Digital-only brands & customer experience: pop-up stores

Pop-up stores are allowing digital-only brands to engage with customers

Earlier this year we predicted that the return of the store would be a key theme throughout 2019. Despite numerous brick-and-mortar stores closing and a rise in online retail, the concept of the store is not doomed but needs to be rethought. As a matter of fact, a growing trend is experiential marketing in the form of temporary physical stores, famously known as a ‘pop-up store’. Many digital-only brands have launched pop-up stores as a new channel to engage with current and potential customers and set themselves apart from other online competitors. This provides an opportunity for brands to create a memorable and unique experience for the consumer, enhancing the overall brand experience, often at a limited cost. When focusing on its influence on customer experience, there are a number of notable impacts.

Brand engagement

The digital space is becoming highly saturated and competitive for brands to both advertise in and sell their products. As a consequence, this can leave customers feeling overwhelmed by the excessive amount of options and reluctant to make a purchase. While digital-only brands have the strength of having built their customer base solely online, it’s becoming harder for them to generate brand loyalty. This is where pop-up stores come into play, acting as an engagement opportunity to maintain a customers’ attention: customers that attend pop-ups are immersed in the brand’s experience, without interference from a competing brand, and can benefit from the personalised advice of a salesperson.

Brand Identity

For digital-only brands, a pop-up store launch is also the opportunity to strengthen brand identity and raise brand awareness. For instance, the U.K.-based FinTech ‘Klarna’ has recently launched a pop-up store in Manchester after a successful launch in London as its awareness triggered more demand. This is a way for brands to raise awareness about their products and services, attracting new customers while still reinforcing their identity amongst existing customers.

As mentioned previously, pop-up stores provide a new channel to directly interact with the brand and its products or services. The physical structure gives digital-only brands the possibility to develop their universe and their values. Consumers tend to choose brands that fit and reflect their personal values. In the example of Klarna, the brand values are centred around brand discovery, seamless shopping for millennials, being fun, innovative and easy. And this is reflected in the quirky design as well as the interactive discovery sessions of the pop-up store, which include a coffee shop, styling workshops, gym, and yoga classes: these elements are unusual in a store!

Human Touch

A store has the benefit of offering physically immersive experiences and interaction with the product that cannot be offered by online shops. Despite consumers typically adapting quickly to new technologies, consumer habits persist and the need to interact physically with the product remains important for customers. According to analysis from the Internet Retailer, the proportion of sales made in-store in the U.S. is still higher than online sales. According to data from the Internet Retailer, e-commerce sales only represented 14% of the total U.S. retail sales value in 2018, despite a rapid growth for online sales.

Perhaps surprisingly, “millennials” enjoy shopping in physical stores and according to research 80% of this segment believe it is important for a brand to have a physical store. This can be explained by the factor of convenience: while online shopping becomes increasingly seamless, there are still some pain-points not found within in-store experiences, such as waiting for the delivery or unmet expectations from the products. To that end, pop-up stores can drive growth in customer satisfaction as customer expectation can be met.

Relationships

Pop-up stores are an opportunity for digital-only brands to better understand consumers as well and better serve them with a more tailored range of products. For instance, Amazon has tested several pop-up store launches across Europe, and as Nick Caplin – Head of European Communications at Amazon states:

“The purpose of the pop-up store was to have a physical presence where we could meet with media and partners and influencers, and most importantly with customers to try and understand more about what they want with their relationship with Amazon (…)”

Nick Caplin, Amazon’s Head of European Communications

On the other hand, for the customer a pop-up store is the chance to discover or learn more about the brand and to interact with its product. This can create a personal relationship with the brand that is harder to make through an online platform, enhancing engagement with a brand and generating customer loyalty.

Marketing & Virality

Pop-up stores are a chance for digital-only brands to adopt experiential marketing and allows them to recreate the virality of online marketing campaigns. For instance, the brand Birchbox extend the opening of its pop-up store for 2 more months because of its unexpected success. This is because the characteristics of pop-up stores such as a unique location and a limited timespan create a notion of exclusivity, generating a feeling of excitement by customers that can result in word-of-mouth. This is particularly relevant with social media where customers often share their in-store experience, especially if the design and experience of the store are appealing.

BirchBox, 2018; Klarna 2019; BarkShop Live, 2016

Additionally, pop-up stores can increase sales by developing multiple touchpoints, as the promotion of both the pop-up stores and the brand on social media can create a loop between online and real-life traffic. These stores can also be an opportunity to develop or test new products. For instance, a common feature found within pop-up stores is limited edition products, for the customer it reinforces the singularity of the whole experience with a product available in a limited quantity and at an exclusive location that generates excitement, particularly on social media.

24 % are willing to pay more for a product if the purchase is embedded in a memorable experience

Conclusion

Digital-only brands understand that customers still shop in-store, but are increasingly acknowledging that mixing online and offline channels via experiential marketing can build brand awareness, reinforce identity, and drive excitement and sales. It is not only a matter of standing out from other online competitors but mainly to answer customer needs: to feel the products they buy and to live an experience that cannot be provided elsewhere. Pop-up stores are a great opportunity for digital-only brands to showcase their brand identity, interact with customers and to offer them an exclusive experience without the cost of investing in a long-term store. As retail experiences will become more personalised, we expect to see the pop-up store become a central component of many digital-only brands’ marketing strategies and a primary channel through which to build a brand persona and offer an immersive customer experience.

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