Amy: Welcome to the Brandboom Podcast. I’m your host Amy Zhou. On this episode, we have Melissa Gonzalez of Lion’esque Group. Melissa is a retail futurist and expert consultant in pop-up shops, who has been awarded Design Retail 40 under 40 for her work transforming the retail environment. She will bring some deep knowledge on how pop-ups can benefit your brand, which brands should try them, and why pop-ups have become more popular. Melissa, welcome to the podcast.
Melissa: Thanks. Thank you for having me.
Amy: Well, first of all, it’s getting towards the end of 2017 for all of us here at retail, and holiday seasons are coming up. I just wanna kind of recap the year a little bit from your perspective. You build a lot of pop-up shops, how many of them have you done so far in just this year alone?
Melissa: Wow, wow. I think we’re close to nearing 20 this year.
Amy: Great. And is that usually the average for the year or has there been a lot more this year?
Melissa: It comes in waves, you know. It’s interesting because we just have brands that are staying longer and longer, so our role within each scope of work is adjusted a little bit. In the beginning, a lot of brands had pop-ups that were one week to one month-long and now they [inaudible 00:01:30] to do three to six months, and a good number transitioning to permanent. So our role becomes building community around the pop-ups as part of our scope of work.
Amy: And what about, as I mentioned, holiday seasons are coming up right now around the corner, does that actually get busier for you and your team during the holiday season?
Melissa: Yeah, pop-ups tend to be the busiest for us consistently each year in Q4. That said, last year, for example, Q1 was really, really busy. It was second to Q4, which was surprising to us. But I would say year-over-year Q4 is the bulk of it. But we physically get busy in summer preparing for fall.
Amy: Now, just rewind a little bit and tell us, the Brandboom audience, whoever is listening out there, why did you first become interested in pop-ups? What is your background and why this?
Melissa: Sure. It was a little unexpected. My background is I used to work on Wall Street. I worked in institutional equity sales, so I always loved the stories, but dug into the nitty and gritty of the financials. But while I was doing that, I was also hosting a TV show and producing indie films. And so my desire to be creative kind of overweighed everything and I left Wall Street in ’09. And to be honest, my goal then was to be a famous actress, but I didn’t really like auditioning, so that wasn’t gonna work. But I did produce a web series, and the person I did the pilot with, his family-owned real estate in Midtown Manhattan. And it was just serendipitous timing and he said, “We have real estate, do you wanna experiment with us?” And it was just that, a time when I had enough [inaudible 00:03:13] and could it, and it just became a happy experiment that brought kind of my desire of being creative and bringing business sense to the table together.
And then over the years it just…the industry itself really evolved. The consumer expectations evolved, technology continued to kind of shape this changing landscape. And so it just kind of continued to self-feed itself as a growing business and something that really interested me and kept me on my toes and always being able to learn and experiment. And so that’s kind of been my path for the last eight years.
Amy: And it’s been keeping you interested in these last eight years as well. It sounds like from what you’re describing it’s been because of the changes in the industry and the landscape and across the board. It’s you have to kind of learn things as you go and you’re getting excited about everything.
Melissa: Absolutely. You know, a few sectors always interested me when I was on Wall Street, and technology was one of the top ones. And so I was kind of in an affinity for it and understanding it, but also seeing how it shapes us and understand that as an individual kind of helps you relate to it. But, yes, in the beginning we were doing pop-ups for brands who couldn’t afford a long-term lease, and they were a lot of mom and pop shops and they could go to Etsy or Shopify and launch a store, but that’s kind of, like, what their business is gonna be. And over time you saw this big shift happening where you have this huge growth in e-commerce, but then that became crowded and really expensive to compete. And people really coming back into understanding, “Okay, we do need physical, and then technology helping … continuing to shape what our consumers expect in physical.” And so it’s just always kind of like a new puzzle that we’re solving and figuring out, and helping people rethink how they can create an experience, and what can’t I deliver online that I wanna bring into the offline world? And helping them figure all of that out.
Amy: That’s super interesting. And from all the years that you’ve been doing this, as you have seen the different changes in the retail industry and the marketplace, if you can kind of just from giving advice to a brand, from your perspective, what are some of the advantages you can see now when you talk to potential clients or anyone in terms of financial or otherwise in doing a pop-up in conjunction with some of the other options that they can choose, like what you said, Etsy, Shopify, and, like, doing indirect sales and such?
Melissa: Sure. So I think financially, I mean, you don’t have to commit to a long-term lease, so there is some protection on the downside, I guess, right? Kind of — you can put an actual, like, project budget together and know that that’s what you’re gonna spend roughly. When you sign a 5 to 10-year lease, there’s a lot of unknowns to account for. So there’s that. But, you know, there’s an opportunity for really, really high-touch interaction and learning in a physical space that you just can’t do online. And it’s gonna vary from product to products of, you know, what that encompasses, but for example in the home category we just launched a pop-up in partnership with General Growth Properties, they’re a mall operator and property group, and to lay on a mattress isn’t the same or something that you can never compare to shopping online, you know.
So the e-commerce portion allows for a larger footprint of distribution across the country and easier fulfillment and all of that, but it can never truly replace laying on that bed. And it can’t compare to laying on that bed with a VR dream sequence of two minutes led by their brand ambassador Michael Phelps, taking them through a dream journey, talking about all the layers of foam and feathers and this and that underneath them, right? So it’s understanding okay, if you have an e-commerce site, on the backend you can learn a lot of information of what that customer does, right? What pages they go to, how long are they there? When do they add something to a cart, when do they abandon that cart? What are their kind of pain points maybe that you can solve in a physical space? And for a mattress, for example, getting them to lay on it is a really obvious one. But with apparel, it’s getting them to try something on and really [inaudible 00:07:40] and then feeling more confident to order that later.
It’s also just hearing things. You know, you can’t hear what your customer is saying unless they’re posting on socials or making a comment on your website, but in a store you can really observe how somebody responds to your product after either speaking to a friend or speaking to the associate is there something about it that they love physically but the price point is too high? Or did you add extra bells and whistles that you thought they’d pay up for but then you watched them in the space they say, “Oh, I love this, but I would love it more if it was at X price point,” and they really don’t feel like paying extra for that extra strand of gold you put on it.
Amy: Yeah, yeah, that totally makes sense. So it sounds like it’s a combination of the product that you’re trying to sell and also maybe where you’re trying to sell it to and also the experience you want to provide to the customers. And also the feedback, right? That’s what you are really going after, the feedback from the customer that you absolutely will not be able to get online otherwise.
Melissa: And it takes … it takes an effort on there because sometimes the founder, especially with [inaudible 00:08:50] brand will be able to run the store, but a lot of times that’s not who’s running it day-to-day, so there’s training that really needs to happen on the brand side with their in-store staff so that you train them to make those observations and, you know, you empower them to say, “Everyday fill out a survey and get these points back to me.” And we can work as a team so I can better understand my customer and how to better serve them.
Amy: Got it. And you did talk quite a bit about these emerging brands. It sounds like, you’ve worked with mom and pop shops, ranging from those type of brands and all the way to larger brands like Sole Society, so, like, how much is it for those mom and pop shops do they need to invest in order to create a pop-up shop with you, for instance?
Melissa: Well, the kind of most accessible entry point, I guess, to do a pop-up with us is in some of our partnership spaces, one of which is the one that I started with as an experiment in 2009. And those are more turnkey and they’re in partnership with the Roger Smith Hotel. So, you know, they’re not looking to sign a long-term lease. They’re there to have a revolving storefront that gives an opportunity to entrepreneurs and it’s also, you know, good equity for the hotel because they’re always getting new eyeballs and for traffic and media. So that would be the most accessible price point in New York City that I know of. So it’s — the space starts…there’s three revolving storefronts next door to each other. One is about 300 square feet, so it ends up being perfect for a single brand, running the store themselves. It’s got the infrastructure you need, the hotel is paying for you and there’s Wi-Fi and alarm system and that kind of stuff. So I would say the average investment for something like that is about $20,000 because we do it a month at a time, and that includes the rent, the decor, the staffing, and a lot of the times then you kind of do a little bit more grassroots marketing instead of putting money towards that. So that’s kind of like a safe number to think about all in.
Amy: That’s great. And you did mention staffing, so you actually provide in-store staff training for most of the brands that you work with?
Melissa: We do offer that as an option on a statement of work. Most of the time it’s in collaboration with the brand, so what we’ll do is sit with them and think, “Okay, let’s understand what the [inaudible 00:11:22] of the story is gonna be and what the goals are and what your goals are as far as sales conversions. And conversions really vary. Sometimes a conversion means capturing an email, sometimes it means making a sale. So really understanding all of those needs and then figuring out, “Okay, what’s the right mix of staffers that you should have on a daily basis, and then, what do you want them to be able to convey?” And we work with them on the training manual, everything from operations to talking points, and then we’ll be there to help co-run training. And we try to get brands to do it for at least two days.
I would say that one of the top kind of underestimated areas of pop-ups is the amount of money and time a lot of the brands put towards in-store staff. So we try to push that they understand that. It’s gonna take a little bit of time for them to be the next best thing, to talk about their brand and really hone in on [inaudible] this is one of the most important touch points in the store. And so making sure they understand not just what the product is, but also why was the brand even started? What makes it different? What’s gonna really build empathy with customers about the purpose of the brand? And then really also understand every single product and the frequently asked questions and all of that. And then just again, the kind of things to watch for and empower them to feel like they’re part of your business team and that they understand that pop-ups are really public focus group and there’s a ton you could be learning, and making sure that they understand how to kind of gather that information and get it back to you.
Amy: I love how you just said that a pop-up is really like a public focus group. That is how a lot of these brands should be looking at their pop-up stores. And it sounds like you’re so hands-on with the process that you make sure that when they come out of this business partnership with you, when … for doing the pop-up, that you’re gonna make sure that they’re gonna walk away with the data and the information that they’re going to need to really evaluate, “Hey, what did I learn from this public focus group,” right?
Melissa: Absolutely, absolutely. And there’s the opportunity to integrate technology to complement all of that. And so that’s another thing that we work on a lot with our clients is, like, really stepping back and assessing the goals, and what does success mean, and then understanding all the different points of collection that are gonna happen and how to use and sit back and really put all that information together and contextualize it and use it in a way that is gonna elp you make better decisions. Because the ROI is really qualitative and quantitative in a pop-up store, and so it’s not just the sales you make between the four walls while the pop-up is open, it’s also all of the things that you’re gonna learn to help you make better marketing and merchandising decisions going forward. So we also work with them to say, “Okay, you’re gonna collect sales from your POS, do you have a budget for a sensor at the door so we can capture how many people walk in? Do you have a bigger budget where we can also other sensors so we can understand parts within the store but if the store is say 4,000, that would be helpful. And then what are we seeing in different pockets of the store? Because then you can learn a lot of things to contextualize what actually happens in the store.
For example, you might notice that a handful of products are selling like hot cakes and just proportionally higher than the rest of the store, but maybe it’s because it’s right by the window, right? And so do you move that towards the back to get people to come deeper into the store? You know, there’s just a lot of things that you can do merchandising and collecting data and experimenting in the store too. So we also work with our clients to think through that as well.
Amy: So it sounds like you would absolutely recommend to no less than one month for a pop-up just so they an actually get some data and really learn from the experience altogether, and all the way to the three months, right? Like, that’s the timeframe that you would recommend as a minimum?
Melissa: Yes. We do…because most of our clients are really doing this feasibility studies. I mean, we do have some clients that do pop-ups for, you know, a new product launch or to test a partnership, or really just for marketing purposes. And those are different, and those tend to be brands that already have a pre-established following, and those tend to be, like, four or five days, and they’re giving away a free product. And the bell curve of hitting your target market versus anybody who just wants free stuff happens pretty quickly. So we’ll put that in one bucket. But for most of our clients’ brands that have proven concept at scale. They’ve raised money to go brick and mortar, but they wanna test in pop-ups before they sign long-term leases. And for that, yes, we recommend that you have, you know, three to six months if possible because then you’re getting a full quarter of data. And then you could really kind of dig into that later and understand, “You know, if I do open a store what worked, what didn’t work? What staffing choices should I make? Is this the right footprint for me? Is this the right layout for me? What really moves the needle for marketing initiative?” There’s a lot more that you can really dig into and then make better decisions going forward.
Amy: So if I’m a brand and I’m interested in opening a storefront in a specific, you know, a neighborhood in New York, let’s say, for example, do I work with you to test a pop-up that may not be the final location or my actual store or can I…
Melissa: Yeah, that happens. Sure.
Melissa: Sure. We definitely see people test markets that they decide, “You know what? This doesn:t make sense to me long-term.” We’ve seen some where the exact space that they’ve tested isn:t where they go, but it is the neighborhood they stay in and maybe they opened a permanent space a block or two away. And it could just literally be a function of that landlord wasn’t agreeable to the terms they wanted, or it didn’t have all the infrastructural needs they realized that they needed.
Amy: Got it. So in most cases it sounds like landlords would be open to someone coming in coming in temporarily for a pop-up, if…just to test out the location and to see whether or not they would become a long-term resident, right?
Melissa: Yes, yes.
Amy: Got it.
Melissa: But the tricky part is a lot of landlords won’t do sort of a on the lease, so it gets tricky, because the brand does invest in the pop-up. You know, these days it’s at a higher bar of expectations when you open a pop-up, so brands do still invest to make it really good. And especially if their bands have raised money to go into brick and mortar because they’re trying to put their best foot forward in really presenting who they are as a brand to this new market. And then a landlord is not willing to put a refusal, so it gets tricky because a brand invests a lot and the decides, “I love this space, I wanna stay,” but during the time of their pop-up the landlord might have already been showing this space to other people and then it doesn:t work. So it’s tricky, but yeah, I think that the climate has definitely changed. Over the past year I’ve had more inbounds than I’ve had over the past eight years of brokers and landlords saying, “Hey, we have space, keep us in mind.”
Amy: Oh, great. Yeah, I was just about to touch on that topic, which is, you know, the fact that there’s all these major retailers closing their doors, filing for bankruptcy. I’m walking down in Soho and there are so many vacant and closed storefronts.
Melissa: I know.
Amy: So has that been working towards your and how do you kind of think about this in terms of, you know, for the landlords and then also for the brands , especially for the emerging brands who now might have a chance getting into one of those, like, prime retail locations to kind of test their brands?
Melissa: Yeah, I mean, it’s definitely become a lot more of an opportunity than it’s been in the past. Trust me, years ago, we were begging landlords and had to convince them so them, “This is a great plan and this is what we’re gonna bring to the table. It’s gonna look beautiful. It’s gonna serve as a great for you. We’re gonna get you so much press.” And then it kind of…because of that it kind of skewed to much more established brands getting the opportunities because they could make those promises, right? They had a celebrity following, they had strong PR companies and everything like that. But now, yes, you’re seeing a larger spectrum of brands having the opportunities now to really experiment and try to be on, you know, maybe 5th Avenue or any area where they wouldn:t have been able to have the opportunities to test just a year ago.
Amy: So Melissa, this is all amazing information, I just have to kind of ask, like, what type of demographic do you and your clients cater their pop-ups to? Is it more the millennials and younger shoppers or is it…you know, do you guys have something that you guys specialize in or what do you see people respond to, and who responds to what?
Melissa: It ranges, but I would say a lot of the times it ends up being more the millennial market that a lot of the brands kind of cater to, the larger percentage that we work with. But I will say that it skew, like, to older millennial, Gen X.
Amy: Got it.
Melissa: And there being more a lot more acceptance of the technology. I mean, I think that a lot of people think of the millennial and Gen Z of they’re the digital and they’re the ones who get this, but I don:t think that it’s limited to that. I think that it’s how you deliver it, and the experiences will need to differ a bit, but I think that it’s become a lot more of a massive adoption and openness to what technology can bring to your life, and I still think that across those three kinds of generations, there’s still a desire for physical just in different ways.
Amy: That’s super interesting because we have a lot of brands who are started by millennials and Gex X. You know, maybe even Gen Z now, right? Because we’re getting into that timeframe. And I was just curious whether or not those type of brands and how they target those type of customers in how they’ve been doing it. And it sounds like the pop-up and the physical touch of products and experience is still very relevant to that demographic, very much so.
Melissa: Yes, absolutely. Absolutely. I mean, depends on the products you’re presenting. For example, I bring it up just because it fits this topic, but at Water Tower place Chicago, this store…with my company and GGP, it’s home products. And the price point is pretty healthy. You know, the average size is $400 to $500 in the store, and iit’s — so you definitely see it’s skew to more of that older millennial Gen X and even older in the space, and we have a variety of things. We have ping pong, we have water rowers, we have mattresses and we have books, and we have…but it, you know, it is…but it is a range of people who are just kind of…maybe they’re newly married, starting their first home, or they’re kind of looking for refreshers, but they have been so excited to have a definition and actually touch and feel product. And they all do the VR. And they’re actually really open the technology that’s in the space and they interact with it with no problem. But on the flip side, you know, we’ve definitely done a lot of pop-ups that are geared more to really just focusing on what are the Instagrammable moments? Because that’s really gonna be what gets millennials excited and Gen Z excited because they’re a demographic of whatever they discover they wanna share with the world because it’s a little bit of how they define, you know, where they are.
Amy: The city that you put the pop-up in also has a lot to do with the demographic it attracts, right? I’m assuming that in New York and, you know, in dense cities like San Francisco or LA, it’s maybe a younger crowd, depending on where specifically the pop-up is versus somewhere else in the states.
Melissa: Yeah, that’s true. And also just the cities have different kinds. So the benefit of New York City is — it’s so…it’s not just relying on being destination-based, right? There’s so much active foot traffic in all different neighborhoods that you don:t have to just be relying on, “We told everybody our address and they’ve been invited to come here.” If you have something that looks interesting , like, people will stumble upon in, and that’s a great benefit in New York market, whereas in Los Angeles, for example, it’s much more definition-based. So you’re kinda gonna take a lot of that in consideration too.
Amy: So do you recommend, you know, brands to try out New York City as one of the prime locations to test a pop-up, or where is another particular cities which you recommend?
Melissa: New York is great, but it’s not for everybody, especially a lot of brands if they’re not from New York ad they feel like it’s a crowded space. They think they could have a much more profitable opportunity in some really strong secondary cities. So while New York is number one for us because this is kind of our headquarters and there isn’t a lot of opportunity for stores here, this year we’ve definitely seen demand become a lot higher for some of the strong secondary cities. And Chicago and D.C. have come up a lot. Nashville has been a city where people are starting to see a lot of success. And then you see, like, Dallas come up and Boston a bit. So I think it really depends on the brand.
And the good part is that most of them are e-commerce stores, so they have that starting point advantage of knowing where they’re seeing traction online and where their traffic is coming from, and really kind of try to look at that as figuring out, “Okay, where do I kind of put my pen on the map based on what traction they see from online audiences already.”
Amy: That’s really amazing. That’s really good to hear. It sounds like most of your work has been on the East Coast side and it’s starting to trickle down into the West, down all the way to Dallas. I was just actually in Nashville the scene over there is very…it’s a prime location for these new experiences to be happening, especially for retail shopping and something different from the past, so it’s good.
Melissa: Yeah, I actually had a call with a brand earlier this week, and he was clear that New York was definitely not on the radar. So really it depends on the strategy.
Amy: Yeah, absolutely. So, Melissa, this has been such a pleasure talking with you about all of this. I just have one last questions to wrap up. If any of the brands that are listening to our podcast and they’re interested in working with you, in terms of, like, the timeline of how, you know, they get in contact with you and your team all the way up to actually getting a pop-up out of the door, what does the timeframe look like?
Melissa: It’s a few months. I mean, if we get three months, we can be in good shape. And that will really depend on how large the company is and its own corporate structure and all of that. So really, really large companies like, you know, a brand owned by a or something like that, you know, you’re talking about different timelines just because of their internal infrastructure and ordering merchandize and all of that. But as far as actually like taking it to market, a lot of the times we work to work in that three-month timeframe because a landlord is not gonna agree that much further in advance. It takes a space off the market and commit it to you short-term.
Amy: Got it, got it.
Melissa: So we usually work as fast as possible, where as soon as we start the conversation we dive into the goals and really figuring out what’s the story and many kind of creative must-haves and then we kind of we were on hold for a little bit while we find the space so that as soon as we find the space and we can take all of that creative, and then retrofit it to the floor plan of the space you actually signed, and then move as fast as possible securing everything.
Amy: And a lot of our customers at Brandboom, we are a wholesale platform, so they do a lot of wholesale and indirect sales where like, retail stores are merchandising their product and selling to their end consumer. But I know that there’s a lot of benefit for these brands to test out market in case they wanna go brick and mortar. So for those brands that have not actually done brick and mortar themselves and has always done wholesale, you know, bulk orders but they have really strong branding online and such, like…but like I said they haven’t done brick and mortar, do you provide a technology to support them in doing the pop-up in that case? Like, to set up all their product with the POS and everything as well?
Melissa: We’ll help, sure. Yeah. I mean, all of it will be purchased by them because they need to set it up, but a all of that. But sure, we’ll walk them through that. And we have our guide, we have a POS guide, we have a locations guide, we have a analytics guide. So once they sign on with us we kind of go through all these guides and it charts kind of based on this budget these are the that we might recommend based on your timeline, etc, and then we kind of walk through them with weighing on all those pros and cons of each and then helping them secure it, and then we might help them, depending on the scope of work train their staff on the POS systems. The good part is, there’s a lot of opportunities for kind of plug and play with and Shopify and so a lot of bringing in a POS system isn:t…it isn:t one of the hurdles, and it can happen pretty quickly.
Amy: Great. Excellent. Yeah. This has been amazing. I’m sure a lot of listeners who are familiar with Brandboom today and who has been doing wholesale, and who also has ideas about what an actual retail experience looks like in the brick and mortar situation, after listening to Melissa’s talk would be more inclined to explore this area a little bit more., especially in the wake of all of these larger brands closing down their stores, making retail space vacant and available for Melissa to negotiate a better deal and to work with emerging brands.
So Melissa, is there anything else you would like our listeners to know about you and your team before we sign off her today?
Melissa: My biggest piece of advice is always, when you know you wanna do a pop-up make sure you understand why and make sure that you have a clear point of view on what your goals are gonna be, and that you understand what you would consider a success so that that should kind of guide the conversation of what kind of space you need, what story you’re gonna tell in the space, how you’re gonna merchandise it. Really starting with the goals and a target demo, and helping that to inform you.
The other thing I’ll say is I have a book called The Pop-Up Paradigm, and it’s a pretty easy read. Most people tell me that they read it in one or two days. And it’s not necessarily a how-to book, it’s some examples of how brands have done it, depending on their goals, and what their successes have been.. And I think you could give some brands ideas.
Amy: Great. And Melissa, do you have a favorite brand that you’ve worked with in the last, you know, year or two that you can share with us and then our listeners can also go check out what you’ve done for them on your website or something?
Melissa: Sure. There’s a number of brands that I loved for different reasons. While it was three years ago always point out Street Shop just because I think it was such a smart way for a brand to show to shoppers that they’re accessible. So Street Shop is you paid with social currency. There were no dollars exchanged at hands. You Instagrammed or put stuff on Facebook but it doesn:t need a #. And you showed at the counter you did that, and that’s how you paid for products.
Amy: That’s fun.
Melissa: But it was so smart of them to do it. So that’s one that’s in my book and on the site. Let’s see. I really always because it’s an example of a brand really communicating the larger purpose of their company and it’s not just about selling products. Their product was…their purpose, and for every 10 beds they sell they donate one to the homeless shelter, and they…you know, we worked with them to real events in the store throughout the month with like-minded brands. They’ve done talks with Charity Water, and they’ve had…they have art on the wall from a company called Art Listing, and all of those artists are formerly homeless or disabled artists, and they make a portion of their sales, and just the kind of alignment of that. And when people come in and learn their story, they feel like they’re part of something bigger, and I think they’ve done a great job of inviting people into being part of that initiative.
Amy: Oh, that’s amazing. So we can find all that information on your website under your portfolio, right?
Amy: Well, Melissa, thank you so much for joining me today on our podcast.
Melissa: Great. Thank you so much. It’s been great. Thank you
Amy: That’s the Brandboom podcast for today. If you liked the episode, please make sure to hit the subscribe button and share it with a friend. Visit us on SoundCloud for new episodes and brandboom.com for show notes and more. I’m Amy Zhou, and thanks again for listening.