Popupalooza is coming (again)—do these actually work?
And insights on unleashing the power of physical retail
Commitment is hard. So let’s just say for now I will do my very best to post monthly. Maybe a bit more frequently, maybe a bit less. If you’re good, I’m good.
Now, I do have a good reason for breaking my incredible 2-month streak. We’ve been very busy at rekon! We had a mini rush of spring openings including:
The first ever Kizik store in SLC
Olfactory Williamsburg and Olfactory Pop-up at The Current in Boston
The Canvas Miami
It’s so wonderful to see new brands and concepts joining the magical world of physical retail. It seems, in fact, many new brands are looking for that always desired but not easily achieved test that confirms physical retail will work for them—that it’s the unlock to the “hockey stick” growth they’ve been looking for.
If you haven’t guessed it yet, I’m talking about pop-ups.
This week alone I have roughly half a dozen calls with brands that are thinking of doing some sort of short-term retail presence for Q3 or Q4.
I’ve decided to dedicate my next writing (maybe next two) to pop-ups—the good, the bad and the ugly. Brands should know what they can expect to reasonably get out of a pop-up and, frankly, what they should NOT expect to get out of one.
Tune in for the next one…which I hope to write sooner rather than later. And now, on to the main event!
Unleashing the Power of Retail—a conversation with Tydo
Last month, I had the distinct pleasure of speaking with Rachel Cantor and the Tydo team about how a brand will know if it’s ready to dive into physical retail. The truth is, it’s a bit like making any big life decision; is anyone truly ever “ready?”
In the below interview, I do my very best to focus on scalable, sustainable practices for brands. This article was first published on Tydo’s blog on June 28, 2023. I’ve included it in its entirety below.
The hard truth: DTC doesn’t just mean ecommerce. The most direct route to a customer is via a brick-and-mortar store.
To dive into all things physical retail, we sat down with Rebekah Kondrat, founder of rekon Retail. Rekon is a physical retail agency that manages the end-to-end process of getting stores up and running, creating a foundation that ensures the future success of your retail channel. Partnering with brands such as Olfactory, Hypebeast, Brightland, Kizik, and more, Rebekah’s team knows how to build and operate sustainable, retail stores.
Now, let’s dive into retail as a channel, its opportunities, and how to get started.
Rebekah’s path to retail
Rebekah worked her way up the retail ladder. After beginning her career as a Starbucks barista and progressing to a managerial role, she joined the retail teams at Apple, Warby Parker, Outdoor Voices, and Joybird Furniture. Then, she joined a boutique agency called Loose Threads, and afterward, leveraging her retail background and expertise, she launched Rekon.
Rebekah witnessed the renaissance of digitally-native brands entering retail. The Warby Parkers, Caspers, and Outdoor Voices of the world realized they could provide a well-thought-out product and a great customer experience; however, they lacked the knowledge around basic store infrastructure. Rebekah saw an opportunity to build her agency—one that could provide the retail fundamentals to startup brands.
Rekon specializes in building and operating sustainable, scalable stores. You can think of them as a retail SWAT team that builds the retail foundation, accelerates the process, and helps brands save money from the get-go (aka not losing money or margin).
“I feel strongly that foundational operations will make or break a business.”
Retail’s recent evolution
Even before iOS 14, CACs were rising. As brands relied less and less on paid advertising, they started asking: How do we acquire customers sustainably? How do we not lose out on the first few sales to Facebook?
Before 2015, signing a lease was intimidating for digitally-native brands. But, it was around that time when the math started working out.
“The customer acquisition cost in physical retail wasn’t as bad as everyone thought,” notes Rebekah.
Mall landlords became a little more forgiving as they noticed their tenant base aging with stores such as Macy’s and Dillards. They needed to offer more appealing, younger stores to survive and keep customers coming back. The pandemic accelerated this need.
Nowadays, landlords are more open to creative deal structures, says Rebekah. What does that look like in practice? It might be a lease that’s a combination of base rent and a percentage of sales or a sales threshold.
“Both CACs rising and the pandemic contributed to brands becoming more open to building physical retail stores.”
Shifts in consumer expectations
Now more than ever before, consumers expect to be known across all purchasing channels. For example, if a consumer sees a Glossier lipstick on Instagram and messages the brand, he or she expects that interaction to be known if they walked into a Glossier store or shopped on their site.
“Consumers expect all systems to be connected, and that’s way more difficult to do than they realize! That’s mostly because brands have disparate systems,” says Rebekah.
In Rebekah’s eyes, the other big shift is that consumers expect to instantly receive products. This is yet another argument in favor of stores, says Rebekah.
Finally, personalization has changed the way stores operate. Luxury brands used to be the only ones who incorporated embedded personalization into the retail experience, but now smaller brands are offering product personalization in-store as well as clienteling (i.e. Little Words Project and Olfactory).
“What hasn’t changed is that most startup brands still haven’t addressed how to deliver a consistent, human customer experience in-store. Whereas big brands spend millions of dollars building out associate programs, many digitally-native brands launch retail without spending any capital on that.”
Scalable and sustainable operations
What does it mean to operate a sustainable and scalable retail store for Rebekah and her team?
For Rebekah and her team, it’s all about creating a strong kit of parts. That looks like answering the following questions:
Before you open a store, what data are you taking into account (i.e. lease and traffic)?
Do you know what the market looks like?
Do you have a standard operating procedure outlined?
Do you have a labor model for all your stores?
Do you create P&Ls?
What is the current tech stack? Are you a Shopify brand?
Rebekah’s team works hand-in-hand with brands to build a kit of parts that’s scalable.
“After we create that kit of parts, we go from being the team that executes to backing away and handing off our work to an in-house director of retail,” explains Rebekah.
The ultimate goal: The brand owns retail as a channel.
“You can’t outsource your retail channel forever, especially if it’s going to be one of your major revenue-generating channels,” adds Rebekah.
“Stores should be profitable. They’re not marketing experiments.”
Are you ready for retail?
There’s no formula to knowing whether or not you’re ready to enter retail. However, typically, you need enough customer data to even consider opening a store and around $10M in gross revenue per year, notes Rebekah.
“You need to know enough about your customer. If you don’t know enough about your customer, you need to keep learning in the short term,” says Rebekah. “That could look like exploring wholesale, partnerships, or pop-ups.”
If you are ready to open a store, remember to stay close. “If you open your retail store far away from your home base, your marketing team or CEO can’t pop in and learn from that store,” notes Rebekah. “You need to understand what’s going on, if that store is under-performing or over-performing, and why.”
“Go where your customers are.”
Key metrics
Keeping data top of mind while launching retail as a channel is pivotal. You’ll need to measure the success of your store and measure the impact of the store on the overall brand.
One metric to keep an eye on is customer lifetime value (CLTV) across channels. The key question to answer: If a customer discovers your store walking down the street, goes in and buys something, do they then go and spend online with you?
Other metrics to look at include foot traffic, conversion rate, average order value, UPT, sales per staffed hour, and salaries as a percentage of net revenue.
Plus, you always want to look at qualitative data, says Rebekah, especially the halo effect of a store. What were the ecommerce sales in that market before the store, 6 months after the store opened, and a year after the store opened? “Typically, we see a 30-60% ecommerce lift,” adds Rebekah.
From talking to customers, sales associates can gather anecdotal data, such as what new products customers want to see, why they might’ve left without purchasing, and what other brands they love.
“You can capture data through end-of-day email reports,” says Rebekah. “Make sure to set up a clear communication cadence between the store team and HQ.”
“At a store, you get to see what the customer wants. Make sure your sales team is documenting that data.”
Standout stores
We asked Rebekah about her favorite stores, and here’s what she had to say:
“I love CAMP stores,” she says. “What they’ve built around customer experience is amazing. It’s so whimsical and on-brand.”
Plus, she loves the brand, Little Words Project. Each store is a true manifestation of the brand and its personality.
Out of Rekon’s clients, Rebekah likes to highlight the Kizik store in Salt Lake City. It was a very thoughtful store as the product is unique—step-in shoes. “You have to experience the product,” she adds. “We asked ourselves: How do we get the shoe on the customer as fast as possible, so they can have that aha moment? Then, we reinforced the answer through experience design along with design partners like The Lionesque Group, who brought the brand to life visually and physically.”