Can pop-up shops save department stores?
Year-old upstart Neighborhood Goods thinks so. This fall it's unveiling an experiential department store that will rotate a mix of digitally native national and indie brands.
Neighborhood Goods wants to be the new department store — well sort of.
The year old startup, which just raised $5.75 million in seed funding, is opening up its first 13,000 square foot store in Plano, Texas this fall. While the size is significantly smaller than most department stores, it's design aims to fuel constant discovery and community — and pop-up shops are the key.
The new space will house about 15 brands at a time on a rotating cycle, including several multinational brands alongside local indie labels. The focus is all about courting digitally native brands that want a physical presence but aren't drawn to traditional department stores. The assortment will range from apparel to housewares, and brands will have the opportunity to pilot products and experiment with customer experience.
Experience and community will be a major part of this new concept. Retail aside, the store will also have a bar and restaurant and feature events like speaker series, art installations and podcasts.
These types of amenities aren't exactly a new concept but a constant influx of pop-ups are. On the topic, the discussion forum RetailWire asked its BrainTrust panel of retail experts the following questions:
Would the department store model benefit from a pop-up sensibility?
What aspects of the Neighborhood Goods model make the most and least sense?
Here are nine of the most provocative and insightful comments from the discussion. Comments have been edited by Retail Dive for length and clarity.
1. Remember The Market at Macy's?
"Retail as a Service" is another way to look at it — providing the space, technology and merchandising expertise for the brands and not having to worry about holding inventory. It’s great for shoppers as the sense of discovery will always be there and it’s great for the department store model as it adds to the experience.
2. Less is more, seriously
Cathy Hotka, Principal, Cathy Hotka & Associates: What’s interesting here is the smaller footprint, along with product curation. I recently shopped in a national department store (not to be named) and was overwhelmed by the visual chaos — thousands upon thousands of products jammed into a huge space. The "less is more" principle may turn out to be highly appealing.
3. 'Fast turn stores'
Ken Lonyai, Consultant, Strategist, Tech Innovator, UX Evangelist: The model described here is similar to what I call "fast turn stores." The idea is that there is a certain amount of bedrock brands that shoppers know they can find at their local store, infused with constantly changing, limited quantity, unique finds.
Neighborhood Goods has a different spin, but the same outcome is sought: motivation to shop the physical store, driven by unexpected discoveries. If however, the rotating brands/products can also be had through the company website, foot traffic won’t see too much of a rise.
4. What about a 'pop-up alley'?
Lee Peterson, EVP Brand, Strategy & Design, WD Partners: Our latest research showed consumer fatigue with pop-ups, mostly because they were not done right ("just a bunch of stuff in a crummy space"). So this might cause more brand damage than good. It really has to be thought through, which has not been true of other efforts recently (beacons in-store, etc.).
Also, it seems to me that it would work the other way around. Department stores become more "popup-like". I.e. more consignment of new-new brands, faster turn of staples, fresh associates with the popups, etc. You know, create a "popup alley" vs. racks and racks of apparel you never stop to look at. In today’s "fail fast" retail world, I’d try both.
5. Not great for utility shopping
Camille P. Schuster, PhD, President, Global Collaborations: For consumers who enjoy shopping, like treasure hunting, and are not time pressed this is a great option, especially if kiosks are available for purchasing items not seen in the store. If the activities at the location are so entertaining and compelling that consumers will be attracted to come back and try new things, the attraction could be strong. For those who are time constrained and need to shop, this is not likely to be an attractive option because they will still have to shop somewhere else to get items they could not find. Fun and excitement is attractive. Getting the job done might be frustrating.
6. 'What DOES a department store provide?'
Doug Garnett, President, Protonik: This isn’t a reinvention of the department store, it’s Sharper Image expanded to other kinds of products. What’s missing from the model seems to be having gone to consumers to sort out the question: "What DOES a department store provide?"
If we jettison all the department store ideas assuming they are merely to create a venture-ready pitch, what’s left? It’s a store where people can rent space for their products — like the antique store in my neighborhood?
7. Buyers beware
Phil Chang, Retail Influencer, Speaker and Consultant: I love the experiential element in this. The caution I have is that experiential must be targeted and authentic. Two concerns:
- If you’re going experiential, it must be catered to your audience. Throwing an espresso machine in the middle of a store doesn’t make it experiential, nor does adding products that don’t inspire your consumer’s trust.
- Most struggling department stores can’t afford to scale back without some sort of space rationalization. Macy’s will have the very same problem. The pop-ups they are doing are great, but do they move the merchandise in the rest of the store? Only time will tell.
Experiential selling isn’t a tactic. It needs to be an organizational mindset. Buyers beware!
8. Whatever you call it, it's a good idea
Neil Saunders, Managing Director, GlobalData: Stripping away the definitions, this is simply about creating interest through a well-curated range of products which change regularly. Department stores used to deliver this. Now they don’t. Most throw loads of bland, undifferentiated product onto the shop floor in the hope some of it will sell. Seasons blur into each other; nothing is distinct or interesting. Changing that mentality and attitude is vital.
9. Forget it, death to the department store
Christopher P. Ramey, President, Affluent Insights & The Home Trust International: Let’s dispose of department stores rather than trying to reinvent them. Let’s think bigger and reinvent retail. Besides, why would a company burden themselves with a category nearing irrelevance?
Anything that creates interest and fascination is a positive move. The trick is replicating in a world where you often only get one chance.
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