BP10b: We Decided not to create Pop-Up Stores. Here's Why:

Our company's initial plans was to create pop-up stores within the next few weeks. However, one major roadblock so far has been that the rent of such pop-up stores. For places with known good human traffic, such as along Gardens by the Bay, it can cost our company between $150 to 230 to rent a booth for just one weekend, depending on the size of the booth and number of times we worked with the pop up booth vendor.

As CFO, I had the responsibility of ensuring that the money spent on the pop-up store is justifiable - At least, we should be able to breakeven and pay for the rent and labor hours clocked when setting up a pop-up store!

As $150 (to $230!) is a sizable sum for us to fork out for a single pop up session, we decided to do some maths and excel calculations to simulate the running of the pop-up store. We wanted to find out: Just how much money would we need to fork out to breakeven from creating a pop up store?

I first took note of the key facts from running such a booth:

• Choose a place with at least decent footfall: BayFront (pop-up market)
• This is a Rain or shine event, so hopefully, the weather is on our side (not too hot, and please, no rain!)
• Weekend Period: 1 weekend (Friday Night (5pm-9pm), Saturday and Sunday (10am-9pm)) ➡️ This translates to 26 Hours of manpower clocked per worker at the booth.
• 2 Table, 2 Chairs. Light and power-point provided. (whew, at least can charge our phones there)

Based on the above, for realistic simulation purposes, I estimated:

• having 2 people at the booth at all times during operational hours. I think that's a bare minimum so we can give good service to our customer and not rush.
• We pay each "worker" (i.e. ourselves a conservative $7.50 an hour from running this business - after all, the whole idea of a business is to generate profit (and feed ourselves, right?)
• Gardens By the Bay Members must get 20% Off (Which means...our Pricing strategy had to take this into account). Then, I took into account the two types of pricing needed within the operation of our pop-up store: the price that public members have to purchase, and the discounted price Garden By the Bay members will get to enjoy.

Based on this, as well as taking into account the contribution margins per product sold, I estimated the number of products needed to breakeven from renting a pop up store. I then did 3 scenarios (High, Medium and Low pricing), to have a good estimate of the number of products needed to breakeven.

Note: Due to the sensitive nature of the numbers, I will share the redacted picture of the simulation I created here to the public, so you can still have a sense of what I Did. (For Professors/Members of Flormiere, Feel free to access the images stored here)

Here's a quick crash course of what's going on here:

→ I First entered and calculated the total additional cost we would incur by setting up a pop-up store (Factoring manpower cost for manning the booth and rent), into the red table in the above picuture. Days = 2.36 to include Friday Evening, Saturday and Sunday.

→ Using Formulas, The Spreadsheet I created would calculate the cost and margin based on estimates I manually created per product design (to have an accurate sense of the numbers) on another spreadsheet.

→ This Excel Sheet will calculate the total margin we would earn based on the varying price points and quantity sold, and check it against the "Profit (After Rent, Booth Manning)" Value. If it's positive, it will show green, if we made a loss, it would have a red cell colour automatically formatted.

→ Thus, using the above sheet (which I created), I experimented with different pricing for our products, by filling the Dark yellow boxes under public price (green box). Then, I estimated the number of products we needed to sell to breakeven. As the prices the members of Garden's by the bay (GBTB) are more attractive, I guessed we would sell more units to GBTB customers than to the public.

→I Created 3 Scenarios (High, Medium and Low price) to see how many products we needed to create to breakeven from the additional cost of creating the pop-up store. Then, I shared the points with my team to discuss if we should enter the pop-up store scene (or not) at this point of time.

Based on our current margins and estimations, we would end up with a large amount of loss as we need to sell an unrealistic amount of floral decorative products within the 2 days. Our company needs to sell close to 30-59 products in a single weekend to recoup the cost of renting the booth! There are three issues with this:

1) First, our current production speed is not capable of hitting this number - Due to the complexity of each design, We will not be able to create 30 - 50 unique finished products, and craft a story for each of them

2) Logistical Issues to bring finished products to the pop-up store: Because each design is so intricate, carrying 30 to 50 products to the booth in itself is far too challenging. we are unable to trust common courier services to get this done right - Meaning that apart from carrying in our tables, chairs and other assets for setting up a proper pop-up store, we have to carry all the intricate products we have created to the venue, and there is too much risk that we will mess up the products during transit.

3) The figure of needing to sell between 30-50 products within a weekend is a figure that none of our group is confident of hitting at this point, as this would be our first time participating in such a show, without any form on brand awareness built at all. This means that when customers visit the pop up store area, it will be the first time that most would have heard of our brand, and we would purely be relying on footfall within the chosen area. Hence, we are not confident that there will be enough demand for our decorative products.

But for now, We decided to just concentrate on digital selling strategy instead.

Our group will also discuss about further about our pricing strategy as a team soon, to see if the current prices of our products are fairly priced, and enticing for customers to purchase. In the meantime, while we do intend to continue creating custom designs according to the customer, I've already highlighted the increased costs of doing so to my colleagues. We would bear in mind the additional labour hours and cost of creating such designs, and factor this in before taking on new custom design projects.

At the same time, Our group will firm up on the ready made designs to be sold on our online channels first. We hope to have online sales available within the next 2 weeks, and hopefully, the market responds to these products in the way we think it would. Stay tuned!