BUS613: Advanced International Business

The pop-up shops run by established national or international brands or retail chains can be supported as part of their overall marketing budgets. These pop-up shops often serve as a vehicle for marketing and brand communications and provide experiential shopping experiences to engage customers. No sales targets are established or enforced. In contrast, the entrepreneurs who plan and operate pop-up shops to test the market, liquidate inventory, or launch new venture startups usually set clear sale and profit targets.

In this section, we discuss the cost structure of a pop-up shop.

1. Cost of Goods Sold (COGS): refers to the cost of purchasing merchandise from vendors/suppliers for resale. Oftentimes, freight and delivery charges as well as workroom costs (to prepare the merchandise to be floor-read) are included in the COGS.
2. Operating Expenses: refers to the costs required to operate a business. Operating expenses can be divided into two categories: fixed expenses and variable expenses. Fix expenses are those that do not change with the business volume. Examples include: rent, insurances, licenses/permits, depreciation of equipment, and staff salaries. Variable expenses are those that change with the amount of business. Examples include: advertising and promotional costs, utilities, telephone, internet, and professional consulting fees.
3. Capital Expenditure: refers to the expenditure to purchase capital equipment, such as point of sale system (POS) and/or store fixtures. Most pop-up retailers opt for renting the capital equipment unless the pop-up shop is positioned to transition into a long-term store operation.

Cost of Goods Sold (COGS): the cost of purchasing merchandise from vendors/suppliers for resale.

Operating Expenses: the costs required to operate a business.

Capital Expenditure: the expenditure to purchase capital equipment.

Example

The following table shows an example of a pop-up shop budget.