DMT Beauty Transformation: The Glory Days of the Pop-Up Store Are Over. What’s Next?
Cathaleen Chen DMTBeautySpot

The Glory Days of the Pop-Up Store Are Over. What’s Next?

October 09, 2024BruceDayne

When Rhode opened a pop-up in New York in June, there were about one thousand people lined up before the doors even opened, every one of them hoping to buy the brand’s new blush or secure a glimpse of founder Hailey Bieber.

The pyjama-maker Petite Plume is taking a more low-key approach when it comes to its next big activation. For the holiday season, the brand will be launching its new line of homeware at Maman, a New York bakery with outposts across the US Northeast. Petite Plume will be sold on shelves in select locations, while baristas and other staff will don the brand’s aprons.

As a small, self-funded brand — and one without a celebrity like Bieber involved, though founder Emily Hikade’s background as a CIA officer is just as intriguing — Petite Plume’s real-life marketing strategy is to insert itself into buzzy locales rather than try to build one of its own from scratch. The brand has also partnered with the Colony Hotel in Palm Beach, the Hotel del Coronado in San Diego, and developed a collaboration with Veronica Beard that was stocked in 30 of that brand’s stores.

Petite Plume's collaboration with Veronica Beard.
Petite Plume's collaboration with Veronica Beard. (Petite Plume)

“The whole idea is meeting the customer where she is but finding a relevant way to do it,” said Fanny Quehe, Petite Plume’s chief marketing officer. “These partnerships help us capitalise on brick-and-mortar experiences without the massive investments that go into them,” she added.

Increasingly, it’s Rhode’s approach that’s the exception that proves the rule. Before the pandemic, temporary stores were a popular marketing strategy for online, direct-to-consumer brands; many had plenty of funding to throw into building elaborate setups that would only exist for a few months, and there were plenty of vacant storefronts in top-tier shopping neighbourhoods.

The glory days of pop-ups are long gone, however. Retail vacancies are at a decade-low in the US, and landlords are less willing to accept short-term leases. The expense is another hurdle: in the part of SoHo where Rhode had its pop-up, asking rents rose 27 percent year-over-year in the second quarter of 2024, according to CBRE. A few blocks over, another shopping corridor saw rents soar 60 percent in the same period. That doesn’t consider the cost of actually building out a temporary store, or staffing it.

Still, there’s a reason so many brands rushed to open pop-ups in previous years: creating a physical space that reflects a label’s vision is a compelling form of marketing, particularly when compared to social media ads and sponsored influencer posts. When done well, a pop-up could even get customers to do a brand’s marketing for it, in the form of in-store selfies and word-of-mouth.

Some brands are finding creative ways to produce that real-life magic on a budget. Petite Plume’s strategy of popping up in unexpected locations is one approach. Trunk shows and launch parties give people the opportunity to meet a brand’s founder over free champagne while they shop. Major events provide another opportunity: spa tools line HigherDose sets up wellness lounges featuring its infrared recovery mats and sauna blankets at Coachella and Art Basel. Draper James, the clothing line founded by actress Reese Witherspoon, will set up shop inside Hilton’s Graduate Hotels in college towns during big football weekends.

“The stickiness with a customer is much greater when you’ve had a personal interaction,” said Meg Bedford, chief executive of Loops Beauty, which hosts events with sororities and other clubs on college campuses. “It goes further than if it was just them buying our product at Target.”

Beyond Stores

Having a variety of different physical channels is important for brand-building, even when a company has stores of its own (as Draper James does), according to Murali Gokki, co-leader of the retail performance improvement practice at consulting firm Berkeley Research Group.

“Our data shows that customers right now have a plethora of choices and what they’re looking for is an excitement in how they purchase,” said Gokki.

Instead of opening a flagship, the skincare brand Orveda recently opened a spa in Manhattan’s Upper East Side neighbourhood, to create a more “high-touch” experience for customers than regular stores, according to Coty, Orveda’s parent company.

At Orveda’s spa, customers learn about the brand’s premium products while using them during their facials. That’s the difference between a customer making a transaction and a customer becoming a proponent of a brand.

“A lot of what we saw post-Covid is that people are craving interactions,” said Andrea DiNunzio, general manager of luxury skincare, US, at Coty. “When you think about skincare, it’s a very intimate thing that requires a more intimate conversation that you have with a customer.”

Free Real Estate

For a profitable and self-funded brand like Petite Plume, opening a store is only justifiable when the financial risk can be mitigated, said Quehe. It often takes months, if not years, for permanent storefronts to break even, and even pop-ups are rarely profitable.

Partnering with another brand with an existing footprint or other consumer-facing businesses eliminates virtually all the costs associated with retail, save for product and marketing. And these costs can be split between the two parties.

“If you find a partner, it’s mutually beneficial. You just divide and conquer the expenses and there’s no fee to set up shop,” said Piper Parsley, vice president of brand marketing and e-commerce at Draper James. “Having two established brands come together allows you to cross promote on each other’s channels and … double your exposure.”

It’s even more effective when a brand hones in on a location where existing customers already shop. Loops chooses the colleges it works with based on whether there is a Target or CVS store near campus — retailers that stock its products.

“We first and foremost try to look at areas where we either know we have engagement from because people are shopping at the retailers around them,” said Bedford. From there, the brand finds content creators and micro-influencers in those communities to promote its products, combined with events such as spa nights at sororities with free Loops samples.

Breaking Through the Noise

Physical touchpoints that aren’t pegged to stores can also be a great way to form a closer, more lasting connection with customers or potential tastemakers.

Philosophy, another skincare brand under the Coty umbrella, transformed an old conference room in its headquarters in the Empire State Building in April into a clinic where influencers, key customers and beauty press are invited to meet with the brand’s scientific advisors and try out new products. The company also films its livestream shopping videos there. The primary goal is generating brand awareness, said DiNunzio.

Just like how many luxury brands woo their top-spending customers, HigherDose invites its most loyal shoppers and brand ambassadors to free wellness events. Whereas its wellness lounges at major events such serve as a top-of-funnel marketing channel to acquire new customers, the activations and experiences offered to top clients are a means of generating loyalty.

A 360-Retail Approach

In-store pop-ups, trunk shows and other events are not just an effective means of creating brand affinity but also serve as a proof of concept for future stores or major wholesale partnerships.

For instance, Draper James hosted a pop-up inside Sewing Down South, a pillow store in Charleston, S.C., which exceeded its sales expectations. The company had been considering opening its own store there, and the pop-up solidified its plan to start scouting locations.

Before it was able to land major wholesale accounts, womenswear brand Amir Taghi hosted trunk shows inside the homes of its top clients as a way to build a following. The travelling trunk shows began in Aspen and have gone around the country from Palm Beach to Los Angeles. Building on the success of this format — the label will generate more than $1 million in sales from trunk shows in 2024 — Taghi has signed on Moda Operandi and Elyse Walker as retail partners in recent months.

A full retail distribution strategy is ultimately necessary for sales expansion. One-off pop-ups and partnerships may be easy to facilitate but difficult to replicate at scale, according to BRF’s Gokki.

“When you host more events, it’s more inventory and more complexity, but not necessarily revenue add because you’re only there for a limited amount of time,” he said. “You need a permanent position with retail shelf space to really grow the business.”

Denim company Citizens of Humanity Group, which also owns Agolde, has one store of its own, in Aspen, Colorado. It approaches events and physical activations as part of its overall retail strategy. “We think of it as a triangle or a stool,” said chief executive Amy Williams. “One leg is the special events or partnerships that can’t be orchestrated in a store. And then we think about our retail partners such as Net-a-Porter.”

“The last piece of the puzzle is stores, which we hope to open a handful globally,” Williams added.



DMTBeautySpot

via https://dmtbeautyspot.com

Cathaleen Chen, DMT.NEWS, DMT BeautySpot,

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