Retailers Find Plenty of Space to Pop Up
It’s that pop-up time of year again. Fall is here and so are the temporary Halloween stores. Others are already in place for Christmas.
“With the closing of Borders and other retailers, you’ve got higher quality retail space going empty, and [pop-up retailers] are going into higher rent or more upscale locations,” Michael McCarthy, associate professor of marketing at Miami University’s Farmer School of Business in Oxford, OH, told The Plain Dealer.
According to The Plain Dealer, Spirit Halloween is opening 970 pop-up locations this year, up from 850 in 2010.
Toys “R” Us, which went from 90 to 600 Express stores between 2009 and 2010, has indicated it may scale back some this year but has yet to release a number. A RetailWire poll in April found that 45 percent believed pop-locations would be “much more” or “somewhat more important” for toy sales this holiday season versus last. Eleven percent said pop-ups would be “somewhat less important.”
Key to pop-up stores is location and experts say that the closing of a large number of stores, most notably Borders and Blockbuster, is providing retailers with prime space without getting drawn into expensive, long-term leases. The question is: how long will it last?
“Pop-up stores are opportunistic,” Prof. McCarthy told The Plain Dealer. “When the economy turns around or stabilizes, I think you’ll see them go away.”
Discussion Questions
Discussion Questions: Do you think retailers, aside from Halloween and toys, will begin to make greater use of pop-up locations? Do you agree that pop-ups in the marketplace will noticeably lessen when the economy improves?
Pop up stores have worked well for special occasions and holidays. They are geared towards event marketing. By definition they are not practical for a retailer looking to engage with customers longer term.
Unfortunately, it will be some time, if ever, before retail is fully recovered. That means that temporary space will be available for pop up locations for the foreseeable future. As class A space gets rented, the pop up operators will simply move to class B space.
I’m not so sure that pop-up stores will “go away” when the economy improves (whenever that happens). It’s turning out to be a useful way to sell seasonal goods in a cost-efficient way, and stores selling everything from holiday goods to garden supplies are discovering the benefits. It’s also a great way for vendors to “take their brands to retail” in order to create some buzz and test new product concepts. Even when retail business strengthens — and the excess inventory of space starts to tail off — the idea has lasting benefits.
Pop ups are an excellent channel for retailers in good or bad times. Retail vacancy is pretty high right now so the lease opportunities are pretty juicy. The one thing I would like to see is greater connectivity between pop ups and home stores. This would provide better customer service as not all SKUs are available in the smaller store. In terms of seasonality, there really is no limit to the usefulness of pop ups, especially in touristy malls like Sawgrass Mills, Aventura Mall, Horton Plaza, South Coast Plaza etc. And what about events? Down at the Canadian National Exhibition this year, I noticed more of a retail presence with more booths catering to electronics and close outs. As for TRU, they have been successful with their pop up strategy and should continue to expand, not scale back.
I wonder if anyone is tracking the shopper response to pop-up retail. My guess is they love it.
I think there are plenty of opportunities to use pop-up retail, especially pop-ups that can change locations quickly, as an invigorating experience concept instead of just a way to add square footage cheaply in a recession.
Done well, with the right product at the right time in the right place, pop-up retail can give consumers a reason to put down the smartphone and get up off the couch to go DO SOMETHING FUN. Shopping in real life is boring without some disruption and a twist on the experience.
A great example I read recently in the trendwatching.com Retail Renaissance brief is UNIQLO, which installed a roller rink and pop-up shop under the High Line in NYC designed to stay open from July through September. Seasonal, fun and worth a visit for a memorable experience with friends. That is what shopping in real life should strive for.
I hope innovative pop-up concepts can generate investment funding as well, so some of us entrepreneurs (me included) with interesting new retail concepts can get them out in the marketplace for testing and learning!
The soft economy has certainly enabled the pop-up store phenomenon. There is so much dark retail space now, I don’t see how that will change much for several years. I think internet retail and social media will play increasingly visible roles in keeping temporary retail viable.
Pop-up stores will not lessen as the economy improves. In fact, they may even grow. The driver behind pop-up opportunism is the amount of retail space available. The United States is over stored and will continue to be for years and years to come.
The other side of the pop-up store phenomena is that they are the perfect business model for the retailer. Unlike a traditional store, pop-up stores match sales, inventory and costs. There is no Black Friday for pop-up stores. Pop-up stores are BLACK from day 1. Just compare the inventory turn in a pop-up store that is open for 60 or 90 days to that of the store that is open year round. It is multiple times more. There is no comparison.
Pop-up stores offer more than just opportunistic plays. The consumer is making use of them for far more than just “price,” as they await the economic turn-around.
They recognize the value of location (convenience), selection for specific needs, quality, store layout and appeal to their needs, not to mention the simplicity of being able to efficiently and effectively find items that meet their seasonal needs.
Pop-up stores have legs.
I’ve never really seen profit numbers from pop-up stores, but I would guess that unless they are toys or costumes, they’re probably pretty dodgy and really a brand event more than anything else, like revenue-driver.
The pop-up phenomenon reminds me of the rush to technology at retail in that all retailers feel the need to try something because everyone else is, but there isn’t necessarily a strategy in place. Many of them seem like great fun, but at what price glory?
Having said that, if executed properly, they can indeed be a really effective brand tool. How many Uniglo pop-up shots did you see before they opened? That certainly worked. So, IMO, if pop-ups stay on a line on the bottom side of the P&L sheet under “Marketing Expense,” you’ll be a lot happier.
Pop-up stores have a lot of unused potential, both seasonally (such as a pop-up back-to-school store in August) and/or based on location (such a pop-up PacSun store in a resort community during the summer). An improving economy (if such a thing ever happens) will not necessarily dampen consumer enthusiasm for pop-ups. In some respects they duplicate the “what you want, when and where you want it” nature of the internet in the physical world.
For purchase occasions where pop-up stores are engrained (like Halloween and Christmas), I imagine we’d have to see a decline if retail space becomes more occupied and rents increase. That’s simple economics.
But I also agree with others that there is a world of possibilities beyond the current pop-up stores. Look at the explosion of food trucks and farmers markets… imagine that diversity in pop-up retail. Just as on the food side, pop-ups can also serve to vet a new concept with limited capital before investing in a full store.
Good economy or bad economy, pop-up stores are a permanent part of the retail landscape. Holidays like Halloween, Christmas and Valentine’s Day are a natural fit for pop-ups. But the only real limit on this format is the brand’s creativity and innovation, e.g., enlisting pop-ups to sell limited-edition merchandise, creating pop-ups to provide edutainment activities (e.g., learning a new craft, participating in yoga classes), using pop-ups to reach new demographics in new locations (e.g., college campuses, pop-up grocers for camping enthusiasts), or putting pop-ups on wheels to take the brand on a road trip (e.g., stops at major sporting events or Spring Break beach parties).
Pop-up is one of retail’s most creative offerings, if it’s well thought out and designed to appeal to the potential location’s demographics and their lifestyles. The format’s built-in, short time frame also helps build brand excitement, both for local denizens as well as faraway consumers who learn about the offering. The short lifespan also allows the most creative brands to keep refreshing their pop-up offering to continue consumer excitement and engagement.
A lot of brands are already using pop-up locations as a marketing tactic to generate buzz. In the 2007 article below, companies like Kraft, Lexus, Motorola, Target and Nike have all launched pop-ups; Kraft actually opened a retail-store for only 3 days on Chicago’s Michigan Avenue!
Nontraditional marketing tactics just like pop-ups are critical for delivering something unexpected to consumers. These companies could go even further to employ nontraditional support tactics online, like local Facebook pages for the pop ups, listing on daily-deal sites like Groupon, and introducing mobile apps into the whole experience.
Whether the economy is strong or not, pop up locations, and nontraditional marketing tactics in general, will be a viable way for brands to generate buzz.