Are Pop-Ups a Permanent Fixture in Retailing?

Discussion
Jun 05, 2013

A rash of pop-up stores have opened in recent years to fill in the darkened spaces that were created during the recent recession. But many market observers don’t see the trend going away, even in better times.

An article on Knowledge@Wharton, "Are Pop-up Stores Here to Stay?," detailed how various parties across retail are benefiting from the emergence of a wide variety of pop-up stores.

For landlords, pop-ups generally pay less than market rate but they do offer some rent for a brief period when a spot is empty. Filling vacancies is expected to remain an ongoing challenge, and a successful draw for a pop-up may attract a full-time tenant. The arrival of brokers and other build-out specialists has also eased the pop-up process for landlords.

For shopping centers and permanent stores, a pop-up can create excitement and a sense of urgency that can drive traffic. Wharton marketing professor Barbara Kahn said the time limit of pop-ups works similarly to the way demand builds around a luxury item.

"If too many people wear it, it’s not a luxury anymore," she told Knowledge@Wharton. "There’s a paradox if you sell too much of something. Perhaps that is some of what’s going on. It’s a way to make it exclusive and special because of the time period."

Finally, for those outside Halloween stores, doing the pop-up is said to be less about making money than building awareness or testing an idea. Target has particularly earned praise for creating buzz through its many start-ups over the last decade. But cosmetic and toy companies, airlines, restaurants, non-profits and others are also experimenting with pop-ups to test initiatives or garner publicity.

A pop-up of merchandise honoring the U.K. boy band, One Direction, is nearing the end of a three-week run in Tempe, AZ, representing the twenty-second city where the pop-up has landed across the globe. Several online retailers are also increasingly using pop-ups to physically bond with shoppers.

"I think it is a wonderful vehicle for small businesses to use to build their business and sample their business, meet consumers that want to be long-term customers," Christina Norsig, founder of PopUpInsider, a national online exchange that connects potential pop-up retailers with landlords, told The News-Observer.

Are pop-up stores here to stay at retail or a side-effect of economic times? What are the keys to launching and operating a successful pop-up?

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16 Comments on "Are Pop-Ups a Permanent Fixture in Retailing?"


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Mark Heckman
Guest
8 years 11 months ago
A good friend of mine has a frozen yogurt franchise in the Midwest. Given the very slow sales and traffic in his stores during the winter months, I have to believe he wished his leases allowed for “pop-up” operations, during the months and seasons his product is in demand as opposed to full time operations! To that point, I do believe that retailers who have very seasonal or holiday oriented products will continue to thrive especially as some much retail space is painfully vacant and available for cheap rates. For those that operate these stores, everything they do is compressed. Marketing, advertising, hiring, etc. Accordingly, they must have a well-thought out plan to maximize their limited presence. Intrusive, bodacious signage is a very common practice, but in some cases these pop ups, knowing they will be popping up again next year, may want to consider online and mail-order services during the months their retail operation is not open. Email blasts, customer databases, and an opportunity to sell via online could make sense for some of… Read more »
Roger Saunders
Guest
8 years 11 months ago

Well run pop-ups provide the consumer with a sense of adventure and treasure hunting. They fill a unique niche.

And, with the continued excess real estate available, the landlords will continue to welcome these players. Chains like the Dollar Stores and Big Lots have taken advantage of these opportunity locations. Pop-up stores are wise to follow a similar path.

Ian Percy
Guest
8 years 11 months ago

I sure hope they’re here to stay. In our City Possibilities initiative we’ve found that almost all cities are looking for a way to promote entrepreneurism and to attract small businesses. Many are setting up city-sponsored Incubators and/or Accelerators to help people get into business. My suggestion is that a city keep an inventory of small empty spaces like this where people could launch and refine their business idea without having to sign their life away.

Far too many cities still have an “every man for himself” mentality and have failed to see how integrated every component of a city truly is. A city is one intertwined living organism. As so many have said, if we can save our cities we can save the world.

Dick Seesel
Guest
8 years 11 months ago

The pop-up store may have started as a response to vacant space, but it has evolved into a legitimate strategy. It allows brands to test new design concepts and merchandising strategies without the commitment of a long-term lease—and it provides a laboratory of results that can be rolled out to other stores. And, as the article points out, it’s a great way to create “buzz,” along the same lines as the short-duration designer goods inside Target, H&M and Kohl’s recently.

Brian Numainville
Guest
8 years 11 months ago

Pop-up stores are here to stay. They fill a unique niche opportunity to brand build and advertise for major brands to small retailers, as well as provide revenue for the landlord. And it isn’t limited to just the Halloween variety of stores, but really can be about most anything. Plus, the use of pop-up retailing might even create an expectation of “repeat pop-ups” for certain retailers on regular intervals.

Ben Ball
Guest
8 years 11 months ago

Call it “portable retailing” and throw in kiosks, food trucks/carts and a host of other manifestations that are “popping up.” It is a very effective approach to fishing where the fish are—and it’s not going away.

Start with incremental availability, add in market location and timing flexibility, then toss on lower capital costs and potentially lower space costs. Any CFO can add that up to be a winner.

Dan Raftery
Guest
8 years 11 months ago

While the large inventory of vacant stores may have been the catalist for pop-up stores, the many creative ways they have been used has made them a viable retail experience. I expect them to be around for quite awhile.

Tony Orlando
Guest
8 years 11 months ago

This has been going on forever, starting with street vendors, and folks selling flowers, ribs, and fireworks on every street corner. Some cities have cracked down on them, and hence the pop-ups in the malls, and strip plazas gaining strength.

As long as there are folks who want to be business owners, and can work hard to do this, than it will be a part of Americana for years to come. Many will fail, but others will learn from this, and start growing their businesses, and hiring others, which is what we need (JOBS). Good for them!

Ed Rosenbaum
Guest
8 years 11 months ago

I agree with the comments posted and will add that I see pop-ups as welcome to the landlords with vacant space. Sure, pop-ups may pay a lower rent for short periods. But the rent paid goes to salaries and overhead, or CAM that would otherwise come from profits.

Ed Dunn
Guest
8 years 11 months ago

Some landlords will have to get over the fact the commercial real estate boom has gone and will not come back.

As Ian Percy, it is incumbent on a community to create an area for pop-up stores to welcome both fresh storefronts as well as start-up retailers in their area to spur activity.

This is no longer the 1900s—no one wants to take the risk of a multi-year lease on large square footage only to be showroomed or compete with a drop-shipping kiosk right down the street.

Landlords need to make their commercial space flexible to accommodate pop-up shops and realize pop-ups are going to be the norm, not the exception from this point on.

James Tenser
Guest
8 years 11 months ago
The state of the pop-up store was one of several fascinating topics addressed at the recent ReCON conference (ICSC) in Las Vegas. I was privileged to participate on a panel which included Daniella Yacobovsky, a co-founder of BaubleBar.com, an innovative online jewelry seller. Her firm has deployed the pop-up strategy twice in Manhattan with very good success. She indicated that more will come in other selected markets. BaubleBar has used temporarily vacant retail spaces to operate stores open between 6 and 12 weeks. Typically the rents paid are “found money” to the property owners, who may anticipate permanent tenants to occupy the spaces months later. For this online retailer, the physical location is an opportunity to attract and capture new loyals, showcase product trends, create an event atmosphere, and sell through on merchandise that cannot be easily replicated by competitors. We panelists asked the audience (all retail real estate professionals) whether they detect an emerging market for short-term, pop-up leases. Their responses (an unscientific sample, to be sure) suggested to me that the pop-up business… Read more »
Martin Mehalchin
Guest
Martin Mehalchin
8 years 11 months ago

In this hyper competitive era, agility is key for retailers. Pop-ups are a great way to test new concepts or gain quick access to new markets; they are here to stay.

John Boccuzzi, Jr.
Guest
John Boccuzzi, Jr.
8 years 11 months ago

Pop-ups are hear to stay. Twitter and other social media platforms have trained consumers to look at things in short segments (140 characters in Twitter’s case). In my opinion this trend of short segments has spilled over to retail and restaurants. Consumers want what’s hot, new and fresh and then for the most part they are gone. Pop-ups are a perfect way to satisfy the demand for new and fresh.

Pop-ups also serve as a great way to test concepts before committing long term. This works for hard goods as well as services and restaurants.

I could see Best Buy taking a block of their huge store format and converting it into 2 to 3 pop-up stores. Best Buy benefits by making more per square foot through rent. Store traffic increase and PR including social conversations about the concept and what’s popping up next.

I hope Best Buy runs with this idea.

Gene Detroyer
Guest
8 years 11 months ago

Pop-up stores give retailers the opportunity to match overhead with sales. It is that simple and as more retailers experience this, the more pop-ups we will see. Goodbye Black Friday.

Karen S. Herman
Guest
8 years 11 months ago
A recent report from Bloomberg explains the meteoric growth of pop-up retail with these statistics, “Pop-up Retail. Zero dollar industry in 2003, an $8 billion dollar industry today.” Why? pop-up retail is a smartly targeted strategy that fulfills a specific marketing objective and delivers immediately measurable results. Pop-up retail works for luxury brands, as Chanel has demonstrated very nicely with pop-up beauty boutiques, nail bars and flower stalls to showcase flowers featured in their perfumes. Pop-up retail works for large retailers, too, with The Target pop-up in Grand Central as a great example. Pop-up retail also works for redevelopment and has been adopted as a business model for economic development centers in the U.S. and around the world. Popup Britain is a brilliant example. Strong conceptual design, a specific marketing objective such as a flash sale, new product launch, seasonal store, or exclusive sale, and a detailed multi-channel marketing campaign are some of the factors that contribute to a successful pop-up. The increase of short-term leasing options in commercial real estate has also been a… Read more »
Tristan Pollock
Guest
Tristan Pollock
8 years 11 months ago

Pop-up shops are here to stay. Whether that’s under the current name (pop-up shop), past names (trunk show, temp store), or a new one. Short-term retail has never been anything new, and now it has become an essential part in a multi-channel retailer’s playbook and one of the few ways to provide an experience that outmatches online convenience. There will always be a need in making unused, underutilized space more accessible.

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