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Pop goes the start-up: Retail Start-up Feature

Pop goes the start-up

By Oliver Milman
Tuesday, 17 July 2012

feature-ebay-thumbWith consumers rushing online to purchase their goods and services, it may seem counterintuitive to add a physical presence to your business if you’re a web start-up.

 

But that is exactly what many small businesses are doing in the form of pop-up shops. And the results should give encouragement to those struggling to generate both sales and profile.

 

What are pop-up shops? They are temporary retail outlets that spring up almost anywhere – shopping centres, within other stores, out in open public spaces – for a few days, weeks or months.

 

While Australians are spending $11.3 billion a year online and growing – and physical stores’ sales are sluggish – pop-up shops are bucking the trend.

 

A recent report by Commercial Real Estate Agents found that vacancy rates in Melbourne's top 10 retail strips fell to 3.5% over the second half of last year, driven by the rise in temporary outlets.

 

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The trend is catching on in Sydney too, with US fast food chain In-N-Out Burger opening up in Potts Point restaurant Barrio Chino for a matter of hours. The queues were so long that many people didn’t get served.

 

“I think pretty much any kind of small business can use pop-up shops, as long as they are offering something different and interesting to consumers,” says Debra Templar, founder of the Templar Group consultancy.

 

“Cafes are doing it, so are vintage shops and head and shoulder massage places. It’s all about the people and PR, rather than just the type of business you are.”

 

“I think we’re seeing this kind of outlet grow because lots of businesses can’t afford the rents that are now being charged.”

 

“Rents are rocketing up and with pop-up shops you can test out a concept without locking yourself into a long, expensive lease.”

 

While this growth is helping businesses keen to get into retail strips and shopping centres, it is also aiding start-ups that didn’t initially start with the idea of having a physical sales presence.

 

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“Pop-up stores are seamless for online businesses – I know of a business owner who sets up a store once a month in a design studio and she just sells online the rest of the time,” says Templar.

 

“Businesses such as Sterling & Hyde and Perfect Pieces Jewellery have found that it is perfect for their start-up model – they can test concepts, expose themselves to new markets or shift old stock.”

 

“The challenge for a lot of them is broadcasting their message. TopShop has great pop-up shops, but then, they have the money to set them up and market them.”

 

“It depends a lot on whether you have a database or not. If you don’t, you need to do handouts, social media such as Facebook, posters and so on. Still, it can be very cost effective.”

 

As more temporary stores appear, an industry is starting to grow around it. Scott Williams was working in exhibitions when he realised that there was a gap in the market to service the pop-up shop sector.

 

In 2010, he launched Instant Retail, which provides the shop fittings and services for temporary stores. Williams, who says his business is the only one of its kind in Australia, has since worked with brands including Peter Lang, Decjuba and Zoggs.

 

“What we used to see is a warehouse-style set-up with rusty racks of clothing,” he says. “We wanted to raise the bar a bit. The best pop-up shops are branding exercises, rather than just a way of moving stock.”

 

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“A lot of clients don’t want a permanent retail presence but they want their customers to be able to touch and feel their products. Many of our clients are smaller businesses that want an economical, physical presence.”

 

Williams has worked on a variety of projects, ranging from Christmas present wrapping stations in large shopping centres to pushing stock in roped off sections of larger retailers. The typical cost for a weekend of trading, including location, equipment and set-up, is around $5,000 to $10,000.

 

He admits, however, that Australia still has a long way to go to match the intricacy of pop-up retail overseas.

 

“Australian businesses mainly see it as a sales exercise, a way to clear last season’s stock,” he says.

 

“Internationally, it’s more about branding and marketing. I hope and expect this approach to come to Australia, but it’s still in its infancy here, with four-day sales.”

 

“The best ones are those that are unique and have something different to say. For example, eBay in New York and London had no product or cash on site, but you could scan a QR code and buy a product via your mobile phone.”

 

 

Three tips to pop-up success:

 

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1. Take it seriously

 

Even if your retail spot is temporary, your standards should not fall – be professional about it.

 

“You need good systems and customer service,” says Templar. “You can get customers in there and then annoy them because you don’t take credit cards or don’t have change. Get the basics right.”

 

2. Get the right spot

 

While the likes of Harvey Norman or Myer are unlikely to give up some floor space for your pop-up store, some other independent stores may be willing to do so, significantly lowering your costs.

 

“The best locations are existing shops as shoppers are there anyway,” says Williams. “But you can go for anything from an existing shop to a marquee on the grass.”

 

The main concern is red tape. “If the space you choose hasn’t been used for retail before, you will have to go to the council and get a trading permit, which can take months and will kill your project,” warns Williams.

 

3. Be different

 

Templar says “colour and movement” are good ways to lure consumers to your temporary edifice. Consider using special offers, games or other attractions to get people interested and follow it up with unique products and good customer service.

 

You’ve only got a short time, so make sure you make an impact. Be bold and different in order to stand out from the crowd.

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