E-commerce & Internet Retail

4 Benefits of Pop-up Shops for Legacy CPG Brands

  • June 22, 2018
  • Anthony Riva
  • 8 minutes

Walk through any Main Street, mall or metro area, and you’ll see dozens of short-term stores that are here today and gone tomorrow. Pop-up stores are a familiar feature of the current retail landscape, but that hasn’t always been the case.

Pop-up shops first became popular in the late 2000s during the U.S. economic downturn as a low-investment sales tool. They allowed savvy retailers to move inventory quickly without a long-term lease commitment during the uncertain economic climate.

Over the past ten years, pop-up shops have become a tool with a myriad of benefits for retailers, banks, startups, musicians, artists, TV shows and more. Now, CPG companies have caught pop-up fever. M&M’sSnickersHalo TopAriZona Iced Tea and Mike’s Hard Lemonade have all launched pop-up shops just in the past two months.

Consumers and the media have reveled in the rise of pop-ups shops. It’s clear that these temporary stores will remain a feature of the retail landscape for years to come, but why are CPG companies latching onto the trend? Is the strategy only about PR and media hype? Is the goal to connect directly with consumers? What are the true benefits of pop-up shops for CPG companies?

Innovation

Groundbreaking innovation in the CPG industry is difficult. Most “new products” are just new flavors, new packaging or new variants of existing products. Coca-Cola is the most purchased brand in the world, but the taste of their flagship product is incredibly similar to their first bottle sold 124 years ago. Compare that to the tech industry, where the iPhone is an entirely different tool today than it was when it first launched 11 years ago.

Today’s consumers demand new and exciting products, but developing products is a lengthy and expensive process for CPG organizations. Launches take 18 to 36 months from inception to the point that consumers can purchase a product in stores. Beyond product development, CPG companies need to convince their retail partners that a new product is valuable enough to reserve space on a store’s shelves. Thus, CPG companies do everything within their power to make sure that a new product is successful before launching. The accidental downside to this cautious approach is that new products are often derivative and boring.

Pop-up shops remove the retailer from the equation and help CPG companies test new products faster. In the traditional model, CPG companies and retailers had to wait months after a product launched to receive sales data that revealed if they both made a reasonable decision. A pop-up shop cuts that cycle down to a few days.

Unilever’s St. Ives is experimenting with a pop-up shop where consumers can choose their own ingredients and product formulations. St. Ives’ brand director Suzanne Palentchar notes that the company is identifying their customers’ most commonly selected ingredients, and that the information may be used to create future products.

Pop-up shop concepts like this allow brands to test and learn. It also allows them to see immediately if a product, flavor or variant is undesirable. If a brand is going to fail, it’s always best to fail quickly. The typical 18- to 36-month process is the opposite of quick.

The decreased fear of failure also allows Research & Development teams to think far outside of the box without worrying that they’re wasting time and money on an idea that is unlikely to work.

Bonus: Big CPG Has an R&D Problem (and How to Fix It)

Customization

The St. Ives example sheds light on another consumer desire the CPG industry has difficulty addressing: customization. Most products are purchased from grocery store shelves and eaten or used the exact way that they were inserted into the package. Customers might love a mix of three different Doritos flavors or three different Dove body wash scents, but it’s unlikely that they are going to purchase three bags of Doritos or three bottles of Dove.

CPG companies know that their customers would love to customize their products. GlobalData notes that 61% of consumers are attracted to the idea of being in control of their own products. Unfortunately, supply chains and in-store displays at grocery stores are not arranged in a way that allows customers to build their own Doritos bags.

Pop-up shops give customers the opportunity to create new products tailored to their preferences. In a pop-up shop, customers aren’t restricted to the rules of a grocery store.

Customer Insights

CPG companies don’t often get the opportunity to interact with their end customers directly. A CPG company’s first customer is usually a retailer, like Walmart, who ultimately maintains the direct relationship with consumers.

Brands do an admirable job conducting focus groups and other market research. However, studying customers isn’t always the best way to understand them. They also need to have real-world interactions. The insights gathered by directly connecting with customers throughout the entire sales process are impossible to recreate with focus groups.

Pop-up shops connect a brand directly to their customers. Within a small store, employees can give consumers individual attention and make a 100-year-old brand feel like something brand new. That employee can help the consumer feel like they just discovered a youthful, modern product.

Suzanne Palentchar notes that the St. Ives pop-up has collected more than 25,000 customer email addresses. “The information we’re collecting will help us have a better conversation with consumers,” Palentchar said. “They already receive boilerplate emails. By getting information from them, we can have more engaging conversations with them, so we’re not talking at them, we’re communicating with them.”

Today’s consumers desire personal interconnectedness. Only direct engagement can create that feeling. The rich insights gathered from pop-up shops are an essential first step to develop genuine relationships with consumers.

"The rich insights gathered from pop-up shops are an essential first step to develop genuine relationships with consumers."

Personality

CPG companies can take the customer insights gained from pop-up shops one step further and create a unique personality for their brand that resonates with consumers. A few CPG brands have successfully used this data to change their stale and stodgy marketing voices into fun, specific personas.

Kellogg’s Pop-Tarts brand has walked the personality tightrope perfectly. Its voice on Twitter is a perfect example of how to cut through the clutter and speak directly to customers.

Pop-Tarts didn’t start creating its personality until last year on Twitter. It launched one of the original CPG pop-ups with Pop-Tarts World in August 2010. It has repeated this success with different versions of Pop-Tarts World up to the present day. This type of direct interaction with customers allows the brand to understand who its customer is and what resonates with them the most.

Authenticity is an essential dimension of brand quality to modern consumers. According to GlobalData, the majority (60%) of millennials prefer to be unique and stand out from the crowd. Authentic products — those with a unique and genuine personality — can be used to facilitate this self-expression.

Let’s not forget that Pop-Tarts were invented in 1964. Yet by leveraging pop-up shops the brand has found a way to stay fresh, exciting and relevant in an age where consumers are running away from sugary breakfast products.

Pop-up stores have a long list of benefits, but at their core, they are all about the customer. We’re living in a “Golden Age of the Consumer” where customers have more choice and a louder voice than ever before. Brands have the opportunity to gather insights and listen to their customers’ voices. If they do, they can make the necessary adjustments to create products that customers want to buy.


Anthony Riva has a 9-year background providing analysis and intelligence on all aspects of consumer behavior, retail industry insights, and CPG trends.

He currently is an analyst at GlobalData, where he develops research that enables clients to make actionable business decisions.

Anthony is an active member of The Hudson Union, a cultural institution. In his free time, he enjoys exploring New York City’s restaurant scene and wandering the aisles of grocery stores across the world.

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