Retail Podcast 604: Melissa Gonzalez The Pop-up Opportunities in Retail

 

 

 Melissa: Yes, thank you so much for having me.

Bob: Well, it's great to talk to you. Now, I think of you as the queen of pop-up shops. Is that correct?

Melissa: That is correct. I do have that title. And I wear it with honor being a pioneer. We didn't invent pop-ups, but definitely living and breathing them since my first pop-up in fall of 2009. And so it's definitely kind of where the company was founded from and continues to be one of our core offerings.

Bob: Okay, so what was that first store and where was it? And is it different than the way you do it now?

Melissa: So the first store...In the beginning, I was working with a lot of brands who really were looking at it from a seasonality standpoint. They had just launched, some of them are selling an Etsy Shopify was just becoming a thing. So it wasn't even as robust of an eCommerce platform for most of them back then. And it was really an opportunity to tell their story in a space, build human connection and drive sales, right? And those sales that they drove were critical because this was like the one-time of the year they're going to get to have a store. What we've seen is the use cases of pop-ups continue to evolve. And I think that that's what makes it more robust strategy. And you're seeing it more and more as brands from all walks and all sizes, whether they're indie brand, a fast-growing VC-backed brand or national brand where pop up is part of a toolkit of how they show up in physical retail environments.

Bob: Now, I'm an old mall rat. So I got my start in the malls back before you were born back in the '80s. And back then a pop up was Hickory Farms, or they had a little mall cart at the time. And pop ups could be anything now, right? I mean, you could be out on the street, you could be inside another store. Can you just take us into that world or pick us a primer? What is it? What are some opportunities that exist there that wouldn't be in an online store, for example, or in a traditional? Because obviously, the lease is the big thing I think of with a brick and mortar store. But what else?

Melissa: Yes, I mean, the good part about a pop up is that there's an inherent sense of urgency. And there's a different expectation usually that consumers walk in. They automatically expect to discover something, whether it's a limited sale, a new product offering, a brand maybe they coveted online. So you're already kind of working with that psychology, right, if you think about the opportunity in that. But we always ask the question similar that you're asking me now, what is it that we can deliver in physical that maybe isn't being answered online? A lot of the brands that we work with today, they do have a robust digital strategy, which means they have a lot of data. So we say, "Let's look at the funnel. Not only how are people getting to you, what are they doing on your site? Where are they dropping off? Does that get any insights to us or maybe what are the pain points that you're not able to answer on an ecommerce platform? Maybe it's fit, maybe it's understanding fabric, maybe it's styling." It could be so many different aspects, and we try to incorporate that into the in-store experience.

So when you think of footwear, that's a perfect example where when we approach the pop ups, we don't want to be confined with the limitations of we have to worry about inventory. Because it's usually a limited footprint. And really, that's not the big problem we're solving for. If they have eCommerce, then they could do dropship most likely. So it's about fit. It's about understanding if it's a woman, maybe it's understanding heel height, size, maybe it's understanding narrower versus wide. Maybe it's understanding the different fabrics and materials and colors. It's gaining that confidence so that that consumer is then more comfortable continuing to shop you in a hybrid scenario, whether you have a pop up store or they're shopping you again online.

Bob: Brilliant, brilliant. I know I worked with Shoes of Prey and they were an online brand. And they had put them into Nordstrom and then that didn't keep going but they learned an awful lot about the comfort level and they thought that their target were young women and yet it often was much older women who couldn't get the size they wanted. So it was like a big, "Well, we didn't see that coming." So is there any ahas that you've experienced with a client? Like, we think it's X and then it's Y?

Melissa: Yes, for sure. We had an exact scenario like that years ago. It was an independent brand called Nora Gardner. And she was targeting a younger demographic when it came to work wear and so she had short hemlines and a little bit tighter fit, but that's not who was gravitating to it. That's not who was coming to visit. It was more of that professional woman who is more in her 30s and 40s who wanted attainable fashion in her work wear, but still wanted to keep it a little bit more professional than sexy. And so as she was getting to have the opportunity for the month to have those conversations with those women, although that first pop up wasn't as successful as she hoped, she stepped back, she took that information and said, "Maybe I'm thinking about my target market incorrectly." She made modifications to the design, came back nine months later and I think she had a one month pop up. She broke even in the first week. So it was utilizing those insights to reposition her brand because that is another opportunity in pop ups. They often serve as this really vocal focus group for you where you can learn a lot.

Bob: It sounds like a lab almost.

Melissa: Yes, exactly.

Bob: They get to see what we put here. Now, you have quote, on The Lionesque site that one in three pop ups expand to long term brick and mortar. Is that surprising to some clients?

Melissa: It is tied a little bit to their goals when they come to us. So for us, one of our core areas have become fast-growing D2C or digital native brands that are proven concept at scale. And then the next leg for them is physical retail. So they are coming to us with a pop up as a prototype mentality. So we don't see those conversions as much happening if it's a brand that's just coming for high impact short-term marketing opportunity. That's not counted in this. But for the others, yes, their hope is that this will help them prove the metrics that they need to prove for themselves and for their investors that it is a justifiable investment, that it is an important touch point in the consumer journey.

And what we've noticed over the years, and I'm sure you have as well is it's gotten so expensive to compete online only. So when you get to a certain threshold of sales and you go from having this really focused approach in how you're targeting marketing, but then you have to continue to widen that net and widen that net online, it gets a lot more expensive. And so you take that opportunity to then have a physical retail store. And it also goes back to your question and purpose of physical. It's an opportunity for them to either further build community around the brand. It's an opportunity for them to take their followers and hopefully convert them from followers to fans, to evangelists. It's getting over those humps of confidence around either fit or fabric or just understanding how to use the product.

And so because of that, a lot of them have been able to prove that this is effective in doing that. And they've also been able to and I think retail technology tools has further helped this track the attribution. And they're saying things like, "Okay, it's not just about the sales and the four walls," they're also seeing a customer that maybe shopped them before they opened doors is now spending more. They're returning products less frequently. There's other things that they're being able to track to say, "This justifies helping us increase lifetime value of a customer."

Bob: So I've opened more than my share of stores. And I want to hear your best and worst story of working with local officials in a pop up.

Melissa: Local officials like when we have to raise occupancy limits and get a TPA and the fire marshal comes?

Bob: Anything like that or health or all those fun little stories if you had a good or a bad. We'd love that.

Melissa: That's always a fun one. We got to raise occupancy limits and depends where you are in New York City is a little tough when it comes to like permitting. Permitting is an area in general across all stores where I feel like it's underestimated and it was definitely even more challenging in COVID to be able to get that. So we work as hard as we can with the brands, especially if it's a pop up to be as strategic as possible to do what they need to do. But there's opportunities where maybe you're pulling an over-the-counter permit or something like that versus going into a major demo and renovation when you really need to prove concept first. But that tends to be one of the trickiest.

Bob: So you would stay away from if you had to do that, that would not be a priority. You would rather...Like when you're talking to a client early, it'd be like we don't want to get into changing the space. We'd rather go in. You don't want to have to one of the hallmarks to stay away from that. I guess that's what I'm curious about.

Melissa: Yes. Yes. I mean, usually it's a good TI project. We take that lens as we're scouting locations with our clients to say, "Okay, like what's going to be feasible in the timeline you want to open? What is going to be feasible within your budget parameters?" And it's not that we don't want to do it correctly and not file the permits, but maybe it's not justified at this point in the trajectory and in our goals to take that route. So how are we limiting, how much we're demoing, or how are we limiting electrical work or anything like that. And then once we have those learnings, we go to the first permanent location, then you take a bigger undertaking for that. And you have a longer timeline, ideally, more budget, things like that. But, yes, we've had plenty of scenarios where they've wanted to do extraordinary things, or the trickiest thing for us is if a client signs a space and then comes to us. Because then we're just stuck with those conditions.

Bob: That's like a reality show. Make it work.

Melissa: Yes, make it work. And I won't name any names of the projects but we've definitely had our projects where the neighbor had a rat infestation and we had to deal with that situation or the property's CO expired and we would have to renew it in the amount of time we were going to open doors, which was going to be in less than three months. So there's definitely some hurdles that we have to overcome.

Bob: I love those stories. I love that. You don't have to name names. That's all right. That's right. Well, you're also an entrepreneur. So what's the biggest challenge in starting your business and how did you overcome it? I think, for me, it probably was getting my name out there. But in your space, what would have been for you?

Melissa: For sure. I mean, my background is working on a trading desk on Wall Street. So it's not that I came from the retail world. I studied retail stocks and understood the stories in the financials. So my background is a little different than the traditional design background. I see myself more as a storyteller. So I use that approach in the work as a whole. And I think that that's been helpful for me because I think to be a successful voice in the industry, there has to be an authenticity behind it. And so it took a while for me to really learn what my voice was going to be and really the consistency in that. You have one too. And I think everybody has like if you say name...

Bob: [crosstalk 00:12:27]

Melissa: Very shy. I think that's really important. As you grow as a company, you have to balance also like, as a founder, being the face of the brand, but also having a brand that lives bigger than you too. Because as you grow and scale, you need your clients to feel confident to work with every team you've assigned to be on that project. So that's always been my careful balance as an entrepreneur, that I'm always working on is that how do I maintain my voice in the industry, doing my research, making sure that I have confidence in my point of view and what I'm sharing. And for me, it's really about creating experiences and the design and the space and all that behind that supports that. But I'm always thinking, "What's the story? What's the consumer experience? What's the journey we're taking them on here? How is that building human connection?" So that's been my kind of like North Star, guiding light as I think through what I put out into the world and the advice I give to clients and what I say to the media and I think it's really having that consistency is really important.

Bob: Yes, I would agree. People keep talking about, "Oh, experience for retail and all these certain things. We're going to put a rock climbing wall in the store." I'm like, "Really? That's experiential? No." If you want to see it to me, the brand standard right now is CAMP in New York City. That is a brand who knows who they are. They figured it out. They've got legs. They have done incredible partnerships. There's so many things that are working in their favor at a time when we're hearing, "No, it's all about they could buy toys online." It's like, "No, that's not really what this is about." So is there another brand that comes to mind that you think is at that level that people should be aware of?

Melissa: Yes, I do think about CAMP a lot. And I think that's a great example. I think in different ways different brands are doing it. I mean, I think Nike continues to push the industry forward in how they've been so smart in utilizing their content versus commerce and personalization strategy. So it's a different approach than say how CAMP is doing it from an experiential level. But I think that they're a perfect brand who can do what they're doing. And they have this active community in their app where they do workouts together. Think about how much they're learning about their consumers and their interest there and then being able to leverage that active community in their stores. I think that that's a really strong example.

You're also seeing a lot more brands that are kind of taking that community approach, which I think is really smart too of the stories about somewhat level of localization. I think what Foot Locker did, and they launched this pre-pandemic but uptown is it's more of a community store and they made a community space out of it. And they leaned in on that and the sales followed. And when I spoke to the team about some of the surprise learnings they had, one of the things was that one of the popular uses of the space that was driving to all times, kids were going there to have a place to do their homework. Like think about the emotional connection of that to a brand and a family that this has become the community space where my kid has a place to do their homework and to further education. And then that's a different level of loyalty that you're creating the next time that that kid needs sneakers.

Bob: Yes, that's really kind of touches your heart because you realize the situation that a lot of kids could be in where it's not safe at home, or there's physical or emotional violence or just being alone. And I think the tragedy in retail right now is people don't understand people who feel they matter buy more, instead of if I just give them a discount, they'll come in and endure our crappy service. And yes, I'm looking at several of you who are listening to me because that's all you have in your wheelhouse. You haven't really figured this out. And even you go back to a Starbucks who early understood the third place and everybody says, "Oh, we're the third place." It's like, "No, they were the ones that came up with that. Whatever yours is, is something different."

But us trying to figure out where do we fit in and then where's that comfort level, that is a wonderful story. And we're going to continue with Melissa in just a bit. We're going to take a little bit of a break, then I'm going to ask you about your Italian luxury footwear brand that's seeing a 50% larger cart size in store than online. But we're not going to say that yet because we're going to take a break to listen to our sponsor from CoreLogic.

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Bob: Okay, we are back with Melissa Gonzalez. We're talking pop up shop. She's CEO of Lionesque. And on your site, you're talking about an Italian luxury footwear brand having a 50% larger cart in store than online. So what does that take for a retailer?

Melissa: Yes. So that example was interesting because they were a fast-growing digital brand. I think they'd only been around maybe a year before we opened their pop up. So not for a long time but was very coveted. Had a strong following, was successful. But there were certain types of shoes that were always selling and certain type that weren't. And when we open the store, we dedicated a decent footprint actually to the customization of moccasins. And we thought that that was like going to be the big thing everybody was excited about. That's what sold well online. But when we went into the store, it was actually getting them over the hump of confidence around fit around heels that changed the perspective and that's where we saw the average cart size rise because those weren't really moving online.

And then when they had that confidence in fit, they were not only purchasing them in store, they were going back to the website almost two times faster than they had been before because that had that confidence in fit. They were also able to really hone in and drive on that Monday drop mentality of knowing that there was something special is happening. You can have first looks on that. We incorporated that into the in-store environment as well and had a big social element around it. You got that special invite to Monday, you met an influencer, or a stylist. So you wanted to be part of that as well. So it was tapping into a couple of things that they really couldn't online and the in-store environment and then further leveraging that full circle back in the online, offline experience. Yes, we also incorporated so you could text ahead and so before if you wanted to have an appointment, you could text ahead to book an appointment time when you're going to show up and tell them from the site what shoes you're interested in.

Bob: Oh, my gosh. Yes.

Melissa: Yes. But that gave insights to the in-store associates. "If they like this then maybe I'll also pull that," and think about the opportunity in that as well.

Bob: Well, see I think that's the key, Melissa, because so many people are saying, "Oh, the great resignation. Everybody is leaving retail." No, some people leaving retail, but I think we're going to see less stores. We're going to see the retail associate who can do everything that we're talking about and get a higher basket size. It's going to be elevated. It's not going to be the lowest job to which somebody can say, "Oh, I could raise a family and kids on this because I've mastered how do I talk to people and I could take digital tools and I could bring it into my life and actually have a really great day at work."

And I've always said the party is in the aisles. It's not behind the counter on your phone. There's interesting people. And when you actually can connect at that level, and play the game of retail, which honestly, I think it is, because the game is being brilliant on the basics and understanding what's new, that's why somebody comes in, and then being able to help them say, "You're my store." Well, that's it. But that's a lot of tiny steps to get there. You don't just open a store and go like, "Well, that'll happen." Like, yes, no, that's not going to happen. What kind of innovations are you seeing out there in creating these one of a kind physical spaces? Even just compared to the last 5 or 10 years, what's something that's new that you are like, "This is absolutely where we're going. This has to be almost in every pop up we do"?

Melissa: Yes, I think that there's like two spectrums of it from kind of the design aesthetic standpoint. We're seeing a lot more of embracing. People are thinking of color from an emotional aspect. You need to be on brand, of course, but the power of color therapy and thinking about the sensorial elements beyond just touch because that's where people kind of are shying away from, we're probably in a mid-space right now where some are comfortable, some are not. But there's other opportunities with the senses. So we're thinking about what's the coloration? And how does that impact mood and what's the sound, and what's the scent, and what's...All those different sensorial elements that are going to make people resonate with what's happening in in-store environment a deeper way and probably walk out of the door with that.

We're also working closely of what are the right kind of opportunities of co-discovery. And we used to do that for years but thinking about that even more. So for example, when we did the J.Hilburn store a few years ago, what's the snack he's eating, what's the drink he's drinking, what's the jean denim company he might want to discover. Every single point of discovery that was curated by that brand was an additive to, "Oh, but that was at the J Hilburn store." And so it's just thinking through those elements as well. So that's number one. As we're getting a little bit more confident on events, bringing back the community aspect is definitely a big part of it that we're talking about. So that would be the second bucket outside of design.

If you think about the opportunity with sneaker stores when they have running clubs or Rapha and what they've been able to do to connect with the cycling community, what's those opportunities? Lively, the bra company that built their brand on the Lively Ambassador community. So what's the opportunity there? And then the third part would be technology. I think it's becoming more accessible than it has been in the past is pop ups, it's challenging. Usually, there weren't short-term contracts, the cost, the lift it took for the internal IT team to make the systems connect. But there's more plug and play opportunities now. So I think that there's a big opportunity where possible for layering some of the aspects of whether it's endless aisle.

We've finally seen the adoption of QR codes after forever. And so we've done some survey work, and we said, "What's the highest value you can get out of it?" And a lot of them talk about, "I'll discover this, but I want to know my other options that maybe I can order." So online, offline was a big one, and then unlocking additional product content. And I think it depends on the category. But for example, if you're in a consumer electronics store, I think the opportunity of utilizing the online, offline connection is critical. Because think about how people shop, you're always comparing product. You're thinking of that charter, like, who has what aspect? How much is it going to cost me? What value is that going to bring me? You can connect that while they're captive standing in your store. That's really powerful.

Bob: I love that. I love that. What's the best or the most worthwhile investment you've made in your business you think?

Melissa: In my business?

Bob: In your business. Uh-huh.

Melissa: I know. This will be A good one. He'll probably kill me when I say this, but I think when I asked our head of strategy to join the company, was a big milestone for me. And for those of you who don't know it, he happens to be my husband. But we both had a Wall Street background. He was making career change. I said, "Look, we're doing well but I need to scale and I need a partner to help me do that." And so not easy working with your spouse in the beginning because you have a learning curve, but you're also not going to trust anybody more. And it was great because I was able to really think about what really was my highest value add, what should I keep on my plate and what really should be delegated.

And I think when you're an entrepreneur when you first start, it's so easy to own everything. And it's easy to forget the perspective of time is money, no matter how you're spending it. And so what was the opportunity cost of me spending my time doing things like accounting and invoicing and contracts versus unlocking my opportunity to be more out in the field, be more at kickoff sessions, ideation with my design group. So that was the first big step. And then really just always having an always learning mentality. We are actively looking at every time we open a store doing a debrief, what went well, what could have went better, what do we continue to improve? And I think knowing that you're going to have your foundation and best practices, but having that room for ideation and ideas, not just for your clients but for yourself as a company.

Bob: I love that. I love that. Well, I think I have...Well, actually one question I haven't asked you yet, which is so obviously when you were seven, you weren't waking up every morning going, "I want to open pop up shops. I think that'll be so cool." And you were in Wall Street and you're obviously a data and analytics person. So you found your niche, certainly, but what was that inciting incident as we would say in the novel? What was it that got you from covering retail to participating in its rebirth actually?

Melissa: Yes. So it was serendipity. When I was working on Wall Street, I was also hosting a show on BET called "Latin Beat." And I was a VJ and I was producing indie films. So I always had this...

Bob: There's so much to unpack there but all right, all right. Keep doing it.

Melissa: I just drop it on you. But there was always this right, left brain. Like I was organically good at math and business but I had a passion for storytelling at the end of the day. Whether it was me being in front of the camera or behind the camera as a producer. And so I left Wall Street, I did a web series that I produced, and the person who I filmed the pilot with his family owned property in Midtown, and they said, "Hey, we have a space here. Do you want to do something creative with us?" And so it was literally an experiment in 2009. And that's when we worked with that first designer, Gail Travis, and she had just launched her collection. And it was really about telling her story in space. For the first four months, I got paid in clothes by brands because we didn't even know is going to work or anything. But my cost was time. I had a really amicable part with my firm on Wall Street. They were really supportive. I had a little bit of a nest egg.

So I'm like, "I'm going to give myself six months and see." And after four months, it was January, and we started charging and people were willing to pay. So there was some validation there and it became something people really wanted this opportunity to tell the story. But it did take me years to realize like, "Well, how did I end up here? Like why am I so easily waking up to do it and working hard on it?" And I realized that it was that serendipitous opportunity where I could take my business acumen and apply that to the work but also tap into that creative side that I'm really passionate about and bring them both together.

Bob: I love that. Well, the name of the podcast is "Tell Me Something Good About Retail." I close all of my interviews with that. So tell me, Melissa, something good about retail.

Melissa: I think something good about retail is that the unfortunate situation of the pandemic I think is forcing it to be better. Because there's so much opportunity and knowing so many companies had to push, accelerate their investment in technology forward, which added efficiency to a lot of the transactional aspects of retail. So for those that can embrace the fact that now that opens up the opportunity for so much more from an experiential side because we've added these efficiencies from a technology standpoint. With dropship and OrderAhead and all these things, that it lets us have a different perspective of the opportunity of the in-store experience. And so to me, we're still at early stages of that, but that's the opportunity.

Bob: I love that. Well, thanks for joining me today, Melissa, the queen of pop-ups. And you can find out more about her in the links below. Thanks for joining us today.