Can the 'Airbnb Model' for Pop-Up Retail Gain a Significant Foothold in the US?

In a recent breakdown of Lone Design Club's latest move to produce the Airbnb of pop-up retail in the U.K., Forbes contributor Kevin Rosario also called other concepts and questions into play.

Introducing a new property technology platform named Revolving Spaces, LDC's core team hopes to provide a digital, frictionless way for existing brands (including a slew of hot DTC enterprises) as well as would-be retailers to purchase floor space from retail landlords — ostensibly a win-win proposition for both parties.

“When it first came out I was really skeptical about renting a stranger’s house, but now we book and don’t even think about it. That’s how we see ourselves with pop-up spaces," LDC CEO and founder Rebecca Morter said.

“The goal is to help landlords monetize their spaces so brands can book anything, and flexibly,” Morter said, adding that the differentiator for Revolving Spaces was in serving as a "landlord-first commercialization engine," in addition to a lead generator.

As the U.K.’s leading operator of short-term retail activations, per Rosario, it seems that the company has at least some foundation to work from. But will the idea succeed, and can it translate stateside?

Pop-Up Retail, Storefront, and Retail Vacancy in the US

The idea isn't exactly an entirely new one: In 2014, CNBC profiled U.S. startup Storefront as having raised $7.3 million in a round of Series A venture funding in an article which likewise termed the platform as "the Airbnb of retail."

And while Storefront continues to operate as a platform, it doesn't appear to have made inroads to the degree that Airbnb has, with the latter company become a household name.

"Storefront faces challenges if it wants to become as big as Airbnb, the service that links would-be renters with physical vacation properties. One key difference is Storefront is business-facing, as opposed to Airbnb’s consumer-facing model, ultimately making it harder to scale," CNBC wrote at the time. Those problems may persist over a decade later, in addition to the comparative difficulty of renting out a physical retail space for full operation versus renting a furnished room or house for a short-term stay via Airbnb.

According to Colliers data, U.S. retail vacancy rates are trending slightly upwards while rents modestly fall. The national retail vacancy rate increased 10 basis points to 4.3% in the second quarter, and the market overall saw negative net absorption of 6.4 million square feet in addition to a 5.2% drop in leasing activity. Average asking rents tumbled by ~0.4% to $25.46 per square foot.

“Much of the remaining available retail space is lower quality, with less than 25% built after 2000, leaving tenants seeking modern space in affluent areas with limited options,” Colliers wrote, also finding that cost constraints are hampering new retail construction.

Still, the opportunity to capture more dollars — and ignite brand awareness or kick off a new marketing direction — appears to exist. According to recent Capital One Shopping Research, temporary retail spaces or pop-up shops pull in an estimated $80 billion in annual revenue, with that figure set to bloom to over $95 million in 2026. It should be noted that this is the high end of the estimate, and includes food trucks, independent sales, and yard sales.

Some other striking stats:

• Four-fifths (or 80%) of retailers that have opened a pop-up shop in the past considered that a successful move, and more than half (58%) say they are slated to open another.
• Nearly half (44%) of pop-up shops cost less than $5,000 to open.
• Two-thirds of retailers (66%) open up a pop-up shop with one goal being to raise brand awareness.
• Nearly the same number (63%) open up a pop-up shop to improve customer connection, and 46$ do so to introduce a new product
• Two-fifths (40%) of pop-up shops belong to brick-and-mortar retailers, 32% to e-commerce retailers, and 28% to businesses operating in both spheres.

In an April profile running down seven high-profile pop-up shops in recent memory, Retail Merchandiser Magazine signaled that the short-term format is here to stay.

"Pop-up shops have become more than just a retail trend, they’re now a strategic tool used by brands to create buzz, drive limited-time sales, and test new markets. From high-fashion collaborations to mobile food concepts, these temporary retail spaces transform passive consumers into engaged brand advocates," the magazine's Sarah Rudge wrote.