Retail Goes Pop!

When I first wrote about #Pop Up stores in 2009, I noted these temporary brick & mortar locations as responses to important market trends – widespread recession driven retail vacancies and the launch of unique fashion brands such as Gucci sneakers and Rachel Roy.

Nearly eight years later, as more shopping increasingly takes place online – at Amazon.com, Walmart.com or the virtual world of your favorite mall-based retailer – Pop Up stores are providing shoppers and brands with important opportunities to connect.

  • Pop Ups allows brands to create a unique shopping event for their customers, aligning the brand’s positioning with an IRL experience. And we know consumers are more likely to be interested in brands that provide an experience, not just the acquisition of “stuff”. When GOOP (Gwyneth Paltrow’s lifestyle brand) opened a popup location for four weeks in Dallas, brand aficionados lined up around the block to experience the GOOP lifestyle the brand advocates in its online positioning.
  • Pop Ups can reinforce the customer’s connection through exclusivity. E-commerce is mass commerce – anyone with a credit card and an internet connection can shop online, even for the most luxurious products. But a popup Hermès launderette or Armani Beauté styling shop is available for just a lucky few Parisians, helping to solidify consumers’ alignment with the super-premium attributes of those brands.
  • A Pop Up shop can create opportunities for re-branding or re-positioning. Manufacturers can use these temporary retailers as a controlled environment for testing new products or service concepts. Amazon’s popup stores offerings have expanded from locations that focused a data-curated selection of books to outlets now highlighting the company’s devices such as the Kindle and Echo.These brand driven strategies are aligning with increased interest from commercial landlords in taking on temporary tenants. While the general economy has improved, property owners in cities like New York are facing rising retail vacancies. And malls across the US are suffering shuttered stores and declining foot traffic. The result is a greater willingness to consider (and even seek out) popup retail as a way to bring in some rental income.

Some thoughts for marketers:

  • Do you think this sales channel will increase in the future?
  • Are Pop Ups a way for brands to address the desire for “high-touch” among some consumers?

The K-Beauty Revolution: How Culture Drives Innovation

America’s multi-billion-dollar cosmetics industry thrives on consumers’ thirst for novelty—the next new service, formulation, or product—delivered through targeted messaging, packaging and promotion. While the United States is home to the largest cosmetics market in the world, there is perhaps no nation that prioritizes innovations in beauty and skincare as much as South Korea. From BB creams & egg hydration masks to snail cream, the innovations of K-Beauty are now taking the West by storm. At a recent K-Boom symposium hosted by Cosmetic Executive Women, it was reported that Sephora’s K-Beauty category grew more than 70% between 2015 and 2016.

The K-Beauty revolution is built on the willingness to blend cultural tradition and reframing raw materials found in local environments such as Jeju Island. With more than 25,000 beauty brands in the hyper-competitive South Korean market, being distinct takes tremendous creativity. This sense of excitement is evident no matter where K-Beauty arrives around the globe. All you have to do is walk through a pop-up store in Manhattan to experience the way K-Beauty engages the senses with fun, youthful, vibrant packaging and in-store displays. The formulations, and the delivery systems are designed to be distinctive, aesthetically appealing and communicate the efficacy consumers are looking for. Donna was first introduced to BB Cream when she conducted focus groups with users about their experience with this new skincare product. As women discussed the strengths of BB Cream, it was clear that they thought it was unique and, unlike so many skincare entries that promised the world, it actually worked! Women spoke about BB Cream in glowing terms describing it as the optimal blend of skin care and cosmetic attributes—an all-in-one product that combined hydration, sun protection and evening out skin tone. Women talked about the natural, dewy fresh, finished look it provided, which was even more amazing to them given the light texture and consistency of BB Cream. Their enthusiasm for this all-in-one product motivated Donna to give it a try.  Not only did BB Cream simplify her beauty routine, the results were as advertised by the users she interviewed. Today, the enormous appeal of BB Cream can be seen on the shelves, as most major brands have a BB Cream entry in their product line.

The Emergence of AmorePacific: Case in Point

According to Ju Rhyu, a K-Beauty consultant, the K-Beauty producer with significant U.S. presence is AmorePacific, whose North American sales were approximately $48MM in 2016. What’s the key to AmorePacific’s success?

The AmorePacific brand epitomizes K-Beauty innovation. The organization is interesting in its attempt to stay true to its Korean pre-war roots. The brand is built on the home-grown legacy of Yun Dok-Jeong, a mother of six who in the 1940s produced beauty products in her kitchen using local ingredients. This notion of bespoke botanicals underscores an “all-natural” image. Fast-forward to 2007, when AmorePacific’s R&D laboratories produced the ultimate combination, uniting skincare, sunscreen, and foundation into a single product that could be sold in the form of a compact dubbed the Cushion, a product that has since been duplicated by numerous cosmetics companies. By integrating its cultural roots with state-of-the-art processes, AmorePacific has effectively broken through and established a significant presence in the US market.

As a child growing up in Korea, Jane remembers raiding her mother’s makeup bag and playing dress-up with a treasured cache of Amore products. After her family arrived in the United States, it was hard to find Korean beauty products in mainstream stores, and so she naturally adopted the American brands that were more readily available. At the time, her mother’s Amore products began to seem outdated and old-fashioned simply because they had belonged to Mom. Several decades later, AmorePacific has transformed itself into a global brand, and reinvests 3% of its revenue to R&D where their 500 chemists and scientists from around the globe formulate and test new ideas.  Their global success—with $18.8 billion in market capitalization and 28.4% in sales growth in 2015—is a model for any organization that wants to transform its brand and become a worldwide powerhouse. As companies like AmorePacific continue to grow beyond their borders, it is imperative that they are innovative with their management practices, just as they invest in their R&D.

The Linkage Between Leadership and Innovation  

When a company attempts to sell its products beyond its borders, it requires “flexing” on the part of the organization. It needs to leverage its existing assets while delivering tangible benefits to the target audience with which it hopes to grow. The pace of growth also requires leaders who are willing to take risks in order to create new products. To leverage this diverse thinking from their employees, the organization’s leadership needs to provide the resources for new ideas to be generated. And, once the idea is developed, it must have the right advocacy to bring it to market.

It will be critical for the organization to consider two questions:

  1. How much will they invest in preparing their global leaders to demonstrate the cultural adaptability required to succeed in new markets that have distinct cultural norms from their Headquarters?
  2. How will they adapt their global business approach to work with customers based in other parts of the world?

It will require increased cultural awareness about what the employees and customers want in these new markets and increased self-awareness about what they need to do differently to remain relevant. Creating an environment that rewards innovative thinking will require intentional effort to foster the right organizational culture. We look forward to watching the next chapter unfold.

====

Donna Fullerton is the founder of DMF Communications, which has conducted consumer research across diverse industries with a specialty in beauty for more than 25 years. A global leadership strategist and executive coach, Jane Hyun, is the founder and president of Hyun & Associates and co-author of Flex: The New Playbook for Managing Across Differences. Chapter: Leveraging Diverse Thinking from Your Teams to Drive Innovation

We’ve Got Updates – Right Here!

Some updates on previous posts:

giftboxesAre eReaders going to be the “got-to-have-it” gadget for holiday gifting this year? Barnes & Noble has launched its own dedicated eReader, the Nook. They already offer an electronic book platform that can be used on PCs, iPods and other devices. The wars are escalating as Amazon has just introduced a free application designed to enable Kindle owners to read electronic books on their PCs. While Forrester Research reports that most bibiophiles are still looking for significant price drops (below $99) before they are willing to invest in an eReader device, will the increased number of electronic book platforms across existing and dedicated devices make the printed blockbuster a thing of the past?

lv2The Virtual Goods market is skyrocketing. US sales of virtual goods have doubled in just a single year and are expected to exceed $1 billion in 2009. And many consumers are indulging their recession- thwarted desire for luxury goods by spoiling their online alter-egos. Sales of fashion and accessories in the virtual universe Second Life account for 40% its the marketplace, as players outfit their avatars with the latest Gucci, Prada and Jimmy Choo gear that they are no longer able to afford in the real world.

And lastly, guess who’s joining the parade to Pop-up Stores? While it was played for laughs in the hit comedy “The 40-Year Old Virgin“, online auction leader eBay is planning to use temporary mobile locations to generate awareness and to familiarize shoppers with their web functionality. You saw it first… in the movies!

Battle of the eReaders

robots2Just last month, Barnes & Noble announced their new eBooks platform, explicitly seeking to take their share of the eReader market currently dominated by Amazon.com’s Kindle.

David Pogue, The New York Times’ Personal Technology writer offers a good side-by-side comparison of the two platforms in this video. Key differences:

  • The Kindle is priced at $299 for a basic model; the eBooks platform is free to download
  • Kindle’s exclusive reader software can also be used on iPhones and iPod Touch, while B&N’s eBooks can be downloaded to any PC, Mac, iPod, Blackberry, iPhone
  • Amazon’s library covers over 345,000 titles; Barnes & Noble offers 700,000

So, who are you betting on in the battle of the eReaders? Will electronic books replace printed editions and maybe stem the decline in reading for pleasure?

Hot off the presses – another player enters the fray: Sony just announced the launch of their own electronic reader, timed for the holiday gift season. Sony’s touchscreen-enabled reader, dubbed the Daily Edition, will retail for $399; a partnership with the New York Public Library will allow 21 day access to over 29,000 titles.

The games are on!