Part 5: Measuring Success of Pop-Up Retail Operations
Chapter 16: Pop-up Analytics and Measurements
Chapter Overview
To achieve pop-up retail success, Haas and Schmidt (2016) suggest six strategic aspects to consider: 1) lifestyle products and luxury goods; 2) Millennials as the target market segment; 3) unexpected and extravagant shopping experience; 4) scarcity marketing tactics; 5) a location that fits the target market and brand; and 6) advanced brand awareness, distinctive brand community, or innovative brand power 1. These aspects provide a framework to plan and execute a pop-up retail shop and a direction for analyzing its outcomes.
Along with quantitative performance measures (such as store sales and profit) Return-on-Investment (ROI) metrics also link to relationship-building outcomes, as well as other subjective evaluations by retailers and customers. These are called non-objective performance indicators. In the context of omni-channel retailing, pop-up analytics weigh heavily on the ROI of social media impacts as pop-up shops are considered an integral retail channel that complement the bricks-and-mortar, online and other channels.
In Chapter 2, we discussed the five main objectives of pop-up shops: communicational, experiential, transactional, testing and institutional. It is worth noting that metrics for performance measures of pop-up shops with different primary objectives will vary accordingly.
Learning Objectives
Upon completion of the chapter, readers will be able to:
- Define different types of performance measures and ROI of a pop-up shop.
- Analyze the appropriate measures based on the objective of a pop-up retail operation.
- Develop pre- and post-pop-up strategies in the omni-channel retail context.
Video
The following video provides some context for how a retailer might measure the success of several pop-up shops with the aim to promote a new product. In this example, a Retail Consultant and the Director of Marketing for a major retailer discuss the pre- and post- strategies for the pop-ups that will run in three different locations.
1. Type of Metrics and ROI of Pop-Up Retail Operations
Choosing a set of appropriate performance measures to track for a pop-up operation is not an easy task, but is critical to the retail business’ ongoing success. The metrics used to compare different measures can help retailers in identifying areas of strength so they can devote sustained energy towards maintaining and enhancing the areas in their operations. On the other hand, proper metrics can also help retailers to recognize gaps in performance and steer their attention towards improving business processes to better achieve their goals and objectives. In order to develop and implement effective performance measures, a retailer must have a clear understanding of the broad dimensions of performance metrics.
For retailers, performance metrics include the use of information from objective measures and non-objective measures and performance can be measured at store level or at the organization level if the retailer is operating multiple stores and in multi-channels. For pop-up retail operations, metrics are often developed at the store level.
Measures, Metrics, and KPIs: the terms “measures” and “metrics” are sometimes used interchangeably; however, there is a difference between the two. A measure is a value that is quantified against a standard at a point in time (e.g., sales for January) while a metric compares two measures (e.g., actual sales vs. planned sales). From here, a retailer can identify some key performance indicators (or KPIs) as important metrics that provide actionable information about the business.2
1.1 Objective Measures and Performance Indicators for Pop-Up Shops
Research shows that choice of performance metrics are often driven by data availability, which results from the more “observable” financial performance measures (such as sales, profits, ROI) being widely adopted3. Thus, these quantitative performance indicators make use of what are called “objective measures”.
Sales in this context refers to the net sales revenue which can be measured by day, by employee, by product and per square foot.
- Sales by day can provide insights into which days a pop-up shop achieves a high volume of sales and this information is important to plan and adjust inventory and personnel needs.
- Sales by employee can be used to measure productivity of sales associates.
- Sales by product is an essential indicator for merchandise planning and inventory management.
- Sales per square foot, as discussed in Chapter 10, refers to net sales divided by the total area (or square feet) of selling space. Sales per square foot is an industry standard calculation of how productively a retailer is using the selling space to generate sales.
Profit includes operating profit and net profit. Operating profit is what remains after all financial obligations related to operating the business are met and net profit before taxes refers to the figure on which the firm pays income tax.4
Operating Profit: what remains after all financial obligations related to operating the business are met
Net Profit (before taxes): the figure on which the firm pays income tax
Return on investment (ROI) is a financial analytic tool which measures the output performance benefits gained against the total costs of an initiative or a company, expressed in percentage.
Return on Investment (ROI): a financial analytic tool which measures the output performance benefits gained against the total costs of an initiative or a company, expressed in percentage. The formula is ROI= net profit/total investment *100%.
The following video from Howcast Media provides a detailed explanation on how to calculate ROI.
In addition, retailers also use KPIs such as traffic count, conversion rate and basket size to conduct detailed analysis of the effectiveness of retail strategies.
- Traffic count is the total number of customers who come into a store during a given time period.
- Conversion rate (also called traffic conversion rate) refers to the percentage of the number of transactions made divided by the number of customers coming into the store.
- Basket size (also called average transaction rate) measures the average dollar value per transaction during a given time period.
Traffic count, conversion rate and average transaction rate provide details on total traffic, changing traffic patterns throughout a day, how much traffic has converted into a transaction and the size of an average transaction. These KPIs help managers to better plan daily operations, such as staffing and inventory management.
Example
This video from ShopperTrak will help you better understand how to leverage traffic counting information to increase traffic, conversion and transaction size.
1.2 Non-Objective Performance Indicators of Pop-Up Shops
In addition to objective metrics, retailers also examine other KPIs that are related to relationship-building and customer experience management. These metrics are primarily based on subjective performance assessment by retailers and customers. However, pop-up retailers who excel in non-objective performance measures often enjoy great success in the objective KPIs that we outlined above.
KPIs linked to relationship outcomes include relational touch-points, strategic alignment, surprise and delight and serendipity 5.
- Relational touch-points highlight that pop-up shops provide opportunities to reach out to new customers, raise brand awareness and engage with existing customers.
- Strategic alignment emphasizes the importance of a pop-up shop’s alignment with brand, location and context.
- Surprise and delight confirms the strong link between positive emotions and customer engagement with the brand through delightful and multi-sensory pop-up shopping experiences.
- Serendipity refers to chance, happenstance or happy accident 4 and is one of the factors that largely contributes to pop-up retail success.
Pop-up retailers who devise effective strategies to control happenstance, location, timing, and serendipity (i.e., seasonality) of a pop-up operation will maximize customers’ perceived serendipity which strengthens their positive relationship with the brand.
Other experience metrics, such as customer satisfaction scores and customer journey/touch-point analysis, are also meaningful measures of pop-up retail performance, especially in building customer experience.
Example
Watch this video to learn about retail expert Doug Stephens’ viewpoints on how to build customer experience in retail.
A customer satisfaction score is a holistic measure of a customer’s satisfaction with a retail business. This score can be obtained by customer surveys on multiple satisfaction dimensions, such as product quality, service quality, cost and timeliness6. A final global customer satisfaction score is calculated as the sum of all scores on each dimension. Analyzing a customer satisfaction score and its antecedents offers important implications for pop-up retail operators.
Mapping the customer journey can help businesses to better manage and stage the sequence of touch points that customers interact with while the customers are within the retail environment. Customer journey management helps to create “a customer-centered vision of the future and align the promise making and promise keeping efforts of an organization profitably”7. A pop-up retailer can conduct audits of customer journeys through participant observations and customer interviews, using the findings to gain a deeper understanding of the key objective measures and inform the future design of customer experience.
Customer Journey: the sequence of events that customers go through to learn about, purchase and interact with company offerings7
Example
Watch this video by UX Mastery to learn how to create journey maps that include the following steps:
1. Define goals of your product/service
2. Gather research
3. Generate list of customer touch-points and channels
4. Create an empathy map (i.e., how the customer feels at each point in the journey)
5. Brainstorm new ideas through different lenses
6. Create an affinity diagram to organize ideas and solutions
7. Sketch the journey
8. Refine and digitize
9. Share the map (within your organization)
1.3 Social Media ROI in Pop-Up Retail Operations
Social media can and should be an important aspect at all stages of a pop-up shop. A good social media strategy will:
- consider how to reach potential customers and influencers prior to launching the pop-up, which will create awareness and build excitement for opening day
- engage current customers at the pop-up to share their experience in the moment
- continue to build on the connection post-visit
To develop a social media plan, the retailer must determine which platforms their target customers most frequently use and decide what actions they hope to encourage, along with the measures that will be used to track success.
In Canada, the Social Media Lab at Ryerson University reported that 84% of adults had a Facebook account, 42% were on Twitter and 37% had an Instagram account8. Most retailers will have a target customer that is more narrowly defined by a certain age, gender, geographic region or other factors that may be relevant in choosing the social media platforms that those individuals prefer and in measuring their level of engagement compared with the rest of the population. According to Statista in 2017, only 26% of Canadians aged 35–54 were active on Instagram each week, yet 54% of individuals between 18–34 reported using this platform weekly9. Understanding these differences is one of the first steps in building a measurable social media plan.
The next step is to define how these social media channels may contribute to the pop-up shop objectives. This may include driving foot traffic to the pop-up or redirecting customers to the retailer’s website, building a new online community hub, getting feedback about products and the store experience, or even making sales directly through social media platforms.
With the above goals and information, the retailer can decide what measures will matter most and the best metrics to track in determining an ROI. Karola Karlson outlines a list of 37 KPIs for digital marketing and notes that, “social media has many advantages that can’t be measured in numbers, you should evaluate your social media ROI according to your goals and advantages”10. Whether you seek numbers like actual sales or qualitative feedback from a certain number of customers, having an idea about what each is worth to the business will be key in planning how much time and money to invest in a social media plan and developing targets for an expected return.
Examples
Videos
- This short video on Social Media ROI provides a brief overview of this topic.
- Hootsuite is a social media management tool and offers several free resources, such as this one on setting Objectives, KPIs and Key Supporting Messages for social media plans.
2. Analyze Appropriate Measures by Objective for a Pop-up Shop
2.1 Transactional Pop-Up Shops: Understanding Objective Performance Metrics
There are several transaction-oriented metrics that may be relevant to a pop-up that sells products or services on-site. Some of the objective metrics listed above include sales per day, by product, or by employee plus traffic counts, conversion rates and basket sizes. For each of these metrics, there are multiple factors that managers must consider.
| Sales per day | – determine the average sales per day over the full duration of the pop-up – compare average sales for each day of the week (i.e., busiest vs. slowest days) – compare sales for the same day each week (i.e., Saturday sales vs. previous Saturday) – consider also time of day (i.e., hourly breakdowns, peak periods) – note any anomalies such as holiday weekends, weather, etc. that may impact sales |
| Sales by product | – determine average price point of all products sold – compare items with the highest and lowest volume sales – chart top ten and bottom ten selling items – note sales by product variants (e.g., top selling colours, sizes, etc.) |
| Sales by employee | – determine the overall average sales per employee in a given time period – track average hourly sales for individual employees – compare sales by employees working at the same time or day of the week – track rate of add-on sales (or up-selling) by employee |
| Traffic counts | – track total number of visitors to the pop-up – consider tracking average time spent per visit where possible – consider tracking individual vs. group shoppers |
| Conversion rate | – determine the ratio of sales transactions vs. total visitors to the pop-up – note: conversion rate may be impacted by shoppers in a group or family being counted as multiple visitors while combining purchases into a single transaction |
| Basket size | – determine average dollar amount per transaction – determine average number of items sold per transaction |
| Note: sales by day, sales by product, conversion rate and basket size may all be compared in different ways between the pop-up location and typical online sales for retailers with existing e-commerce channels. |
Social media metrics related to conversion can also be an important indicator and business driver during a temporary retail activation. James Mulvey suggests that conversion may be measured as “goal completion” in relation to total visits to a retailer’s social media channels, website or even the pop-up itself where a goal may be defined as the customer making a purchase, signing up for an e-newsletter, downloading a mobile app or any number of other measurable and desired customer actions11. On social media, this could include a special offer code or downloadable coupon which may only be redeemed at the pop-up shop. In-shop redemption of this code may be tracked and measured against total visitors to the pop-up and total visitors to the social media channels to determine its effectiveness in driving traffic or influencing purchase decisions.
2.2 Testing-Focused Pop-Up Shops: Listening to Customer Feedback
Most social media platforms provide easy access to simple metrics such as number of likes, comments, shares or other engagements for each post. However, retailers must look deeper than this to analyze customer sentiment when testing new products or a new retail business through a pop-up shop. The use of relevant hashtags can help with this ability to listen for key messages from customers, as can the creation of “brand fan pages”.
Customer Sentiment Analysis: involves tracking and documenting the thoughts, feelings and opinions of customers to identify overall positive or negative reactions to the brand, product, service, experience or relationship between events12
In their work on how to generate different types of social media interactions, De Vries, Gensler and Leeflang (2012) report that posing a question is one of the best ways to encourage comments rather than simple likes.13 They found that positive comments led to an increased number of likes and that sharing of both positive and negative comments led to increased number of total comments, which can provide an opportunity for the retailer to learn from feedback and to further engage with customers to address any concerns in a transparent way.
In addition to social media channels, some traditional methods for listening to customers and soliciting feedback may include:
- customer feedback solutions at the point-of-sale
- customer intercept surveys/interviews
- reports from observations by employees
- post-purchase customer surveys by email
Example
Video
- TRU Rating point of sale solution: This is an example of a solution that integrates with POS devices such as credit card or chip-and-pin readers to ask customers to rate their experience through a single question linked with one of several key metrics.
Pop-up retailers might also consider how scarcity marketing strategies and limited available inventory at pop-ups may impact customer satisfaction. Developing marketing, communications and operational plans that set clear expectations in the minds of customers with a strategy to help satisfy those who do miss out can go a long way to avoiding unintended negative consequences.
2.3 Communicational and Experiential Pop-Up Shops: Measuring Social Media Impressions
One of the first things a pop-up retailer might ask themselves about their planned shop before launch should be “Is it Insta-worthy?” Dave Colebrook, vice-president of marketing for Cara Foods, explained that this question is something his team considers when creating new menu items in the hope that customers will be compelled to take photos of their own food and share them through social media – encouraging word of mouth marketing at no cost to the company14. Getting customers to share their experience is step one, but tracking what they are sharing, how many people they are reaching and if the same individuals are sharing repeatedly are all important things to measure from social media.
Apart from the organic nature of creating experiences that customers will share on their own, pop-up shops can further encourage customers to engage with the brand and their personal networks online by offering special discount codes for future e-commerce purchases to individuals who share their experience. Tracking how frequently shoppers use specific words to describe their experience can also help to inform future Search Engine Optimization strategies for the brand.10
In a study by Klein et al (2016) about luxury retailers, it was found that “pop-up brand stores are an exceptional opportunity for luxury brands to reach existing and new target groups alike” and that these retailers could use the pop-up experience to stimulate positive word of mouth15. With this in mind, some important metrics to track may include the number of unique posts that mention your brand through social media during a pop-up activation, shares of brand-generated content related to the pop-up experience and the total reach of each post.
2.4 Institutional Pop-Up Shop: Bringing Different Types of Analytics Together
As discussed in Chapter 2, an institutional pop-up shop also contributes to revitalizing local communities and promoting economic redevelopment of the area, in addition to the business objectives individual pop-up entrepreneurs are working toward. These pop-up shops are often part of a community building project and supported by local shopper loyalty. Thus, an institutional pop-up is not just about transactions, testing a product or concept, or communicating to customers and providing experiences. Oftentimes organized as a pop-up program, multiple institutional pop-up shops have missions beyond business operations. Therefore, in addition to specific metrics measuring business success, such as those objective and non-objective indicators and social media ROIs, civic leaders focus on the social and economic impacts of pop-up retail operations in local communities. Examples of such measures include how vacancy rates of commercial districts in neighbourhoods have been reduced, indicators of local customers’ engagement in local economy and matters (i.e., physical and social media participation of residents on community issues and debates, foot traffic in downtown mainstreets and commercial districts, and in-shopping behaviours of local residents).
3. Pre- and Post-Pop-Up Strategies
Pop-up experiences can vary significantly, depending on the objectives of the operations. However, pre-planning and post-planning strategies of a pop-up shop include fairly consistent elements, regardless of the format and primary objective.
3.1 Pre-Planning Strategies
Pre-planning builds a blueprint of a pop-up shop within financial perimeters and a road map to achieve the desired outcomes. Pop-up retail operators should have a working model they can use as a template to guide their implementations in a logical sequence. In the pre-planning stage, the following aspects should be included:
- Initial planning and budgeting: These initial steps help a pop-up entrepreneur to articulate why he/she plans to operate a pop-up shop and the scope of the pop-up shop. To answer the question “why” one has to consider the primary and secondary objectives for the pop-up shop. In Chapter 2, we discussed five objectives for retail pop-ups: communicational, experiential, transactional, testing and institutional. With clear objective(s) in mind, a pop-up entrepreneur can develop an effective concept for the pop-up operation and establish budget expectations based on the concept.
- Planning the set-ups: Baras (2016) suggests that a pop-up operator should use the following checklist16.
- Location: Where will the pop-up shop be located? In an empty storefront, inside a shopping mall, at a community park, in a market place or in an exhibition hall?
- Permits and licences: Find out what permits and licenses are required to operate the pop-up shop. Usually the information can be obtained from the local town hall.
- Landlord requirements: What is required in terms of rent, hours of operation, parking, maintenance schedule and insurance?
- Hiring staff: Determine the number of staff needed and establish work shifts. Budget payroll expenses including Worker’s Compensation insurance.
- Visual merchandising and pop-up space planning: Include all aspects of the pop-up retail environment such as lighting, colour, signage, shelf/fixture, display, traffic flow and crowd control.
- Planning the operation: Establish the aspects that are directly involved in the pop-up retail operation, such as:
- inventory and logistics control, financial planning to ensure cash flow and operational success
- store policies with regards to hours of operation, payment methods and loyalty cards/gift cards
- staff training on customer service, loss prevention and security
An important aspect to plan is how to promote the pop-up shop. While online and social media promotions are most common, attention should also paid to drawing in passerby into the pop-up shop. This can be achieved by various tactics, such as distinctive signage (i.e., balloons), music and swag items by the entrance.
4. Planning the evaluation: Develop a plan for dismantling all displays, fixtures, and signage, putting inventory and swag items away, and cleaning up the space. More importantly, the plan should also set KPIs and determine net profit target, as well as how to measure if the pop-up shop objectives have been met.
3.2 Post-Planning Strategies
In the context of omni-channel retailing, pop-up retail operations are often considered as a channel of merchandise and/or service distribution which is an integral element of the comprehensive retail business strategy. From this perspective, pop-up shops do not just provide a “once in a lifetime” experience for customers, they are part of the customers’ brand experiences before, during and after the pop-up retail operation. Thus, a pop-up entrepreneur needs to establish a clear vision for the pop-up shop beyond the operation itself. Post-planning strategies are part of the long-term vision of a retail business. Especially in the areas of fostering customer loyalty, further developing relationships with new customers acquired through pop-up retail operations, diversifying shopping and brand experiences through pop-up but creating synergy across different channels such as bricks-and-mortar, e-commerce, mobile commerce, and social commerce, and continued product and brand development based on the insights gained through pop-up retail operations.
Key Takeaways
In this chapter, you learned:
- about different types of metrics and ROI of a pop-up shop
- how to analyze the appropriate measures based on the objective of a pop-up retail operation
- what key aspects to consider when developing pre- and post-pop-up strategies in the omni-channel retail context
Key Terms:
- Measures, Metrics and KPIs
- Operating Profit and Net Profit
- Return on Investment (ROI)
- Customer Journey
- Customer Sentiment Analysis
- In-Shopping
Mini Case Study
The following is a fictional teaching case based on a combination of real world and hypothetical examples.
Good.net
Situation:
Good.net is a popular online retailer with a healthy living focus that has opened a pop-up store in a busy mall in a large city. The objective for opening this physical location was to take advantage of multiple sales channels (i.e., testing an omni-channel approach) and to complement their online store by providing customers with a hands-on experience. It would also serve as pilot to test new products and strategies, aiming to better understand customers and collect new types of data to make better, more informed, strategic decisions.
Although Good.net had data about customers and transactional information from their online sales, the company was seeking additional qualitative data that could only be gained from observing and interacting with customers in a physical location. Testing new products and product combinations, obtaining on-the-spot reviews and testimonials after customers try new technologies in store (as opposed to online) and a host of other important metrics were missing from Good.net’s analyses, and the pop-up location was chosen to help fill these gaps in data.
Solution:
The pop-up shop was set up to: attract new customers while drawing from an existing online customer base; gain the attention of a local/urban target market; obtain meaningful data from visitors; determine the complementary effects of adding physical stores to an established online presence; determine the effectiveness of online campaigns to drive traffic to physical stores (and vice versa); and to determine the potential for a more omni-channel oriented approach through the development of physical stores.
Interactive technology was utilized across customer touch-points and included the chance to fill out surveys for product discounts, the monitoring and measurement of shopper behaviour in the store (i.e., time spent at a given area, types of product displays that attract attention, etc.), and the opportunity to drive awareness and future traffic to the online store.
Results:
Sales figures increased on the www.good.net website as more people visited the physical store, confirming the potential success of an omni-channel approach. More meaningful data was collected about their customer behaviours, likes/dislikes, preferences in various categories (e.g., price per transaction, units per transaction, item combinations, product attributes, etc.) and general feedback. The company did so well at their first pop-up in the mall that they have planned on opening a second location!
Consider the following questions:
- What are some of the metrics you would want to measure in a physical pop-up to complement your online business?
- What are some potential risks of utilizing a physical store to obtain data about your target customers when the majority of your business is online?
- How can a pop-up shop help a business like Good.net to develop a better online experience for customers? Which of the metrics you identified above would you use and why?
References
- Haas, S., & Schmidt, L. (2016). What drives the success of pop-up stores? Wissenschaftliche Beitrage, 20 (1), 89-95.
- Mullins, S. (2008). Measures, Metrics, and Indicators. IT Toolbox.
- Lowe, J., Maggioni, I., & Sands, S. (2018). Critical success factors of temporary retail activations: A multi-actor perspective. Journal of Retailing and Consumer Services, 40, 74–81.
- Brown, S. (2005). Science, serendipity and the contemporary marketing condition. European Journal of Marketing, 39(11/12), 1229.
- Gauri, D. K., Ratchford, B., Pancras, J., & Talukdar, D. (2017). An empirical analysis of the impact of promotional discounts on store performance. Journal of Retailing, 93(3), 283-303.
- Goyal, V., & Mishra, P. (2016). A framework for performance evaluation of channel partners in distribution relationships. International Journal of Productivity and Performance Management, 65(4), 503-531.
- Kunz, G. I. (1998). Merchandising: Theory, principles, and practice. New York: Fairchild Books.
- Gruzd, A., Jacobson, J., Mai, P., & Dubois, E. (2018). The state of social media in Canada 2017. Ryerson University Social Media Lab.
- Statista. (2018). Weekly social media usage by adults in Canada as of July 2017, by age group.
- Karlson, K. (2018, March 12). 37 Digital Marketing KPIs (Complete Guide). Scoro.
- Mulvey, J. (2017, May 11). 4 ROI Formulas That Will Help Earn You a Promotion. Hootsuite.
- Ku, L. W., Ho, H. W., & Chen, H. H. (2009). Opinion mining and relationship discovery using CopeOpi opinion analysis system. Journal of the Association for Information Science and Technology, 60(7), 1486-1503.
- De Vries, L., Gensler, S., & Leeflang, P. S. (2012). Popularity of brand posts on brand fan pages: An investigation of the effects of social media marketing. Journal of Interactive Marketing, 26(2), 83-91.
- Buckner, D (2017, June 2). ‘Is it Insta-worthy?’: How companies get customers to do their marketing for them. CBC News.
- Klein, J. F., Falk, T., Esch, F., & Gloukhovtsev, A. (2016). Linking pop-up brand stores to brand experience and word of mouth: The case of luxury retail. Journal of Business Research, 69(12), 5761-5767.
- Baras, J. (2015). PopUp republic: How to start your own successful pop-up space, shop, or restaurant. Hoboken, NJ: John Wiley & Sons, Inc.