Luxury brands no longer sell their wares only in traditional brick-and-mortar stores: China’s retail sales have been moving online at a faster rate than in the US, and luxury is no exception. Now, luxury brands are starting to leverage temporary pop-up stores that focus on more than just selling products, but rather are designed to engage and drive new customer adoption. In our January 2019 report 10 Retail Trends for 2019: Get Ready for Retail Reinvention, we outlined that we expect to see more temporary pop-up stores this year as retailers seek flexibility with shorter leases while shoppers continue to seek more engaging experiences. In this report, we look at how luxury brands are using pop-up stores to offer customized experiences and promote their brands to China’s increasingly affluent consumers. Pop-Up Stores Yield Various Benefits to Retailers Pop-up stores, which can be open from a few days to a few months, enable brands operate at lower prices due to shorter set-up time, smaller space and shorter operation time. Pop-up stores offer a number of benefits:

• The impact of pop-up stores can be amplified by social media as visitors share their experiences with their followers.
• Pop-up stores are a fun, engaging and more personalized way for luxury brands to connect with consumers, offering a special or unique experience.
• Pop-up stores can create buzz around product launches, new collections or limited-edition items.

Below, we discuss a few examples of how luxury brands are leveraging pop-up stores to reach China’s increasingly affluent consumers. Chanel’s Le Rouge Chanel Pop-Up Store in Shenzhen Chanel operated a Le Rouge Chanel pop-up store at Shenzhen between December 1, 2018 and January 1, 2019. Visitors could register to visit the pop-up store through Chanel’s Weibo account or the brand’s official WeChat account. Visitors could:

• Purchase limited-edition eye shadow and lipstick, and try out Christmas products.
• Get a freebie bag (from Chanel staff near the pop-up store entrance).
• Collect a map of the pop-up store which they get stamped when they visit three key points in the shop, then redeem the card for a small Chanel gift.

Chanel also leveraged the pop-up store to promote its brand among customers on Xiaohongshu, a social and e-commerce platform. Many Xiaohongshu users commented that the Chanel pop-up store was great for taking photos and buying cosmetics. [caption id="attachment_85562" align="aligncenter" width="720"] Customers could try on products in Chanel’s Shenzhen pop-up store (left); and the exterior of the pop-up store (right)
Source: Company website [/caption]   YSL’s Pop-Up Store in Hong Kong YSL set up a pink-themed pop-up store in Central, Hong Kong’s central business district, February 10-14, 2019. Visitors could sign up to visit the pop-up store through Facebook Messenger or the company’s website. Once registered, visitors got a unique QR code they could use to buy things and take part in games at the pop-up. These are some of the other things visitors could do:

• Engrave their Volupte lipsticks free with any purchase.
• Create customized YSL stickers.
• Create customize gift boxes at the “Make It Yours Trial Table.”
• Get free makeup tips at the Makeup Stage, where YSL Beauté’s national makeup artists shared tips on how to make the perfect look for Valentine’s Day.
• Using points accumulated from making purchases or creating Whatsapp stickers, win a chance to play a clip doll (claw crane) machine, which featured cosmetic products.

[caption id="attachment_85587" align="aligncenter" width="720"] YSL’s clip doll machine (left); and production of a customized WhatsApp sticker
Source: Company website [/caption]   Hermès’ Store Fuses Music with Silky Scarfs Hermès hosted a record-store-inspired pop-up store named “Silk Mix” in Beijing’s shopping district Sanlitun between November 16 and 24, 2018. Beijing was the 7^th stop for the pop-up store after a road show that included Madrid, Rome, New York, Brussels, Munich and Seoul. Customers could sign up to visit the pop-up store through the brand’s WeChat mini program. In the pop-up store, visitors could:

• Take photos wearing silk scarfs showcased at the pop up.
• Enter Hermès’ online shop by scanning QR codes on men’s scarfs on display.
• Print selfies onto vinyl records as free souvenirs in the photo booth.
• Listen to recorded music and live performances.

Hermès made also created a number of integrative features, such as:

• Using men’s silk scarfs patterns as covers of vinyl records.
• Using men’s ties as covers of cassette tapes.
• Music being played on the vinyl records was used in the brand’s fashion shows.

[caption id="attachment_85564" align="aligncenter" width="720"] Example of vinyl records (left); and cassette tapes (right) showcased in Hermès’ pop-up store in Beijing
Source: Company website[/caption]   Xiaohongshu user comments suggest visitors liked the experience and that Hermès created an interesting mix by integrating fashion with music. Prada Mixes Nostalgic Experiences with Exclusive Products Prada presented Prada Wonderland, an exclusive pop-up installation at Galaxy Macau between January 12 and March 10, 2019, which included the Chinese New Year. Prada promoted the pop-up store through its website, on Facebook and Weibo. The pop-up installation stocked a selection of leather goods and accessories for men and women, giving customers an opportunity to purchase exclusive products, including the new edition of the Prada Double Saffiano leather bag made from crocodile leather. In the pop-up installation, there were visual features that offered customers a sense of brand identity and nostalgic experiences of a fair, including:

• The Prada Wonderwheel, which reinterprets the classic ferris wheel, and displays Prada’s iconic products inside shopping-bag-shaped cabins.
• The Prada Carousel, two merry-go-rounds at either end of the pop-up, offering dynamic presentations of products for women and men.
• A black and white checkered floor and desks that use the brand’s colors, maintaining brand identity throughout the store.

[caption id="attachment_85565" align="aligncenter" width="720"] The Prada Wonderwheel (left); and the Prada Carousel (right)
Source: Company website [/caption]   Key Insights Pop-up stores represent a way for luxury brands, which emphasize brand heritage and prestigious offerings, to engage with customers, showcase limited edition products, offer personalized experiences and demonstrate brand identity with a low-cost, physical presence. In an era in which experience-driven millennial customers demand more than just goods and services, brands can leverage pop-up stores for more casual marketing, to promote the brand and better engage with millennial customers – who form the bulk of luxury brands’ future customer base.