REAL ESTATE

Harnessing the Power of Pop-Up Shops

BY Chris Francis

Pop-up stores are a retail trend that shows no sign of slowing down.

The ability to create a brick-and-mortar presence without many of the hassles that come with establishing and maintaining a permanent physical location has become an increasingly attractive option in recent years. The pop-up store concept has transformed into an estimated $50 billion industry — fostering new partnerships, experiential marketing opportunities and a unique way for retail brands to engage with their customers.

From established global brands to independent e-commerce merchants, retailers of all shapes and sizes are utilizing pop-ups as a one-of-a-kind way to experiment within the physical retail environment. High-end luxury brand Louis Vuitton recently generated lots of buzz by promoting its collaboration with skateboarding shop and clothing brand Supreme through the launch of a series of global pop-up store locations.

Retail giants like Nordstrom and JC Penney are also benefiting from the trend via in-store pop-up installations. By lending a portion of their storefront to a merchant like Sephora or Gwenyth Paltrow's lifestyle brand Goop, these retailers have the opportunity to drive in-store traffic while also attracting and engaging new customers.

It’s no wonder a wide range of merchants are looking to capitalize on pop-up shops. Not only do these temporary store concepts offer flexibility but they typically cost as much as 80% and come with far less risk.

Although short-term retail footprints are becoming a mainstay across the industry, that doesn’t mean embarking on the pop-up store concept – and making it successful – comes easy. To make the most of this temporary, limited edition retail offering, there are a few important considerations to keep in mind:

• Focus on Shopper Needs. The pop-up retail environment not only offers flexibility to merchants, but it presents the opportunity to revamp the shopping journey for customers. Part of establishing brand awareness and engaging with shoppers through a pop-up shop is making sure shoppers walk away with an experience they won’t soon forget.

Offering personalized promotions or equipping employees with tablets for looking up inventory, placing orders or even making payments will help merchants enhance their pop-up store offering. Adjusting marketing techniques and customer service tactics can also go a long way in enhancing the retail experience within pop-up environments.

• Keep Payments Simple. The size and format of pop-up shops can vary drastically depending on a variety of factors, including a merchant’s budget and design preferences. In many cases, having a traditional point-of-sale (POS) setup may not provide the flexibility needed to operate in a pop-up space. Rather than trying to incorporate traditional cash registers or checkout lines, many merchants are using pop-up locations as a way to experiment with modern payment options such as mobile wallets and tablet-based POS solutions.

• Get Experimental. Pop-up stores serve as a great way for merchants to test out new products or concepts. Whether a brand is looking to promote a new collection or showcase a unique collaboration, pop-ups create a sense of “limited time only” urgency that attracts and retains the attention of customers. By experimenting with new offerings within a pop-up, merchants also have the opportunity to get on-the-ground feedback and suggestions before taking on the risk of pushing out new products to a larger market.

The exclusive, unexpected and limited nature of pop-ups can offer merchants an alternative way to thrive in the rapidly changing retail landscape. Capitalizing on the trend requires finding the right pop-up model and strategizing to attract the right customers, all while delivering on the unique experience shoppers have come to expect.


Chris Francis is VP of market development at Worldpay US, a global payments provider for all channels: in-store, online and via mobile.

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FINANCE

Home Depot sets new records in Q2; raises forecast

BY HBSDealer Staff

The spring selling season was a busy one for the nation's largest home improvement retailer as Americans continue to spend money on their homes — both new and existing ones.

A pair of home improvement records were broken in Home Depot's second quarter as the Atlanta-based retail giant reported the highest quarterly revenue in its history. The retailer also set a new high for net earnings.

For the three months ended July 30, Home Depot reported better-than-expected net sales of $28.1 billion, up 6.2% from $26.5 billion in the year-ago period. U.S. same-store sales rose 6.6%, also more than expected.

"After a solid first quarter, Home Depot has posted an even stronger set of second quarter figures," commented Håkon Helgesen, analyst at GlobalData Retail. “Given the long run of big uplifts in same-store numbers, this is a very impressive performance." (For more, click here.)

Net earnings increased 9.5% to $2.67 billion, or $2.25 per share, up from $2.44 billion, or $1.97 a share, in the prior year. The results topped forecasts.

"We were pleased with our results this quarter as our customers rewarded us with the highest quarterly sales in company history," said Craig Menear, Home Depot chairman, CEO and president. "We also achieved the highest quarterly net earnings in company history. These results were made possible by our hard working associates and the outstanding values brought forth by our supplier partners."

Based on the year-to-date numbers, the company raised its financial expectations to 5.5% annual growth in comp-store sales, a 5.3% rise in total revenue, and a 13% increase in earnings per share.

"We expect to see continued growth in the repair and remodel market as the U.S. has experienced solid wage growth, faster home price appreciation, and the reemergence of first-time homebuyers," CFO Carol Tome said on the chain's quarterly call.

The company added one new store in the quarter, pushing its footprint to 2,282 stores.

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FINANCE

Coach Q4 profit surges 86%

BY Marianne Wilson

Coach beat the Street on earnings in the fourth quarter even as its sales declined as the company continued to pullback on shipments to department stores.

Net income nearly doubled to $151.7 million, or 53 cents per share, in the quarter ended July 1, amid a 16% decline in selling and general expenses, compared to net income in year-ago period of $82 million. Earnings, adjusted for non-recurring gains, came to 50 cents per share. Analysts had estimated earnings of 49 cents per share.

Net sales declined1.8% to $1.13 billion from $1.15 billion in the year-ago period, missing estimates. (The prior-year period included an extra week of sales.) Total North American Coach brand sales increased 4% over prior year, while North American direct sales rose 5% on a dollar basis and 6% on a constant currency basis for the quarter. Both North American aggregate and bricks-and-mortar same- store sales rose approximately 4%.

Coach noted that, as planned, sales at North American department stores declined approximately 40% at a POS and approximately 20% on a net sales basis as the company has now started to anniversary the pullback in shipments into the channel.

Neil Saunders, managing director of GlobalData Retail, said that Coach's decision to reduce reliance on department stores is justified by the increasing gap between their selling environments and those in Coach's own stores.

"Over the past half year, Coach has put considerable effort into store displays and collections and, in our opinion, these now look very compelling and engaging," he said. "Indeed, we believe that window displays and the general selling environment have been elevated a long way from the rather clinical atmosphere of older Coach stores, and are now more inspirational and engaging. In contrast, most department stores continue to go downhill rapidly and are becoming increasingly unsuited to selling premium products." (For more, click here).

For the full year, Coach's net income totaled $591 million on a reported basis, with earnings per diluted share of $2.09. This compared to reported net income in the prior year of $461 million with earnings per diluted share of $1.65 in the prior year.

“Our strong fourth quarter results – in which we achieved mid-single-digit North America comparable store sales for the Coach brand and drove solid growth at Stuart Weitzman – capped an excellent FY17 performance for the company," said Coach CEO Victor Luis." For the year, we posted a double-digit increase in net income as we continued to make progress on our brand and company transformation plan. We generated positive Coach brand North American comps in each quarter, while driving solid international Coach brand sales gains, notably in Europe and Mainland China."

Luis said the company took a major step in its corporate transformation with the acquisition of Kate Spade & Company, which closed in July and made Coach the first New York-based house of modern luxury lifestyle brands.

"Kate Spade brings a new, unique brand attitude and an additional consumer segment to the Coach, Inc. portfolio and we expect that this acquisition will enhance our position in the attractive and growing $80 billion global premium handbag and accessories, footwear and outerwear market," he stated.

"Today, after the successful integration of Stuart Weitzman and the acquisition of Kate Spade, we are at an exciting and pivotal moment in our journey," Luis said. "In an unpredictable environment, we are evolving to drive our long-term success by reinventing ourselves, moving from a single-brand, specialty retailer, to a true house of emotional, desirable brands built on our unique values."

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