JANUARY 2016

TECHNICAL NOTE #06

NEOSHOPTHE STARTUPS’ BOUTIQUE

TECHNICAL NOTE #06JANUARY 2016

The EBN Technical Note is a publication designed to inform Business Innovation Centres (EU|BICs) around Europe about the trends shaping their markets.

The publication is also intended to create awareness among policy-makers at European and national level on the value of EU|BICS in creating a dynamic and entrepreneurial spirit in Europe. © EBN, Brussels - Belgium 2016. Reproduction is authorised provided that the reference is acknowledged. www.ebn.eu

Environmental production. This publication is printed according to high environmental standards. Design: EBN

Photos: Copyright Jacques Olivier

CONTENTS

1. Introduction 3

2. Neoshop’s History 5

3. Economic and Social Background 7

4. How Does the Neoshop Operate? 11

5. Neoshop’s Experiences Across Europe 14

6. A Word from Two Startups 16

7. Are You Interested in Launching a Neoshop? 18

8. Recommending Startups to Neoshop 20

9. Credits 21

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Supported by

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Introduction: Neoshop, the Startups’ BoutiqueYoung innovative businesses are constantly working hard to conceive solutions for our daily lives. EBN member and EU|BIC, Laval Mayenne Technopole, which has mentored startups since 1996 and launched an incubator in 2008, is currently leading a disruptive way of following these startups.

This new tool bears the name of Neoshop. It is actually a shop located in central areas in order to assess the potential of new products and liaise more easily with distributors. In simple words, Neoshop is a platform for the launching of innovative

products. Established in September 2013, Neoshop presents two main features; it is both a shop, which commercialises new products, while also serving as a mentor for startups. Indeed while selling manufactured items to consumers, Neoshop also helps to:

• Test the earliest sales

• Meet customers faster

• Strengthen marketing-mix enabling interactions with clients

• Bridge with distributors

• Promote ideas through the media while gaining public attention

The originality of this project lies in the involvement of the clients who share their remarks and thereby contribute to the improvement of the product. Neoshop is at the core of the ‘participative economy’ where customers play a major role (after crowdfunding we can speak for Neoshop of crowdselling and crowdmarketing). Unique in France and on the European continent, the Neoshop notoriety has already allowed a broad range of products to gain wide media coverage as well as new partnerships with distributors to find more marketing opportunities and buyers.

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Since its inception, Neoshop has already accommodated over 70 products from different startups (in just 24 months). The shop has already welcomed 22,000 visitors reaching a conversion rate of 17%. These are all very promising figures.

Neoshop was set up thanks to the financial support of the Interreg IV NWE programme and in the framework of the Open Innovation project and the public authorities of Laval. The day-to-day activities are backed and financially supported by the stakeholders of Laval Mayenne Technopole and the French Ministry for Industrial Recovery (Ministère français du Redressement Productif).

Purpose of the Technical NoteBuilding on Neoshops’ successful experience, Laval Mayenne Technopole would like to expand the project by proposing EBN members to set up a Neoshop in their respective cities. The purpose is to enhance the startups’ ecosystem by helping young entrepreneurs in the first stages of the commercialisation phase and boost their promotion through media channels.

Two main alternatives are put forward, either launching a permanent Neoshop or by opening a pop-up shop for a short period. The purpose of this technical note is to introduce the concept of the Neoshops, to explain their roots and applications in the current business and social climate and finally, to set out the requirements to launch one.

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Neoshop’s HistoryHeading the Laval Mayenne Technopole (herein after referred to as LMT) since 2006, Christian Travier was hosting in its incubator (UP!) approximately 30 startups with plenty of great ideas. Out of these 30 startups, several were developing manufactured products such as an anti-vibration bicycle handlebar, a conservation tool kit for wedding dresses and a wireless design computer. The question arose as to how to better help them in their business development.

Christian Travier came up with the idea of establishing a physical shop where they could display their latest innovations, enabling them to accelerate the marketing campaign and make it easier to liaise with distributors.

The idea of Neoshop emerged as a result of the following observations:

Market barriers for innovative productsLMT observed that the startups hosted in their incubator were struggling to access their respective markets. The more innovative the product is, the more difficult it is to enter the market. If the time to market is too long, the entrepreneur can be financially squeezed and present a lack of resources to launch the commercial campaign. Therefore it is fundamental to shorten the period as much as possible.

Furthermore, once the product is ready, the main part of the first sales is often achieved through personal networks, which are in most cases limited, or through e-commerce websites. This undoubtedly narrows the visibility of the product and trade opportunities. Finding a distributor is a difficult task because they often prefer to prioritise well-known products.

Giving startups the opportunity to have a first “friendly” location where they can display and make their products known to their future clients is vital. This is Neoshop’s objective: to provide a physical place for distribution, which accelerates their entrance into the market and helps identify distributors on a larger scale.

Shortening the purchase processOnce the product is marketable, we often observe another delay, the time required for the purchase process, which, on average, is longer for innovative products than

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for traditional goods. This term refers to the time required by distributors to assess the product and their decision to commercialise it. Through Neoshop, startups can have quicker customer-based feedback. They can learn from consumers’ reactions and therefore get a chance to improve the product if needed, making it easier to convince distributors with key figures that support their argument.

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Economic and Social BackgroundNeoshop is embedded in today’s economic and social context, characterised by a revolution of the consumer purchasing process, a result of the massive surge of internet access.

Customer focused approachAn clear understanding of client needs, that includes a positive sales and after-sales experience is crucial to any business. A customer-centric approach clearly adds value to a company and could prove to be advantageous to outperform competitors.

This approach is embedded in the Neoshop concept. Clients are invited to share their comments to the salesperson. Startup founders regularly organise on-the-spot product presentations, as well as focus groups and field surveys. Many actions are implemented in order to collect maximum feedback from potential or current clients.

A new way to validate the marketing-mixThis customer-centric approach helps Neoshop validate the 4Ps.

Neoshop, an Open Innovation toolNeoshop is based on an Open Innovation paradigm. It adapts and integrates an innovation strategy in order to make the most of its ecosystem. Specifically in the case of startups, the objective is to rely on clients to sharpen their marketing strategy and to further validate the 4Ps of the marketing mix.

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• Product design of the final good

• Place distribution policy

• Price pricing strategy

• Promotion communication policy

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A Living Lab methodLiving Labs gather public and private stakeholders, companies and organisations. The aim is to carry out real-life tests of services, tools or new utilities by taking research out of the lab and applying it to everyday life, always keeping in mind a strategic vision of the potential use of new technologies. Neoshop enables customer testing by providing a place for startups (enterprises) and the general public (individual actors) to meet. Neoshop is a living lab, under the Living Lab certification that was granted by the European Network of Living Labs (ENOLL) to LMT in 2011.

Third place shops, the new trendNeoshop is based on the design of new boutique concepts where the relation with clients is totally reinvented. The advent of the Internet has initiated the new trend of “boutique” where the company-customer relationship, or more precisely the product-customer one, has undergone a complete revolution.

What has really changed with the internet? The major shift is more linked to the information supply than to the sales. Indeed, beyond the offer of an alternative distribution channel, the consumer has access to exhaustive information on the products: data sheet, comparative price chart and promotional newsletters. Therefore an effort has to be made in order to offer what the Internet cannot offer: human touch, physical contact with the product, personalised sales pitch, customer welcome, and a smile. In other words, a real-life experience.

Hence there has been an increase of new kinds of shops such as third place shops where the offer made to the client goes beyond the simple purchase: to read, take a coffee or have a breakfast, and even to work. Of course, the purchase of a product is still possible but it is not the sole aim of the shop.

Neoshop is indeed a third place shop where clients are

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offered something additional on top of the simple purchasing action. The clients also contribute to the prosperity of the startups in their ecosystem.

The Barnes & Noble Library, was already a precursor in the United States in 1993, when it opened a coffee corner within the shop. Since then, all Barnes & Nobles are designed to host a coffee corner, mainly Starbucks branded ones. The Starbucks staff are employed and paid by Barnes & Nobles but strictly follow Starbucks’ recipes. Both brands make use of their names to attract the clients (dual interest).

The French trademark Fnac hosts the well-known Colombus coffee in its premises but manages it internally. The peculiarity of such a coffee-library is that clients can drink a cup of coffee and read a book without buying it.

Monde Merveilleux de Sophie in Paris combines a tea room with a theatre and luxury clothing shop, a package for parents and young children. The major difference between this environment and that of Fnac or Barnes & Nobles is that there is no other attraction for the consumer than just enjoying a drink in this atypical place.

Neoshops, third placesThe first Neoshop in Laval is a ‘third place’ where one can come to work, pursue

training, meet, have a coffee and above all give opinion on the products. Neoshops

propose a wider offer than the simple purchase of an innovative product. While the

ground floor is reserved for sales and discussions with the customers, the other floors

are organised as co-working spaces where activities concerning the latest

technologies are regularly organised both for professionals and consumers. The

objective of all proposed experiences is to convert the visitors to new technologies

and innovation whether through the discovery of new products or the participation

in conferences and by giving their feedback on products.

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New York StoryIn February 2012, a shop, specifically designed to sell the products of e-commerce startups, opened in New York. In this case, every four to six months this pop-up shop changes the theme, the products displayed along with a new story.

This project links the off and online schemes. This shop, off line in principle, shares some of the attributes of e-commerce platforms. In fact, its volatility and constant change enable the shop to adapt to the new consumption patterns, where the customer is constantly looking for new trends and unexpected opportunities.

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How Does the Neoshop Operate?

The supply of products

Selection of the products

LMT selects incoming products to be displayed in the shop according to the following criteria:

• Innovative and manufactured products

• Targeting the general public

• With a limited distribution

• Developed by an entrepreneur and not by a private / isolated inventor

Sales terms and conditions

The terms are agreed upon through a partnership contract between the startup and Neoshop. The latter sells the items on their behalf. The contract includes a clause setting the commission on sales to be received by LMT (20-40%). Neoshop does not buy the stocks, which are provided and delivered by the startup. At the end of each month, Neoshop pays back what is left from the sales revenue after charging the agreed commission. The contracts specify a period of six month in average.

Sale of products at Neoshop

Neoshop does not belong to a specific store category. It is a place which offers all kinds of products. The only similarity among the products is that they are designed by innovative entrepreneurs. The purpose is to create a unique place to display the latest innovations but also to listen to the stories of the founders, the adventurers who took up the challenge of innovation and have created their startup.

The sellers play a crucial role in the Neoshop. Not only do they have to explain the product in an educational way but they also have to provide a demo. The seller should also be capable of bringing the story of the entrepreneur alive and entertaining (story telling). Finally, it is vital to gather the remarks made by the clients on the products in order to help the creators.

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Commercial animation

In the same way that ordinary shops operate, it is of prime importance to ensure a good customer flow for Neoshops. This is achieved through local communication actions such as local papers and street-marketing but also at national level. Animations in the stores and online are another way to attract more clients. Here are some examples of actions to be implemented:

• Designer conference: presentations of the products by the creators to targeted clients (geeks and trends setters who are eager to meet the creators. It is a good way to collect feedback more rapidly and to liven up the store)

• Test sessions on new products: invitation to target customers interested in a particular product

• Create newsletters for clients

• Community management (boosting Neoshop social networks)

Follow up of the start ups The Neoshop team offers different services to the different startups. Depending on the supply level, they can be free of charge or tariff-based. In certain cases, Neoshop can outsource some of the services, whereas in other cases, for instance marketing and sales, the Neoshop team will provide them directly to the startups. Charging the startups for the provision of services might be a good way to ensure the financial balance of Neoshop.

Marketing services

Neoshop employees should be sellers, marketing experts and above

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all professionals in terms of commercial products-launching. Startups can benefit from marketing advice according to their needs:

• Collection of the clients’ spontaneous feed-back

• Marketing-mix analysis: price specification, design packaging, point of sale promotion, new applications...

• Liaising with professionals: packaging experts, designers...

• In-depth qualitative and quantitative market studies of customers: drafting and conducting interviews on site

• Focus groups organisation: participant recruitment, definition of the questionnaire, team animation and activities

Communication services

• Training and support in crowd-funding campaigns

• Launching events with invited targeted guests

• Support to local and national media relations with the purpose of contributing to the press review of a product

Liaising with distributors

Once the marketing mix of the product is ready, the Neoshop team helps the startup find a distributor by:

• Liaising with medium and large retail actors (partnerships)

• Providing training on how to approach large retailers and distributors

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Neoshop’s Experiences Across Europe

2013: Pop-up Neoshops in EuropeNeoshop was set-up thanks to the financial support of the Interreg IV NWE programme and in the framework of the Open Innovation project in 2013. The European partners of this project have helped deploy pop-up Neoshops over short periods. Two shops and two showcases were launched in 2013 in the following cities: London (UK), Gent (Belgium), Edinburgh (UK) and Rouen (France). These stores were operated from a few days to three months. This experience validated the possibility to

do it through an pop-up model. Thus, some startups from Laval had the opportunity to test their product on foreign potential markets at a lower cost, therefore reducing the risk factor for future investments. Other products from partners in the Open Innovation project had the opportunity to be displayed in the French store in

order to test the French market. Neoshop Laval is eager to experience new partnerships among other European countries and support the creation of more Neoshops both pop-up and sustainable (see below).

2014 and 2015: Pop-up Neoshop in ParisIn 2014, the new innovative and connected shopping commercial mall Quartz hosted a 50m² Neoshop for three months between April and June 2014. Thus, the startups had the opportunity to benchmark the sales figures between Paris and Laval where the clients’ needs and expectations were very different. The presence of a Neoshop enabled the sale of 523 products for a customer flow amounting to 4,900 visits. A second pop-up shop was operated in a 60m2 space in the Pigalle district in December 2015, since Christmas is the hottest season for Neoshop sales.

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2015: Creation of the e-commerce websiteIn April 2015, the Neoshop team launched www.boutique-neoshop.fr, its own website, in order to get products known beyond the city of Laval. Startups are now able to showcase their innovations on an online platform in order to increase their visibility and allow users to buy them online. The site is envisioned for users looking for an original gift, a practical tool or simply curious about the latest French and European innovations.

Customers are able to browse the online shop according to the following categories: connected objects, home trends, easy cooking, trendy sports, mobile devices, and original presents.

For the moment Neoshop online boutique is only available in French, but an English version will soon be opened.

www.boutique-neoshop.fr

A Word From Two Startups“Neoshop has been an adventure for our startup” Agnès Lowe and Adrien Harmel tell us about their experience with Neoshop.

Could you present your respective companies?

A.H.: I am the founder of Weenect, which allows parents to know in real time where their children are without offering them a smartphone.

A.L.: I created Papado, the first ultra-hygienic clip-on toilet seat. I started my entrepreneurial career after working 20 years as bartender.

How did you hear about Neoshop?

A.L.: We were contacted by Marie-Alizé Favreul, who informed us about the project. For my part, I felt immediately interested in the concept. In fact, I was feeling quite under-supported in the creation of my business project.

A.H.: In our case, we were first and foremost driven by the opportunity to display our products outside the Parisian agglomeration as we wanted to test the market opportunities in other regions.

What does Neoshop bring to your business?

A.H.: Neoshop clearly meets the needs of startups and provides the opportunity to become known among an external audience. To be present in a concept store is already a big part of our promotion strategy.

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A.L.: Thanks to Neoshop I had the opportunity to meet people who could help me with my project; a large distribution chain was particularly interested in my product! Neoshop also helped me to get more press exposure than I could have had just by myself. As a consequence, I had the chance to appear on television (France 2).

What appeals to you most in their service offer?

A.L.: I very much appreciate the commercial service offered to startups: the monthly assessment of customers’ feedbacks is very helpful. It is clearly an asset compared with a traditional distributor.

A.H.: I agree. Following these clients’ feedbacks, we decided to decrease our prices.

Was the collaboration with Neoshop an incentive to explore new changes in your product?

A.H.: Many clients told us they would like the same beacon but for their animals rather than for their kids. Therefore, we designed a lighter model that can be worn by dogs and cats.

A.L.: Following numerous comments of clients who want an extra cover on their clip-on toilet seat, we worked on the development of a new prototype.

Both products (Weenect and Papado) have clearly evolved following clients’ remarks. After some months, they came back with a new adapted version of their products in the Neoshop of Laval. Weenect’s version for pets was subsequently commercialised with success.

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Are You Interested in Launching a Neoshop?If you are interested in setting up a Neoshop, here are a few tips! To get more information do not hesitate to contact LMT or EBN!

Setting up a store in the city-centre

Location study

Before starting, it is essential to perfectly know the neighbourhood by carrying out a field survey that will define the catchment area. A Neoshop is to be set up in a commercial zone. The study will allow stating the schedules, the communication campaign for the launching and the commercial strategy (animations). It is vital to consider this point and ensure that the area is sufficiently commercial before taking any further steps.

Recruitment

First, a project manager is required to ensure the launching of the project (project development, recruitment assistance, commercial launch, and communication, relations with the media, partnerships, and close follow-up during the first

months before it becomes fully autonomous).

Once the store is operational, the staff should cover the established opening hours. We suggest having at least two persons in order to ensure a good running of the store:

• A skilled salesperson with interest in new technologies, dynamic, proactive (understanding and able to collect client feedback, budget monitoring and account management)

• A shop manager, executive level, to ensure the proper running of Neoshop

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Skills required : management, marketing, commercial outlook, innovation and communication

Layout of the premises

It is necessary to respect the visual identity of the Neoshop’s trademark. Any signposting within and outside the shop (information on the point of sales) has to be agreed by the Neoshop founders in order to respect the branding style guide. A professional merchandiser’s advice for the layout of the products is also crucial.

Selection of the products

The selection is done through an exhaustive screening on the internet and through new strategic partnerships (incubators, startup accelerators, science parks, crowd-funding and crowd-sourcing sites...). Taking part in specialised trade fairs is also a good way to identify good products.

Opening

In order to ensure a smooth launching, a good communication plan is required. Here below are some ideas:

• Teasing actions before the opening: pop-ups in different places to make people aware of the opening

• Private visits before the inauguration evening

• Liaise with the national and local press

• Street-marketing; flyers, road marking and advertising displays

Support from the Neoshop Founders

LMT will provide its support for the opening and running of any new Neoshop, in order to build a strong network among the shops in different countries. The services provided are detailed below. The financial conditions are provided upon request and after studying the particularity of each project.

• Transfer of the rights to use the trademark and concept

• Implementation of the project during the first steps (sharing experience...)

• Product sourcing and contractual arrangements with startups

Neoshop is on the constant look out for new products to launch. If you are in contact with startups as an incubator, accelerator, private advisor or investor, and you would like to recommend a product to showcase through Neoshop, please contact us. Send us a short description of the product and brief history of the startup. Bear in mind that Neoshop only showcases products which are in the launch phase. The Neoshop team will assess the eligibility of the startup’s product and once this has been approved, they will engage with the startup to finalise the contract. The product can usually be showcased in the Neoshop within one month!

For those incubators wishing to include Neoshop as a service for their entrepreneurs, LMT can propose partnership agreements defining simple terms of cooperation. The agreement will not include financial engagements and it will allow the partner to be included in the Neoshop network as well as in the Neoshop online communications.

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• Communication plan

• Training of the staff

• Marketing advice

Opening a Pop-up NeoshopCreating an pop-up Neoshop is an alternative to the permanent Neoshop. This solution gives the opportunity to set a further permanent Neoshop on a more steady footing.

LMT is very keen to support the opening of a pop-up Neoshop in large cities in Europe. The support includes a set of selected products from European countries, branding and communication material, training, operating assistance during the first few days. The terms and conditions depend in the duration of the pop-up, the size of the shop and the experience of the partner with selling and marketing. Recommended duration for the opening of a pop-up shop is between 1 and 3 months in order to have enough time to communicate and have interesting feedback.

Recommending Startups to Neoshop

Author

Special thanks to

Giordano DichterHead of EU|BIC Services, EBNDavid TeeHead of Membership Services, EBNClarelisa CamilleriQuality Assistant, EBN

www.ebn.eu | info@ebn.eu

www.laval-technopole.fr

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For more information, please contact

Christian TravierDirectorchristian.travier@laval-technopole.fr

Marie-Alizé FavreulMarketing & Commercial Officermaf@laval-technopole.fr

Credits

Marion HurbinTerritorial Marketing and Communication Managerat Laval Mayenne Technopole (until 2015)

TECHNICAL NOTE #06 JANUARY 2016

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