Pop-up shops can be a great way to test retail ideas before taking the plunge on a long-term lease. But how much does it cost to set one up?
It costs very little to set up a pop-up store. A cash-only shop only requires a copy book and “cash tin” but experts tout cloud software programs as must-haves.
“If you are running multiple pop-up shops or you are opening the shop in different locations or you need to keep more detailed track of sales, stock and payments, you would need to up the game,” says Don Grgic from Business Boost Centre.
If the retailer already has a smartphone or tablet, the cost of cloud software to run the store can be as little as $35 per month.
This includes a cloud-based point-of-sale (POS) program to record payments and manage inventory and an accounting program to measure sales and budgets.
There are several contenders for cloud-based POS. The best known is Vend which costs $35 per month for a basic setup. A free version is limited to 10 products and integrates with cloud accounting program Xero.
Kounta is another POS app with no limits on the number of inventory and transactions. It integrates with PayPal, MYOB and Saasu among others.
Grgic recommends a combination of Vend for POS, accounting software Xero and payment processing via a linked Eftpos terminal.
Thermal receipt printers and an eftpos terminal can connect directly to some cloud POS apps and provides an analysis of what is and isn’t selling.
Accounting software companies have built mobile payments devices that will accept credit card payments and log the transactions directly into the accounting program. MYOB PayDirect lets you take payments with a credit card on their pay-as-you-go plan for transactions less than $2000 a month with no monthly fees. (Integration with MYOB Essentials hasn’t been completed yet but is expected this year.)
In the US, Xero has partnered with Square to take payments by credit card with 2.75 percent fee per swipe. Reckon says it will launch its own version, Reckon Pay in Q1.
eWay and PayPal are other ways to receive payments via connectivity with your smart device. A barcode scanner is a good investment for pop ups who intend to operate for awhile or move to another location.
“Having the right tools is one thing. Using the tools effectively and efficiently is another. If you use the available tools, there is much analysis that can be done to improve the performance of a shop,” Grgic says.
“At the end of the day, there’s nothing wrong with getting a receipt book, then you can still hand write up a receipt but from my experience, Vend is the most cost-effective option,” says Melanie Power, director at Power Finance.
A pop-up shop can be “a great way to start and the admin side of things is not really expensive to manage,”. Once a retailer had tested products, marketing and sales, they could move onto e-commerce, she added.
A simple business plan outlines the location of the shop, products for sale, how often the shop would operate or if was a one-off. Research should focus on whether there was interest in the planned location for the products and if similar stores were nearby. An online presence via social media is key as people will research the products online first.
“Another option is to sell from a small section in the middle of a shopping centre that you’re considering for a few weeks,” says Melinda Chiew, director at H.O.P.E. Collective.
A short-term lease from three to six months is recommended for a low-risk way to test the venue. “It’s the ideal way to test a location to see if your offering is going to sell well in that area and if your product offering is seasonal such as Easter eggs, Christmas puddings and swimming costumes,” Chiew says.
“You can share all costs and staffing of the shop with like-minded groups. Since rent and wages are the number one ongoing costs to manage, this is the smartest way to keep your costs down. Landlords are a lot more open to short-term arrangements with pop-up shops than they were a few years ago. There’s definitely room to negotiate on term and price.”
Legal standings to be aware of include rights and responsibilities and finding an insurer without a cancellation fee for short-term leases. Locking in an agreed rental price for possible long-term leases is also recommended to avoid the landlord raising the price after the pop-up term is finished.