The Impact of Pop-up Shops on Retail Brands
- July 17, 2023
Whether they show up in your local mall or in a post on your feed, pop-up shops have emerged as an enticing tool for brands to draw in young consumers.
Brands and retailers are taking cues from the magnetism of “drop culture” by launching pop-up shops. Drop culture is the only sales strategy to have generated its own subcultures, so brands are taking note. It has spawned terms like “sneakerhead,” a person who avidly collects sneakers/basketball shoes; and “hypebeast”, someone who keeps up with the latest fashion trends and acquires hyped products from highly-marketed brands.
It can be easy to write off the fleeting nature of a pop-up shop, but with the rise of drop culture, they can yield high returns for a brand.
Pop-up shops may seem like a risk, but they actually help brands capitalize on new trends and niche markets at a low cost while helping them go viral.
In a time when ecommerce is becoming more competitive, a temporary brick-and-mortar shop can breathe new life into a brand by promoting limited drops at the location.
“Pop-up shops are the physical manifestation of online product drops. Capitalizing on drop culture and the sense of scarcity, competition, and urgency these drops generate for consumers. They also generate brand awareness, hype, and loyalty through the nature of providing a unique experience and molding the allure of a limited edition item through drop culture.”
– Lauren Kehoe, SVP Creative Services, NVE
Drop culture refers to a marketing approach that involves a limited release of merchandise, which creates hype and anticipation around the product online. This technique is heavily used in the streetwear fashion industry and revolves around the behavior, thinking, and community that surround it.
Sneaker companies like Nike and adidas were pioneers of drop culture in the 1980s. These brands hyped their new releases by announcing a specific day and time when their limited-edition merchandise would be “dropped” or released in physical stores. Once the items sold out, they were gone for good. This model incited excitement, anticipation, and even a rush of frantic shopping as fans of the brands lined up to get their hands on the limited-edition shoes. This concept of scarcity was later revived by streetwear brands Supreme and BAPE in the 2010s, sparking considerable online discussion among retail analysts, fashion enthusiasts, and the media.
Drop culture has now permeated various industries, from sneakers to high fashion to digital items like NFTs. Notably, luxury brands are leveraging streetwear tactics to stay relevant to younger consumers.
NVE Experience Agency specializes in helping brands across the country launch innovative pop-up shops and build online anticipation.
Learn how we can guide your brand’s next product drop.
Here are the top three benefits of drop culture from a marketing perspective.
The limited availability of a hyped product in a drop creates aspiration and desire among consumers, which enhances the perceived value and exclusivity of the products. Scarcity drives demand and can generate significant hype around a brand and its latest products.
Drop culture encourages brand enthusiasts to actively engage with the brand, often prompting them to line up for hours or eagerly anticipate online releases. This engagement not only fosters a sense of community among consumers but also serves as a consistent line of communication with its followers.
Successful drops can significantly enhance a brand’s reputation and visibility, particularly if the items sell out quickly or receive extensive media coverage. This can lead to increased brand recognition and create hype around the brand, which attracts new customers and retains existing ones.
Pop-up retail stores tend to be smaller in scale and may only be open for a few hours, days, or weeks. Because of this, they require less staff, less stock, and limited utilities to make a pop-up shop a success.
In a tight real estate market, a temporary lease is beneficial for both landlords and retail brands. Pop-up shops can also enable brands to showcase their creative side, like when NVE Experience Agency partnered with UNIQLO.
By combining LA lifestyle with brand education, NVE was able to demonstrate UNIQLO as a universal trendsetter and a fashion innovator by focusing on the Japanese craftsmanship of their newly released FW denim line.
There is consistent demand for “something new” and sensory experiences in a rapidly shifting market, especially among Gen Z consumers. That’s why pop-ups can bring in 20–30% more revenue than a traditional store if the timing is right.
A pop-up shop is perfect for a brand that wants to try something bold and new.
In 2019, Converse launched their sustainable sneaker line in London, Renew Canvas. The innovative shoe was made from recycled materials. Customers were free to test out the new shoe in a sustainability-inspired space. As a means of shifting the perspective of how a Converse shoe is traditionally seen, Renew was successful in setting itself apart from the legendary Chuck Taylor shoes of the past.
Established brands can leverage temporary spaces for a pop-up shop like the Diageo Day/Night Market.
NVE, Diageo, and House of Slay partnered to launch a first-of-its-kind day/night market pop-up that was a love letter to the AAPI community, hosting 2,350 guests across 2 days.
The option of in-person shopping is ideal for online brands that want to get closer to the consumer, like cosmetics and fashion. Because these items are so personal, it can be hard to determine how they’ll look in person when browsing online. A temporary retail spot means a customer will be able to try an item, whether a dress or a shade of blush, so they can find exactly what they want.
Before ecommerce, the money that had to be invested in a lease agreement, designing and decorating a space, and getting it up and running was immense. But now, it’s the cost of paid advertising that is going up.
According to the Winterberry Group, approximately 55% of marketing is digital, making it a huge market that continues to grow year over year. The expenditures for digital advertising in 2021 were $436 billion, compared to $196 billion for offline advertising. As more and more brands choose to invest online, this demand means businesses will have to shell out even more to stay at the top of Google ad results.
The need for brand awareness through organic channels has never been more important. Social media can engage and share promotional content for your drop with a wider audience in the lead-up to a pop-up shop and promote it long afterwards.
E-commerce is booming. In fact, according to Oberlo, approximately 2.64 billion people, or 33.3% of the world’s population, will shop online in 2023. This represents a 3.1% increase from 2022.
While numbers show the online marketplace is thriving, a pop-up shop provides the opportunity to engage face-to-face with customers and build a connection that will last online. And in today’s marketing landscape, it’s necessary to have a multichannel strategy to build brand awareness and solidify customer loyalty through constant re-engagement.
No matter how seamless the online experience is, people crave membership in a community that brands can provide. Also, most customers still enjoy being able to see, touch, and smell what they’re going to purchase; this is especially true in drop culture.
Cosmetic brand Winky Lux created an pop-up experience where customers could explore camera-ready rooms full of sets, props, and textures. The $10 upfront charge could then be applied to their purchase of products at the end of the experience.
Customers may love going online to shop, but a pop-up shop provides a flash retail opportunity where they can really explore and appreciate the value of a brand’s products before purchasing.
By learning about a brand’s products and history, consumers can learn about its mission and develop loyalty.
From a seasonal storefront to a new product launch, pop-up shops offer a curated retail experience without the financial implications of a brick-and-mortar store. They also create hype thanks to their ability to tap into drop culture. When you’re launching a new product, a pop-up can be an invaluable asset to help marketers quickly become years ahead in building their brand awareness.