Foong Li Mei
Jan 4, 2018

Pop-up power: Short-term shops stoke FOMO

Temporary retail rentals are as much about marketing as they are about sales, and can give brands a new lease on life.

Pop-up power: Short-term shops stoke FOMO

Now you see it, now you don’t—the classic magic trick apparently makes great marketing tactic as well.

In that last few years, more brands have been using temporary retail spaces, better known as pop-up stores, to drum up excitement or publicity in Asia. These stores most prominently dot mature retail markets like China, Hong Kong, Singapore and South Korea, and the wave is quickly washing over the rest of the region. Retailers, from brick-and-mortar strongholds like Chanel and Ikea to e-marketplaces like Zalora and Tmall, have gotten into the game despite earlier suspicions that the trend would not last.

But not lasting is the point, and power, of these makeshift shops. 

One of the allures of pop-up stores is exclusivity. According to Delon Wang, manager of trends for Asia Pacific at Mintel, savvy brands know to differentiate products offered in pop-up stores from those available in the permanent outlets.

The limited-edition lure combined with the ticking time of availability makes a potent cocktail that fuels the fear of missing out (FOMO)—the main psychology drawing crowds to pop-ups.

Clarins Tmall pop-up store

An example is alcoholic beverage brand Moet & Chandon, which ran a three-day pop-up in Shanghai selling Mini Moets—the miniature sibling of its usual champagne range—with labels customised with customers’ selfies. Nutella also sold 17,000 jars of hazelnut spread with personalised labels through its 24-day pop-up installation in Hong Kong last year, according to a Bloomberg report.

Such personalisation stunts tend to hook Chinese consumers, notes Wang.

But, he explains to Campaign, what really fans FOMO is the boom of ecommerce. Consumers these days have every item they could want at the tips of their fingers. When something is not available with just a few taps on the phone, shoppers are not annoyed—they are intrigued.

“For consumers used to the vast accessibility of products online, these exclusive items only available within the limited duration of the pop-up store sparks excitement and the fear of missing out," he points out. "The urgency to visit the pop-up is heightened.”

The appeal is often augmented with activities designed to be Instagram- or Weibo-worthy. The more patrons post about the store on social media, the more foot traffic.

Brands also leverage social-media platforms to amplify exclusivity. In June, when Supreme and Louis Vuitton (LV) collaborated on a pop-up shop in Beijing, they published a lottery on LV’s official WeChat account that allowed a limited number of fans to participate and gain entry. Traffic to both the pop-up store and the social-media page exploded.

The line between pop-up shops and social media may get fuzzier yet. In October, Hermès launched its first WeChat pop-up store for its Apple Watch wristband. The promotional video registered about 16,000 views within a day.

Bridging online and offline gaps

On the flipside, e-marketplaces are going physical. Tmall, the online platform of Internet behemoth Alibaba, partnered with brands to set up physical pop-up stores for the first time in November to hype its Singles Day sales.

These stores, spread across China, also acted as pilot projects to test Alibaba’s ‘new retail’ process. In simplified terms, ‘new retail’ integrates traditional retail with mobile Internet innovations to enhance efficiency for merchants while easing shopping experience.

Among the retail innovations powering these pop-up stores are digital screens that allow shoppers to try on apparel and cosmetics virtually and an AR display area where shoppers scan items to search its online listings or get Tmall coupons.

With these pop-up partnerships Alibaba wants to amplify its ‘new retail’ brand call so that more retailers get on board, says Han Wenfei, the senior marketing advisor of Alibaba Group.

It seemed to have worked. During the first pop-up run powered by Alibaba’s retail tech in June, only 19 brands participated. In November, for the Singles Day pop-up, the number ballooned to 60.

Han tells Campaign that the pop-ups outfitted with Alibaba’s retail technology recorded higher conversion rates. Customers also lingered longer to interact with these newfangled installations.

One such store was Clarisonic’s. The L'Oréal-owned skincare device brand sold its products through Alibaba’s vending machine that accepts e-payment.

Clarisonic Tmall pop-up store in Shanghai

Having moved most of its business in China from departmental store counters to online retailing, Clarisonic relies on pop-up shops to maintain physical touchpoints with consumers.

“No matter how many attractive promotional videos or visuals we post online, what really allow customers to connect with the brand is touching and trying out our devices at the store, such as our Sonic Foundation Brush Head,” Ken Zou, senior sales and marketing manager at L’Oreal (China) Luxe Division, explains to Campaign.

In other words, hands-on experience still seals the deal in the age of ecommerce. A 2016 study by Mintel on retail trends in China showed that when responding to new product promotions, 39% of consumers say they prefer to see products in-store, then seek and buy them online.

The price of popping-up

Zou declines to reveal the exact amount spent to set up the store. He does mention that the figure was “only about 5% of the business, so it’s within our budget”.

According to the company’s records, the Singles Day pop-up store scored 21 million impressions, 7,000 engagements, and 3,000 posts on Weibo, WeChat and other social media platforms.

But do these buzz translate into dollars and cents? At the pop-up shop, customers can get coupons to purchase Clarisonic devices on Tmall at a discount. Within the five-day duration of the store, about 200 coupons were picked up, of which only 2% were eventually converted into sales.

Zou still believes that the investment was worth it, adding that more pop-ups are in the cards. “The key idea is physical engagement with customers to drive more conversion. In the past, we would also have road shows and such. Pop-up stores are actually a little cheaper to run, but it allows us to integrate our online and offline touchpoints.”

Some in-store sales may be disappointing for pop-up proprietors, but other returns more than make up for the cost, according to Adrian Chan, co-founder and director of PopUp Angels, a startup connecting retailers to pop-up spaces in Hong Kong and Singapore.

“A lot of clients are concerned with whether in-store sales will cover the cost, such as rental or setup. It may not, due to the short run time. But the ROI of pop-up stores is also measured by whether you gain any new information or data about your customers, or if there are increased brand awareness,” explains Chan, who handles the Singapore office.

Depending on the location and scale of the pop-up store, Chan shares that the total cost can range from as low as SG$3,000 to upwards of SG$100,000 (US$2230 to US$74,326). Average in-store sales are pegged at SG$100 to SG$300 (US$74 to US$223) per square feet.

Popper Asia, a brand consultancy agency based in Shanghai and Singapore that also runs pop-up installations, charges about RMB30,000 to RMB40,000 (US$4,560 to US$6,080) for a package that includes rental and partial furnishing. Other services like interior design and staffing support can be added on for a price.

Testing the waters

Its co-founder and CEO, Justin Seow, sees international brands increasingly opting for temporary stores as an economical way to test the Chinese market before penetration.

Even brands with a long history in the market turn to pop-ups. This may be to reach a wider market than their physical store coverage, or just as a branding exercise.

Seow cites the example of the Magnum Pleasure Store, an annual pop-up café, in China.

“We are used to seeing Magnum ice creams in everyday grocery shops and hypermarkets. But for the past few years, Magnum is gearing towards the luxury route with new packaging and flavours, and the Pleasure Store reinforces this brand image," he says.

Customers have to RSVP and brave a long queue to gain entry. Once in the opulently decorated inner sanctum, they can pick from an array of finely plated desserts or cocktails. Or, they can customise their own ice creams at the DIY section.

“This makes the whole experience very exclusive," says Seow. "As the shop only runs for a month, it is cheaper to set up than a permanent store."

For now, Asia maintains a big appetite for pop-up stores.

Kit Chan, who runs the Hong Kong office of PopUp Angels, points out that demand for pop-up space among retailers are outweighing supply. While landlords are largely hesitant when it comes to short-term leases, more are warming up to the idea. They have to fill the vacancy, after all, as many brick-and-mortar retailers hold off expansion due to the economic crunch.

Pop-ups have been...popping up in Asia for many years. Above, the Evian 'Live Young' pop-up shop in Singapore in 2012.

Pop or boom?

The potential of the pop-up to gain business insights isn’t lost on brands, which bodes well for the retail format’s future.

“Over the next few years, we may see a rise in retail technology that allows tracking of customer’s information, video analytics, or even tracking conversions from pop-up store engagement to sales in online platforms. Retailers would be able to better combine physical store and online presence, which is what we are seeing in the US and Europe now,” says Adrian Chan.

Seow of Popper Asia agrees. The agency is already working to set up a new kind of pop-up shop that requires no physical setup or staffing—‘smart windows’ that retailers can rent for a duration to display their products digitally. Equipped with touch screens, these window displays allow shoppers to browse products online and try them on virtually.

At the end of the day, the element of surprise is these short-lived store’s biggest strength, explains Mintel’s Wang.

“With the slew of pop-ups penetrating the Asian space, there are traces of consumer exhaustion seeping in. When pop-ups stop being surprising because it’s overdone, when the unexpected becomes expected, its potential is squandered and you can’t cut through to consumers anymore. People no longer see it as a pop-up, but just a space where the stores keep changing,” explains Wang.

For now, though, Wang is not worried. Crowds swarming ephemeral retail spaces is still a common sight in the region—a sign that pop-ups will keep doing what their name says.

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