Monthly Newsletter | AUGUST 2017 | Sixteenth Issue
S-CUBE Fixtures What's In Store this month

Table of Contents

Pop-Up Stores ~ More Than Just A Trend
5 Signs Physical Stores ARE The Future
How Generations Influence Path to Purchase
Why Amazon's made-up holiday is genius!

 

Pop-Up Stores ~ More Than Just A Trend
Consumers expect the pop-up shopping experience will be unique and different from the average brick-and-mortar visit.



 

Consumers look to pop-ups for a more specialized shopping experience. For example, 61% of shoppers list seasonal products as the main reason to shop at a pop-up store, according to a PopUp Republic poll.

Pop-up shoppers also are looking for:
• Unique services/products (39%);
• Localized assortments (36%);
• Optimal pricing (34%);
• Convenience (33%); and
• A fun experience (30%).

Jeremy Baras, the CEO of PopUp Republic and other industry experts share tips and tactics to help retailers build brand exclusivity and decide if a pop-up store fits into their overall marketing strategy.

Choosing A Pop-Up Model That Works

Starting a pop-up shop can serve as a hybrid for businesses looking to ease their way into a new niche while minimizing potential losses. In fact, launching one is approximately 80% less expensive compared to opening up a traditional brick-and-mortar location, according to StoreFront.

For retailers unsure about setting up a standalone pop-up location, the store-within-a-store concept can be a viable alternative. Several brands have partnered with major retailers, such as Best Buy, Nordstrom and Sears, to showcase and sell related relevant items via in-store pop-ups. These partnerships enable brands to introduce their products in an atypical store offering, broadening their appeal among new consumers.

Depending on the level of these types of store-within-a-store partnerships, brands have a varying amount of input regarding merchandising and the overall presentation in the host’s store. Either way, decreased costs for both inventory and appearance management and lower labor expenses make the model an intriguing concept.

Strategizing For Standalone Pop-Ups

Traditional standalone pop-up stores suit retailers that are interested in controlling all aspects of the store and are willing to take the financial chance to rent or purchase real estate. To create the exclusivity and sense of urgency necessary to build a standalone store, these retailers must plan to cover all facets of merchandise buying, location, design and marketing. Since the pop-up concept offers a different retail experience compared to the typical brick-and-mortar location, retailers must start the planning process at least three months before opening a pop-up location.

Attracting The Right Consumers To Your Pop-Up Experience

Location is arguably the most significant factor to consider when building a pop-up shop. With very little time in the spotlight, pop-ups must be located in an area that will attract the right attention from targeted shoppers. By collecting and analyzing shopper data from online purchases, retailers can pinpoint the best location to open a pop-up.

“It’s all about your target market,” Baras said in an interview with Retail TouchPoints. “Who do you want to be your ideal customer? If you want your customer to be Millennials, most likely you would set up shop downtown, or set up in a location surrounded by other stores where Millennials shop, or in a shopping mall. Tailor your location not necessarily to heavily populated areas of towns or cities, but rather go into places where your target market exists and build a following that way.”

Marketing also is a crucial element in pop-up store success. As more pop-up shops enter the market, competition is heating up and retailers must push the envelope when it comes to creative campaigns. Brands have found success tapping social media and events marketing.

How Can Brands Measure Pop-Up Success?

Store visits outweigh overall revenue and sales, Baras asserts. “Yes, retailers want to make as much money as possible and there’s a certain amount of success that’s measured through revenues and PNL statements. But the amount of customers walking through your store shows that they are interested in and aware of your brand, which arguably is just as valuable as making that sale, because that means that you have the potential for them to be loyal followers of your specific brand.”

Additionally, retailers can measure success via sales lift in both their in-store environment and their e-Commerce site, particularly if they offer deals in the shop that consumers can redeem online, according to Eliason. Not only are retailers looking into how many people enter the store; they also look at how many people sign up for email lists and engage through social media.

Deliver On The Promise Of Unique Pop-Up Experiences

The best way for retailers to approach the launch of successful pop-up shops is to focus on building a combination of a 'can’t miss' attitude and making connections beyond the products being sold. As more retailers enter the pop-up space, they must reach for innovative ideas and take more risks to make their pop-up stores relevant and unique. “The consumer has different expectations from a pop-up then they do from a regular store,” Gonzalez stressed. “They go to a pop-up to be surprised and delighted and be able to discover new things. I’d rather retailers go a little bit deeper into their inventory than have a store full of 100 SKUs and a confusing story told in the space, because the pop-up is your opportunity to tell that story to the customer what you offer that’s unique and different.”

 

 

Kate Spade Pop Up Shop

Outdoor standalone Pop Up Shop

Mobile Pop Up Shop

Suitcase Pop Up Shop, example of a store-within-a-store.

 
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5 Signs Physical Stores ARE The Future
Despite all the chatter about e-commerce putting brick-and-mortar out of business, it’s the online-only merchants that are struggling to go it alone. Five signs of this as truth:



 

1. All But One Of The Top Ten U.S. Retailers Are Physical Chains

Save for Amazon, the top 10 U.S. retailers are old-school, brick-and-mortar stores, according to the Top 100 Retailers list from STORES magazine, a NRF publication.

In ranking order, they are Wal-Mart Stores, Kroger Co., Costco, The Home Depot, CVS, Walgreens, Amazon.com, Target, Lowe’s and Albertson’s. Among the top 10, all but Target generated sales growth in 2017. And it’s worth noting that Wal-Mart, the nation’s biggest retailer, grew 8% last year.

2. Stores Are More Profitable Than E-Commerce

While most of the top 10 retailers boast e-commerce arms, physical stores are still the meat & potatoes of their business. What often gets lost amid the talk that retailers’ online businesses are growing faster than their stores is that bricks generate higher conversion rates of purchasers than clicks.

And as a general proposition, a store purchase is more profitable than an e-commerce order. Factors like shipping & handling charges, and the costs associated with increased returns, eat into margins.

3. Amazon Purchased Whole Foods

When the nation’s biggest e-commerce retailer buys one of the nation’s biggest brick-and-mortar chains, attention must be paid. Amazon’s acquisition of Whole Foods Market, confirms its brick-and-mortar commitment.

4. Millennials And Generation Z Prefer Real-Life Stores

Millennials and Generation Z came of age amid the rise of Amazon, Facebook, and Instagram. But while many of these younger consumers opt to spend free time online rather than watching TV, both groups actually prefer in-store to digital shopping. These groups are the future of retail.

5. Online Retailers Are Being Eaten By Legacy Retailers

Traditional retailers are swallowing up online-only merchants. Brick merchants are buying click merchants because online-only is not a viable model. Evidenced by players from Amazon to eyeglass merchant Warby Parker scrambling to open stores.

 

 

Come In We're Open!

 

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How Generations Influence Path to Purchase
Hands down, the number one factor that will influence a purchase is Customer Service



 

Customer service ranks as the number one factor that affects the purchasing decision across all age groups. During research, four persona’s of shoppers were identified as:

Millennials
Came of age during the social media boom so it is no surprise that they are more trusting than the generations before them of a stranger’s online reviews or a retailer’s recommendation — even if it didn’t completely satisfy their needs in the end.

Gen Xers
Live extremely busy lives as they balance family, work and commitments. 40% value a fast checkout experience that allows them to move on quickly.

Baby Boomers
Born during a time when an infinite number of products were available for purchase, they never felt a deep connection with any specific brand or product allegiance.

The Silent Generation
Grew up during The Great Depression, are very prudent with their purchases and prefer to shop brands they know and trust.

"The key takeaway for retailers is that all generations ranked customer service first over payment security, brand interaction and promotions when it comes to factors that affect their purchase decisions," said Rodney Davenport, VP of strategic insights at Alliance Data.

"While technology and innovation are important, success in retail still comes down to understanding who your customers are, being responsive to their needs, and catering to the way they like to shop.”

 

 

Generation Gap

 

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Why Amazon's made-up holiday is genius!
There's a lot of strategy behind this big one-day sales event.



 

Amazon’s Prime Day, on July 11th was about more than just driving more sales in a typically slow quarter. There's a lot of strategy behind the big one-day sales event in the middle of summer.

Here are three reasons Prime Day is absolutely genius.

1. Pulls forward new Prime subscribers
A lot of people trial Prime during the holiday shopping season as they do their last-minute gift buying. Prime Day can pull forward a lot of those trial members into the third quarter with its exclusive deals. Amazon can then more easily convert those trial members into paid members after the 30-day trial ends, or when they come back to shop at the end of Q4.

2. Incentivizes more merchants to join Fulfillment by Amazon
Amazon's FBA program allows merchants to send inventory to Amazon's warehouses, allowing Amazon to guarantee two-day shipping to Prime customers. Since Prime Day is all about Prime, it's imperative for merchants to qualify their products (become Prime Eligible) for the program and take advantage of the influx of Prime shoppers on the marketplace. It might cut into their margins, as Amazon takes a fee for storing and shipping inventory, but it boosts sales for third-party merchants.

3. It’s a stress test
Last year, Prime Day was Amazon's biggest shopping day in its history! All indications are that Amazon will break the record once again with the inclusion of China and India this year.

That gives Amazon the opportunity to ‘stress test’ its distribution capabilities ahead of the holiday shopping season. In 2015, Amazon experienced higher fulfillment costs during the fourth quarter because of its inability to keep up with the stress placed on its infrastructure. Amazon responded in 2016 by building 26 new distribution centers, mostly in the second half of the year, after its Prime Day sales blowout.

Prime Day also allows Amazon to gauge second-half demand and ensure its fulfillment centers have capacity. It then invests accordingly based on recent shopper patterns instead of last year’s data.

Prime Day is about more than just increasing sales. It gives Amazon an opportunity to attract more shoppers to Prime -- making them more loyal Amazon customers. It also provides incentives for merchants to join its FBA program, and it gives Amazon a chance to stress-test its distribution capabilities before the important fourth quarter.

 

 

Millennials working

 

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