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The pursuit of pop-ups

With the pandemic forcing young brands to find new ways to enter the market, are experiential pop-ups the way forward?

“Since reopening, retail sales have shown a ‘mixed bag’ of results. While the reopening of physical stores was unquestionably positive for the sector, there are still substantial operating costs associated with reopening which will be affecting retailer margins,” said the British estate agency, Savills. 

Savills made the comments as the easing of restrictions began in 2021. Fast-forward almost two years and the retail landscape has barely changed. As Helen Dickinson, chief executive of the British Retail Consortium (BRC) explains, people’s finances over the next 12 months will reach depths “not seen” since the financial crisis of 2008. The rising cost of living and ongoing war in Ukraine is tightening the consumer wallet.

The BRC says some supermarkets have been able to extend their value ranges as a solution to retain revenue. However, it is unlikely that independent high street retailers are able to absorb costs in the same way. As retailers are also facing increased cost pressures, it is expected that many on the high street do not have the financial capacity to weather the storm. 

“Clouds are on the horizon,” forecasts Don Williams, retail partner at KPMG, and figures from retail insight, The Local Data Company (LDC) would seem to confirm it. High street site vacancy rates increased from 14.1% for the period January to March 2021, to 14.5% for the period April to June 2021. It predicts more independent high street retailers to close. Yet, despite the unsettled state of high streets, entrepreneurial businesses are still attempting to enter the sector. 

Innovative schemes such as pop-ups can be a solution to test whether a business can be successful in a physical presence. Westminster City council has recently launched a ‘pop-up boutique showcase’ in Piccadilly Arcade, for 12 independent businesses to showcase their offerings. In collaboration with Heart of London Business Alliance, GPE, and Appear Here, the council said it is part of a programme designed to “test the next generation of local talent”, whilst at the same time drive footfall into the area.

“It is crucial we take the time to collaborate with our trusted partners across London to provide space that will help them, and the capital, thrive,” said Philippa O’Flynn, portfolio manager at GPE, on the announcement of the pop-up initiative. So far, it has supported 38 up-and-coming brands since the first launch in May 2021.

So what does the programme offer? 

“New brands are able to operate free of cost”, says Liboni Saha, founder and creative director of luxury jewellery business, L Saha. “Investors also offer funding to help businesses set-up and run the store throughout their contracted period”.

L Saha launched in 2014 after it found a gap in the market that blended ‘luxury’ and ‘sustainability’. Saha says she aims to produce “timeless collections” whilst at the same time incorporating sustainable practices in each step of the design process. “The council is really, really supportive of what our business is doing,” adds Saha. The programme, not only, introduces new consumers but the ‘right kind of client group’, who she says intend to spend on luxury items.

The value of ‘pop-ups’

“Pop-ups create a quick solution to the problem of selling luxury goods. With so much uncertainty as to how the market would recover after the pandemic, we thought even being able to talk about selling luxury goods was unheard of.”

According to Gary Mortimer, of Queensland University of Technology business school, pop-up shops cost brands nearly a third less than if they were to operate their own site. Mortimer was also quoted by Smart Company that pop-ups attract a wider variety of custom, since flagships can miss out on the small groups of consumers in regional areas.

Additionally, L Saha says it offers a ‘creative element’ that is about more than just selling. If people were to walk into the store, not only could they see the product to be purchased but also the process of the product being made. She says it builds the “intimate” relationship that customers expect from luxury brands. “It was not purely a selling activity for us. It is about getting increased recognition as a young business.”

According to the Small Business Development Corporation, a government agency, ‘cost savings’, ‘brand awareness’ and ‘a chance to market your product’ were listed in a recent survey it conducted as the top motives to run a pop-up – but why is this important? A recent study by design business Visme also found 50% of shoppers are more likely to buy from a company that they recognise. Additionally, 77% of business-to-business marketers said branding is essential to company expansion. However, Saha says ‘scalability’ is the main challenge for independent businesses to overcome. 

Challenges to new firms 

“As a young, independent brand, you’re alone,” says Saha. She adds that it can be difficult to expand, especially under the financial constraints caused by the pandemic. “We had forecasts for business growth between 2020 and 2021, which was totally not what we expected.”

According to Angele Valdez, founder of dress-making site Angie Power, another young brand to benefit from the scheme with Westminster City Council: “It’s also very hard to differentiate yourself,” especially when there’s a ‘budget limitation’ compared to bigger companies. Saha adds that new businesses need to do things differently to be successful, since fashion brands, like in many other industries, are very much alike.

Trying to seem like a ‘big brand’ is one of the biggest mistakes you can make, says Valdez. “It’s just not possible and it’s not true to who you are.” That is what is so great about these pop-ups, she adds. “They’re not trying to be something that they’re not.”

Saha and Valdez explain that pop-ups allow independent businesses to access new revenue streams by encouraging them to test their products on a range of “completely different” consumers. 

Yet equally, new brands offer new opportunities. Saha says the majority of the key players are used to doing things “in the old way”. Accounting firm Baker Tilly says it is the ‘change management issues’ in larger corporations that need to be assessed. The firm alludes to diversity, innovative capability and unwillingness to change as key reasons for business failure. It is the advantage new businesses possess to “break these moulds” more easily, says Saha. 

Data site eCommerce Market UK recently found the UK is the fourth largest market for online shopping. Although ecommerce provides great access to revenue for businesses, especially in the UK, Platform Further, an insight business to support ‘high-growth’ brands, suggests it is fairly restricted when it comes to testing a product. The site said it is a good basis to form market research, yet pop-ups test the products in a “completely different marketplace”, says Valdez. Quoted by retail trend site Storefront, an in-person approach leads to obtaining customer feedback which allows entrepreneurs to refine their product before “taking the big leap”. 

The pop-up programme is a brilliant example of how it can support entrepreneurs, adds Saha. She says it is their ‘uniqueness’ that makes it unrivalled. “Being able to hear about the story behind how the company started is what sells the product to me.” It is the closeness people feel towards independent brands that differentiate them.

Valdez says: “The pop-up programme should be replicated by all councils who might be able to impart knowledge to young and upcoming businesses.” Yet she adds that entrepreneurs would also benefit from grants similar to the ones during the pandemic. “I think it is immensely beneficial and it makes you feel valued as a small business.”

Being a young business means it is difficult to expand, especially in today’s financially pressured environment. Pop-ups allow entrepreneurs looking to enter the market a more affordable alternative to opening a site. They are able to gauge the profitability of their product in an environment that not only tests it across a wide range of consumers but also increases recognition of their brand. 

As the sector enters a period of uncertainty, making sure the next generation of independent high street brands succeed is vital. Pop-up schemes such as the Westminster City Council’s boutique showcase may be the new pursued method of businesses not simply entering the market but staying there.

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