story and relationships with customers.
“Many retailers are looking to engage with their customers in a different way,” Retail NZ spokesman Greg Harford says.
“They are looking to make the shopping experience exciting and interesting and to create a lasting experience for the customer. A pop-up store allows that to happen in many ways.”
Retail NZ warns pop-up retail, while temporary, doesn’t mean businesses can get around existing obligations to consumers and employees.
“The most important thing to remember is the laws that apply to an ordinary shop apply to a pop-up shop so you still continue to be required to comply with the Consumer Guarantees Act and the Fair Trading Act”, Greg Harford from Retail NZ says.
“You are still required to pay your staff in accordance with standard employment law and you still have to provide a healthy and safe working environment for your people and your customers.”
Generally speaking, anywhere zoned for retail is legal to put up a pop-up store in. If there is a question about zoning (for example around an event) businesses should check with their local council whether consent is required.
The Christmas Edge
Heading into Christmas, one of the most crucial and crowded trading times of the year, more than ever businesses need to get noticed.
New York pop-up retail Queen and author of The Pop-Up Paradigm Melissa Gonzalez says using temporary retail is a great way to generate customer loyalty, understand new markets, test concepts and more.
“I think that anything that they can add which is experiential is really what is key,” Gonzalez says.
“We did a pop-up with The National Peanut Board last year. And everyone knows what a peanut is, everyone knows what peanut butter is but not everyone knows how to make a peanut butter cocktail.
“So you surprise and delight people in a memorable experiential way, you kind of build mind share and you create a stronger loyalty to you brand whether they are buying it right there at that moment or the next time they are looking for a bagel they know they have to have yours. That is the success of a pop-up.”
Her company, The Lionesque Group, has identified that over the last couple of years the average pop-up they work with sees a 35 per cent increase in sales over a six-month period and outside of that 50 per cent see an average increase of 30 per cent on social media engagement over the lifespan of the pop-up.
But, Gonzalez says, it is important brands focus on much more than just the financials.
“How many people walked through the door, and how does that foot traffic compare to maybe your web traffic, what was the conversion rate of those people and how much stronger was it than your website,” she says.
“And then how many items did they buy and are they the kind of items they wouldn’t have purchased online because you needed to get over that touch feel gap, and then how many of those customers were new.”
Gonzalez says having the infrastructure in place to capture those metrics is crucial, as well as really useful in helping brands identify how to better market themselves.
“What are they taking pictures of the most, what are they posting on social media, what words are they using to talk about it?” Gonzalez says. “That gives the brand more information about how they should approach their marketing and merchandise choices moving forward.
“Ultimately if they take that information and use it, it should increase ROI over the next couple of quarters because of what they have learnt.”
So are pop-ups a temporary trend? Gonzalez thinks not - but they will evolve she says.
“I see a lot of brands investing more in mobile pop-ups and wanting to take it on the road and getting really creative with kiosks,” he says. “They are seeing they can utilise social media to see where to find them next.”
Briar McCormack is a contributing editor at BlueNotes
The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.
13 Dec 2016
12 Dec 2016