Budgeting for Pop-Up Retail 101

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Historically, pop-up retail has been a sign of desperation. Temporary stores meant your business wasn’t doing well, so you had to sacrifice space and inventory to stay afloat. Those days are long gone, as everyone from Amazon to Kanye West are finding a lucrative business model in temporary retail and pop-up shops.

Ideal for boosting sales in a new or smaller markets, mobile retail is an amazing opportunity if you carefully consider what your goals are and how you plan on getting the best possible return on your investment. But how do you know what you should be spending? Below is the Boxman Studios’ Master budget break-down for holiday on-demand retail.

Your location – 30% of Overall Budget

First things first, you need to determine how much space you’ll need for inventory, point of sale, staff, and customers, unless you choose a layout with window-service or an exhibit feel. To stay on budget, you may need to sacrifice either space or location. As the experts in optimizing small spaces, we would recommend choosing a space with less square footage and more foot traffic than other options with similar rent. We can help you maximize your space. We cannot pull foot traffic out of thin air

Logistics and storage services- 10%-20% of Overall Budget

Do not forget this key line item. Without logistics, your store (if you’ve chosen a mobile on-demand design), your inventory, and any branding won’t be at the location. You can save some money by utilizing your own staff to set up and dismantle your store, but without experience, their risk for damaging inventory and signage, or hurting themselves is significantly higher. So, make sure there’s room in your budget for professional logisticians to handle the heavy lifting. Based on how many activations you’re planning, this number has a little more flexibility, between 10 and 20% of your budget.

Store design and layout – 20% of Overall Budget

Your physical store is the centerpiece of your pop-up campaign. During the design process, you’ll see a variety of solutions based on your goal and budget. To streamline this process for your team and for your designer, draft a priority list of features you want and the ones you need. You’ll likely find that mobile solutions will allow you to be versatile in your store layouts and designs and you can adjust on the fly depending on the size of the space that you’re in.  Then determine the lifetime cost of your store (how many years, weeks, months do you plan to use it?). The average half-life of a regularly activated on-demand retail space is about 3.5 years. Consider that the mobile solution may provide a 7-year depreciating tax life, which could decrease your total cost of ownership and/or expense and allow you to realize a quicker ROI. Does it make more sense than renting a similar option or buying property? That will depend on your overall goals and budget.

Promotion, Staffing, and Miscellaneous-  30%

The remaining budget should be used for marketing your campaign, staffing the store, and miscellaneous costs like Wi-Fi, travel & lodging, and housekeeping expenses. Generally, the breakdown works out to be:

15%- Staffing

5%- Miscellaneous

10%- Marketing and Promotion

… but, these figures depend largely on your individual needs. Some funds may be allocated to a line item that is more important to you. We urge you to reserve the 5% miscellaneous costs for emergencies. You never know what may come up during your on-demand retail season. It’s best to have a little ‘oops’ money set aside.

 

For more information about how to make the most of your pop-up shop, follow the link below to our on-demand retail blog.