Chapter 4: Stakeholders of Pop-Up Retail Operations

Chapter Overview

Pop-up shops have now become part of omni-channel retail strategies for many retailers, from small independent stores to global chains. In addition, non-retailers, such as celebrity artists, band manufacturers, as  well as community groups are also involved in implementing pop-up retail operations to serve their unique purposes. For example, music artists, such as Kanye West, the Weeknd and Justin Bieber, have all used pop-ups as a promotional strategy to engage with their fans¹ and the pop-ups were strategically planned to correspond to their tour schedule and venues.² The WoodGreen Community Services along with the Danforth Avenue East Community Association (DECA) in Toronto, Ontario, Canada, on the other hand, has initiated a pop-up project to revitalize the streetfronts  of a downtown business district. Over a period of five years, they helped to bring in 32 pop-up shops which successfully reduced the vacancy rates of the area from 17% to 5%. Meanwhile, large brands/retailers such as Samsung, IKEA Canada and Muji, have all used pop-ups to promote new products, provide unique experiences for consumers, and/or test new markets.

Internationally, pop-up shops have been implemented in many markets such as Australia, the United Kingdom, Canada and the United States. Australia has seen a number of pop-up projects, such as Renew Newcastle, to revitalize local neighbourhoods³, whereas in the UK, a mobile pop-up box park made of cargo shipping containers represented a novice pop-up shop format⁴. In Canada and the US, pop-up has become a staple in the playbooks of established companies.⁵

A number of people and organizations are actively involved in the planning and execution of a pop-up shop. Those who have vested interest or concern in a business are called stakeholders. This chapter will cover topics related to the stakeholders of pop-up shops.

Setting the Context

1. Stakeholders of a Pop-Up Shop

1.1 A Model of Stakeholders in Pop-Up Retailing

The concept of stakeholder has been well recognized and researched in the literature of business studies. In recent years, considerable effort has been devoted to refining and further developing the concept.  The Clarkson Centre for Business Ethics (based at the University of Toronto) produced a “Consensus Statement” about stakeholder theory, which, in essence, stipulates that:

• The purpose of business corporations is to create wealth;
• The individuals or groups who participate in the wealth-creation process are stakeholders;
• Stakeholders contribute inputs, incur costs, experience risk, and also receive benefits;
• The objective of stakeholder management is to achieve balance between contributions, costs, risks, and benefits, taking account of the roles and concerns of all stakeholders.

In the context of retailing, Whysall (2000) proposed a model of stakeholders in retailing based on this Consensus Statement. He further provided examples of inputs, costs and risks for each stakeholder group. In his proposed model, there are 12 main stakeholders in retailing: customers, suppliers, competitors, government, financial community, service providers, employees, managers, landlords, owners, community and activists.

In a study of female online shoppers, Rambo and Liu (2010) developed another framework to categorize the stakeholders based on their roles and responsibilities in a specific course of action.⁶ They divide the stakeholders into four spheres: contribution, source, market and community. Contribution is the sphere that is closest to the course of action which, in their study, was female customers’ adoption of e-commerce application. The source, market and community spheres are progressively further from the central course of action in the online shopping scenario.

Using Whysall’s model (2000) and Rambo and Liu’s model (2010) as points of departure, we can identify key stakeholders in the pop-up retailing context and propose our own model.

• The first level: Contribution. At the core of pop-up retailing are customers, retailers (including business owners, managers and employees) and landlords.
• The second level: Source. The stakeholders in this level are one step further from the main course of action, but still play a critical role with their contributions. They are: suppliers and service providers, such as pop-up consultants, designers and pop-up space brokerage agents.
• The third level: Market. The stakeholders in this level have indirect collaborative or competitive relationships toward pop-up retail operations. They are: nearby competitors of the pop-up store and the financial community which provides investment and/or payment services.
• The fourth level: Community. The stakeholders in this level have no direct influence on the pop-up retail operations but contribute to the context where pop-up shops take place. This level includes: government agencies, business associations or business improvement areas (BIAs), community service agencies, local grassroots groups interested in promoting community revitalization or other activist groups.

1.2 Roles and Responsibilities of Stakeholders

Now that we have our framework for pop-up stakeholders, let’s look at the roles and responsibilities of each stakeholder group in more detail. Recall from Chapter 2 that pop-up shops can function as marketing and communication tools,  market entry vehicles or inventory liquidation outlets. Depending on the specific objectives established for a pop-up store, the business process may vary. Nonetheless, general expectations for the stakeholders’ roles and responsibilities can be identified.

1.2.1 The First Level: Contribution

This level is essential to the success of a pop-up shop. It includes customers, retailers (business owners, managers and employees) and landlords.

• Customers: Customers are actors who are the utmost contributors to a pop-up retail business process through their patronage of pop-up shops. We will explore consumer segments and psychographics in more depth in Chapter 5.
• Retailers: Retailers are principals of pop-up retailing process. They can be divided into two categories: owners of small and medium-sized enterprises (SMEs) and national or global retail chain stores. For SMEs, the stakeholders include business owners (and employees), whereas for large retail chains, the stakeholders in the pop-up retail context are represented by managers and employees. Retailers initiate and implement a pop-up retail operation with specific objectives in mind. Primarily, these objectives are: communicational, experiential, transnational, testing and institutional.
• Landlords: Landlords are principal supports who provide space and support a pop-up retailer’s vision. For small property owners, temporary rental provides some subsidized income and the potential to draw in new tenants for long-term leases, while for larger property owners and management companies (e.g., shopping malls), creating and maintaining a pop-up retail space may provide novelty to shoppers, project a fashion-forward positioning and make a corporate social responsibility statement, such as promoting and incubating local design talents and innovative entrepreneurs. However, short-term leasing is generally not a preferred arrangement for property owners due to the required repeated efforts for managing tenants and properties. In addition, certain government policies may dissuade property owners from pursuing short-term leases if they qualify for a tax rebate on their vacant commercial or industrial properties.

1.2.2 The Second Level: Source

The stakeholders in this level are service providers to retailers such as suppliers, pop-up consultants, designers and pop-up space brokerage agents.

• Suppliers: Suppliers are providers of merchandise to be sold, display fixtures, storage and other retail supplies. They supply resources to ensure the success of a pop-up retail operation.
• Pop-up Consultants: The service scope of pop-up consultants can vary greatly depending on the needs of retailers. They interpret a pop-up retailer’s vision and advise on strategies. Some are also involved at the operation level. Pop-up consultants are a central point linking many areas of expertise and resources and they are also knowledgeable about other pop-up retail stakeholders and their perspectives.
• Designers: Designers are service providers that offer skills and design production expertise which contribute to pop-up strategies.
• Pop-Up Space Brokerage Agents: These agents are service providers who connect vacant space with pop-up retailers.

1.2.3 The Third Level: Market

The stakeholders in this level form the market context in which the pop-up shops take place. This level includes neighbourhood retailers and the financial community.

• Neighbourhood Retailers: They are competitors who share the target market and resources with pop-up retailers. Neighbourhood retailers include all retailers that are in close proximity of a pop-up shop and that may have a similar brand positioning. This can include independent shops, international chain stores, and even e-commerce operations.
• Financial Community: They are financial institutions or solution providers who are collaborators with pop-up retailers by providing payment options to customers and/or financing to pop-up retailers. Ease of shopping is an important factor for pop-up customers so a variety of payment options helps attract more shoppers. Financing solutions are critical to many retailers, regardless of their size.

1.2.4 The Fourth Level: Community

The stakeholders in this level include government agencies, trade associations and activist groups, all of whom constitute the broader regulatory and social environment in which pop-up shops operate.

• Government Agencies: Government agencies, such as relevant municipal or upper level government units, are part of the legislature which sets out laws, bylaws, rules, regulations, procedures and programs that govern the environment in which pop-up shops operate. The legislative environment can potentially help stimulate or deter pop-up retail operations (e.g. differences in provincial labour regulations, municipal signage requirements and restrictions, etc.)
• Trade Associations: Trade associations, such as business associations, business improvement areas (BIAs) and community service agencies, are advocates which promote favourable business environments and legislative changes where pop-up retailing takes place. They also provide networking and training opportunities and programs to support their members.
• Activist Groups: They are advocates who promote change based on a set vision of the group. For example, a group of local residents interested in protecting their community against the entrance of big box retailers can be considered an activist group. An animal rights group that protests a pop-up retailer who sells down-filled products is also an activist group.

Table 4.1 Summary of Stakeholder Roles and Responsibilities (adapted from Rambo and Liu, 2010)

2. Inputs, Costs and Risks for Each Stakeholder Group

An important aspect of stakeholder management is to achieve balance between contributions, costs, risks and benefits, taking into account the roles and concerns of all stakeholders. In the context of pop-up retailing, the costs and benefits for each stakeholder group are diverse. An in-depth analysis will help develop effective stakeholder management strategies. Based on our categorization of stakeholders into four levels, we know that from levels one to four, stakeholders have progressively less of an impact on a pop-up retail operation. Another way to look at this is that as the contributions made and costs incurred decrease for stakeholders, so too do the risks involved.

2.1 The First Level: Contribution

Recall that this level includes customers, retailers (business owners, managers and employees) and landlords.

• Customers: Customers are the ultimate reason for the success of a pop-up shop and retailers/brands. They contribute money to purchase goods and in exchange, achieve personal objectives from engaging in shopping. In an omni-channel retailing context, a pop-up shop is one of the channels through which customers acquire products/services. Scholars argue that shoppers’ decision on which channel to use is driven by trade-offs, specifically trade-offs between “costs of time, costs of goods, pleasure derived from shopping, perceived value of goods and perceived risks of each channel”.⁸ In the case of shopping in a pop-up store, the costs incurred include time and effort and the risks may involve physical risks (such as health and safety risks from products/services acquired) and emotional risks (such as an unpleasant shopping experience).
• Retailers: As we saw in the previous section, pop-up retailers include two categories: owners of small and medium-sized businesses who usually work directly on pop-up retail operations (with or without employees) and national/global chain stores whose managers and employees are the stakeholders. Business owners primarily contribute capital and skills to conceptualize, plan and implement the pop-up retail operations. The costs incurred are usually directly related to the planning and operation processes. In addition to the obvious risk of losing profitability, they may also risk a “spill over” effect from the pop-up shop into other channels of retail operations, such as online or bricks-and-mortar stores, for example. This could lead to a loss of future wealth.For managers and employees of chain stores, the contributions made are skills and labour and the costs incurred are the time used in the pop-up shop execution process. The risks for these stakeholders are their career development paths and even their livelihoods.
• Landlords: Landlords play a key role in the implementation of pop-up shops. Their level of cooperation and willingness to support pop-up retailers’ visions are critical to the business success. The landlords provide premises for pop-up retail to happen and they incur costs associated with property management. The risks for them relate to how effectively wealth can be generated from the property being used for pop-up retail operations, in contrast to other potential options, such as long-term rental or claiming tax rebates for vacant commercial and industrial buildings.  In some cases, other stakeholders must be prepared to articulate the intangible benefits to incentivize a landlord’s participation in a pop-up initiative where the hassles may appear to outweigh the payoff.

2.2 The Second Level: Source

Recall that this level includes services providers such as suppliers, pop-up consultants, designers and pop-up space brokerage agents.

• Suppliers: While primary suppliers provide the merchandise to be sold, others provide rental solutions for store fixtures, lighting fixtures, mannequins and other accessories. For suppliers, the main costs are carrying expenses of inventories and profitability is a potential risk.
• Pop-up Consultants, Designers, and Pop-Up Space Brokerage Agents: As service providers, these groups of stakeholders share similar types of costs and benefits in their involvement in pop-up retail operations. The contributions they make are primarily their skills, knowledge and connections, the costs incurred relate to their service provisions, and their profitability is potentially at risk.

2.3 The Third Level: Market

Recall that this level includes neighbourhood retailers and the financial community.

• Neighbourhood Retailers: They are direct or indirect competitors of the pop-up shop in terms of location, types of goods/services offered, merchandise type and mix, quality, pricing strategy, store format and payment options. Competitors do not directly contribute to a pop-up shop in its own operations, but they do contribute to the formulation of sector norms which establish a broad context for pop-up stores. Sectors norms include many aspects related to retail business practice, such as wages, work hours, productivity expectations and customer service protocol, and may also include how retailers collaborate with partners, such as landlords and vendors. The costs for direct and indirect competitors are related to defending the market share as the pop-up shop may pose the challenge of taking away target customers, which is also a risk.

• Financial Community: They collaborate with pop-up retailers by providing payment options for pop-up businesses’ customers and oftentimes financing to the retailers. This stakeholder group incurs investment management costs and the risk for them is losing capital.

2.4 The Fourth Level: Community

Recall that this level includes government agencies, trade associations and activist groups.

• Government Agencies: This stakeholder group contributes to funding and programs that build service and regulatory infrastructures as well as general community infrastructures (i.e., streets and public transit) in which businesses operate. The costs incurred are those of legislative process and are indirectly related to a pop-up operation. The policies developed and implemented not only have a far-reaching impact on regional and national economic development, but also have significant implications for pop-up retail operations.
• Trade Associations: This stakeholder group shares communal resources and promotes positive community support to retail business and business districts. They incur the costs of advocacy activities and they risk losing their leadership position among members and the public.
• Activist Groups: They are part of a wider context that influences the business environment. Based on their visions and interests, activist groups can play a significant role in many aspects of retail developments. They incur the costs involved in their courses of action and their potential risks are not achieving their visions and failing to protect the rights they defend.

Table 4.2 Summary of Stakeholder Inputs, Costs and Risks (adapted from Whysall, 2000)

3. Strategies for Working With Stakeholders

Pop-up retailing does not happen in a vacuum. Rather, like any other commercial activity, it is interwoven in the wider social context, in which many stakeholders have vested interests and concerns. Oftentimes, these interests and concerns are competing or conflicting. Therefore, priorities for developing strategies for working with stakeholders should focus on balancing contributions, costs, risks and benefits for all stakeholders. At the core of a stakeholder network are customers, who are the ultimate force of retail success. Satisfying customers’ needs will ensure the growth and profitability of retail businesses and is of the utmost importance. The proposed model of stakeholders in pop-up retailing can serve as a useful road map to help dissect and analyze the complex network of stakeholders.

References

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