So, Halloween is right around the corner, and you want some glow-in the-dark vampire fangs or a green bug-eyed-alien mask. If you live in or around New York City, chances are you will wind up in one of the 30 or so pop-up Ricky's Halloween stores. It's just a costume for you, but for nearly 1,000 temporary pop-up staff members, decked out in Dracula and Anthony Weiner costumes, it's a flat-out frenzy, with crowds and lines out the door.
Opening 30 temporary stores for just two months may seem like a nutty way to run a business that, the rest of the year, consists of just 28 permanent beauty-supply shops. But since the co-founder and CEO of Ricky's, Todd Kenig, opened the chain's first pop-up store, in 2005, he has come to rely on the temporary outlets as critical tools in the expansion of Ricky's. Halloween sales account for about 20 percent of the chain's annual $55 million in sales. Yet more important than added revenue is the pop-ups' ability to serve as test sites for permanent Ricky's locations. "The profit is the icing on the cake," says Kenig. "The real benefit is to study the demographics in an area."
Pop-up stores don't just pop up. They require early planning and the ability to quickly ramp up hiring and management. And woe to those who underestimate the challenge. Poor customer service or shoddy merchandising can badly tarnish a brand for years.
The Ricky's pop-ups, though open for just a couple of months, require a full year's preparation. Beginning in early November, the Halloween team—made up of Kenig and three full-time employees—maps out the stores for the next season. Though it's generally too early at this stage to sign temporary leases, the group scouts out neighborhoods in which Ricky's might want to open. Next year, for example, Kenig expects to open pop-ups in malls outside New York City. If they do well, he will convert some to permanent stores.
The team focuses next on inventory. That entails making a trip in January to the Halloween & Party Expo, a huge conference at which vendors offer practically every Halloween costume imaginable. By March, the orders are in.
Gauging what shoppers will crave in October, though, is a mysterious art. Kenig learned the hard way to be wary of seemingly hot prospects. In 2008, Mike Myers's film The Love Guru was following on the heels of the Austin Powers films. So Kenig decided to place a big order for costumes based on the actor's Love Guru character. That film was a bomb, and Kenig was left holding $15,000 worth of Love Guru merchandise. To avoid a repeat disaster, Kenig now holds mostly traditional costumes and orders only small quantities of costumes tied to upcoming films.
In May, Kenig begins nailing down locations. A broker will hunt for empty spaces in the neighborhoods the Halloween team identified in the fall. The key is to find spaces that are in prime locations and don't need extensive work. Leases are typically for two months. Kenig says a couple of experiences with spaces that were too bare-bones—requiring him to outfit one with electrical wiring, for example—hurt margins. The leases are signed from June to September.
Over the summer, the human resources director of Ricky's, Pat Fox Mastrocovi, moves into high gear. Mastrocovi begins interviewing and hiring the incoming army of temporary workers, which supplements the roster of 350 permanent Ricky's employees. Included are the teams that will set up lighting and displays in the stores as well as the sales staff. Mastrocovi relies chiefly on store notices, Craigslist, and postings at local colleges. She assigns one Ricky's employee from a permanent store to serve as manager of each pop-up. And if she finds someone before a store is opened who has experience and might make a good pop-up manager, she will put the person to work temporarily in a regular Ricky's store.
Mastrocovi, a veteran of the Gap, and her team may interview 500 people in a week, often doing group interviews of 25 people at a time. Kenig says the chain looks for smart people, not necessarily those with retail experience.
Once stores open, the corporate office of Ricky's is on constant call. The headquarters staff of about 60 forms teams that focus on operational issues. One group is in charge of personnel issues—for example, finding a store a quick replacement when an employee doesn't show up. Another team manages inventory, shipping merchandise among stores.
Last year, Kenig says, Ricky's overplayed its pop-up hand. He opened 43 Halloween stores, straining resources and cutting into the company's profit margins. "There are a million people doing this now, so we need to focus on what our endgame is," he says. If sales for women's and children's costumes prove especially strong in a store, Kenig may later decide to transform it into a permanent Ricky's. The location is dumped if it sells mostly men's costumes, a sure sign a permanent store would fail to attract the young female shoppers the chain relies on. Kenig says over the past few years, about 10 percent of pop-up stores have been followed by permanent Ricky's outlets.
The pop-up strategy will be critical as Ricky's expands outside its New York City base. The company has one store in Miami, and last year it opened a pop-up in Philadelphia. The store was a hit, and Kenig wants to open a permanent outlet there. He's also scouting Boston and San Francisco for store sites. "Once we do a pop-up, we have a team in place," says Kenig. "That is the beauty of it."
How to Open a Pop-up
1. Define Your Goal
You may be looking for a boost to the bottom line, marketing buzz, or a location for a permanent store.
2. Create a Dedicated Team
Ricky's devotes three full-time staff members year round to its pop-up business.
3. Plan Early
If the store will be seasonal, positioning for the holiday season should begin a full year ahead.
4. Carefully Select a Location
You want the right geographic location, but also a space that does not require a lot of investment.
5. Use Simple Cash Registers
The sophisticated registers most retailers use are too costly for an outlet that operates only two months out of the year.
Read further about how to open a temporary shop. Go to www.inc.com/magazine/20100701/how-to-open-a-pop-up-store.html.