February 27, 2012
BrainTrust Query: The Future is Temporary – Retailing in A Pop-Up World
Through a special arrangement, presented here for discussion is a summary of a current article from the Retail Prophet Consulting blog.
The concept of pop-up retail has been around for more than a decade. Vacant, a company out of Los Angeles, is credited with pioneering the concept in North America after seeing similar concepts in Tokyo. They observed Japanese consumers lining up for hours to buy limited edition goods. Vacant further developed the concept into the current pop-up model whereby stores open for a defined period and then simply close, only to pop up later in a different location.
Until 2007, however, pop-up shops, while intriguing, were regarded largely as a novelty. The goal of most retailers remained long-term, favorable leases in locations with trusted consumer traffic levels.
The economic collapse of 2008 brought new opportunities. Landlords reeling from fallout in the commercial real estate market entertained previously unthinkable, short-term agreements for their space. From Los Angeles to the mean streets of New York, the economic meltdown spurred a brilliant series of unique and daring pop-up concepts.
Above all else, these concepts seemed to breathe new life into a retail industry that had become fat and lazy in the days leading up to the financial crisis. In a sea of sameness, these unique and fleeting pop-ups caught the attention of consumers and made retail interesting again.
Today, pop-up has become a legitimate channel strategy. Everyone from Walmart to Hermes has turned to these temporary formats to reach consumers where their full-line stores couldn’t.
Entire cities have embraced the concept of pop-up retail as a means of revitalizing urban neighborhoods. One example, Oakland California’s Pop Up Hood concept, offered six months of rent-free space to independent merchants to test out their retail concepts in designated parts of Oakland.
Technology is fueling more creative approaches. Net-A-Porter’s recent launch of its Karl Lagerfeld line, whereby the outside of the store became a living interaction point for mobile device wielding consumers, is one such recent example.
What these and other concepts point to is an historic move away from retail being solely about established patterns of consumer traffic and purchase intent based on familiarity. The new consumer is seeking surprise and excitement from retail and is in many ways returning to pre-industrial revolution roots and the concept of the travelling market.
All of it points to the need for less (permanent) commercial real estate. It’s logical to expect more retail chains to move to a mix of flagship (got to be there) locations and opportunistic, temporary installations to create excitement and capture sales. The commercial real estate professional of the future may be relied upon as much for their keen sense of guerilla marketing instinct as they are for their knowledge of the market overall.
BrainTrust
Recent Discussions
Discussion Questions
Discussion Questions: Do you agree that pop-up has evolved into a legitimate channel strategy? How do you see the pop-up concept evolving?
Poll
Pop-up stores bring vitality into the retail mall, to the event, to the show, to wherever they pop up. The key challenge is deployment.
How exactly does a pop-up retail store operate? Technology is the key. First from a POS standpoint, mobile POS should be the only option explored. Payment should be robust, but I don’t think it is necessary to take cash — too big a risk and hassle. The mobile POS should be a complete window into the chain’s supply chain.
The second key is replenishment. The little space for assortment in a pop-up must be deliciously assorted every day This means that the upstream supply chain systems must be extraordinarily responsive with plenty of back stock to fill in broken and shallow assortments.
I am not sure I would classify it as a different channel, rather a derivative or version of the current physical or “brick & mortar” channel. That being said, it seems to be a great way to take advantage of real estate availability in order to accomplish two different goals: 1. Establish the ability to take advantage of demand that may be temporary due to season, event, or other factors; 2.Create an environment where new concepts, approaches, and locations can be tried and evaluated for more permanent locations to follow.
‘Pop up’ retail is becoming a viable channel strategy. Shoppers want to be surprised and delighted. The reward of finding a unique item or deal unexpectedly is a wonderful experience. JCPenney will be trying this approach in their center store in the coming months. Another example of this evolution is the ‘shop-in-shop’ layouts being used by Apple and Miele.
Pop-Up is a legitimate strategy for some, but not all, merchants. It works particularly well for merchants who cannot afford or do not want a year-round presence in a particular location. It allows small companies to offer their wares directly to consumers without a long-term commitment to a lease. Finally, it offers retailers with large footprints a way to be constantly evolving by allowing pop ups within their stores.
I do see the pop-up retail as a legitimate channel that will take advantage of business opportunities. There have been seasonal kiosks in malls and at outlet centers for years that have been very successful.
A lawn and garden store in my area is in their second year of putting up temporary nursery outlets on vacant commercial lots (probably for very reasonable rent) in areas not serviced by their main brick & mortar location or other competitors. They must be successful, given the fact that they are “popping up” again.
I see opportunity for many different types of retailers to use pop-ups to build businesses. Being nimble can create new business!
People change to accommodate their preferences, their prejudices and points of interest. If enough consumers respond to pop-up retailing, it will prevail and large number of retailers will use pop-ups.
But if consumers are captivated in the future by yet another magnetic technological creation, pop-ups may be just another wagon in the passing parade. So let’s just watch, be flexible and stay on the cusp of change.
The classic pop-up is the Halloween store. Or, the Christmas shop. For specialty retail with a defined beginning/end date so that the shopper recognizes that the merchandise is unique/exclusive, it makes sense. I am intrigued with the Oakland, CA initiative. Love the idea of supporting entrepreneurs to test store concepts.
An emerging trend will be retailers subleasing space to specialty retail partners — placing their unique product on the floor within an established store concept — Forever 21 inside a Sears, for example. The JCP concept is much anticipated as well.
What’s new?
We have had “pop-up” retailers for eons. They were called street vendors. Or farmer’s markets. Or bazaars. Or even “peddlers.” The common strategy is to “appear” wherever consumers can be interrupted (awareness) in close proximity (convenience) with a product they either may need or want at the time (impulse).
Good grief.
Commercial real estate managers and landlords need to do a better job of accommodating pop-up shops. There are way too many vacant strip malls, but when you speak to a landlord about a pop-up shop, they still want 12-36 month leases!
This is why many pop-up shops are looking at high street/main street locations instead of traditional retail locations to create pop-up shops. In the same manner that Regus is leasing “office space” by the hour or the month, mall managers need to get with the times and realize not all retailers require a multi-year lease anymore.
Pop-up shops work best as concept stores and for showrooming. The Missoni/Target implementation in Manhattan last year was an excellent example of how a pop-up shop should be executed and Target is definitely the leader in creating and executing successful pop-up shops.
For me the least interesting element of a pop-up shop is the utilization of unleased retail space. I know that may have been one of the original drivers of the concept, but pop-up shops have moved way beyond a way for landlords to get a little better utilization.
Pop-ups have emerged as a great to offer a terrific brand experience that wouldn’t be sustainable as traditional retail operations. I’m thinking of the pop-tarts, Charmin, Wired Magazine, and Pay-Pay pop-up concepts in high traffic tourist areas.
I really like the mobile pop-up concepts that leverage social media to generate buzz. For example, the Uniqlo portable “cube” pop-ups encourage users to “stalk” them on twitter to learn about the next location (cleverly taking a page out of the food cart marketing playbook).
Lastly, I think we’re going to see a lot more uses of pop-up shops to extend retail to synergistic events and locations. Such as Zumiez pop-up shops at skateboard and snowboarding events. This trend is only going to continue as the technology makes it painless for retailers to extend their mobile POP and endless aisle programs outside of the store.
I think Bill Robinson is on the right track. It’s all about the execution. Does the cost and investment needed to support the pop-up offset the revenue/profit derived? Not every retailer has a mobile POS solution that can flex to a pop-up or the logistical expertise to handle multiple deliveries per week to a small box format.
A small box format to get into retail locations that the big boxes hold is a strategy. Pop-up stores then become marketing.
I don’t see pop-ups as a separate channel, but as one of many brick and mortar format options that retailers and brands are exercising. As for evolution, pop-ups used to be one-off, loss leader marketing stunts; now they are viable, scale-building weapons that retailers are deploying at will and often without warning. On that last point, gone are the days of retailers declaring start and end dates or phase roll-out plans in advance. They are reserving the right to change their plans, selectively parlay elements that worked or quietly fold concepts without fanfare.
Pop-up stores are the perfect solution for too much retail space and too skewed seasonality. Any retailer that does not cut their everyday square footage and increase their seasonal square footage is missing a big profit opportunity. If the month to month revenue can not carry the month to month overhead, eliminate it. Then increase the overhead when the revenue expands.
Doug Stephens makes great points, as usual. Pop-up or temporary, campaign-based retail locations not only provide flexibility and agility for the retailer, but also create a more powerful sense of consumer engagement. Pop-ups can create a sense of exclusivity or “get it while you can” urgency. They also allow for easier testing of product lines and getting quick results on marketing campaigns and test strategies.
In addition to physical pop-ups, it will be interesting to see how retailers may test e-commerce pop-ups or “micro-sites” online.
New creativity attracts. This can develop in to a channel to test new products or lines on customers. Retailers might be prudent to study this; but not waste too much time in the boardroom or risk getting left at the gate by others more aggressive.
Some of these stores can actually become permanent if they do well all year. I think it is a lower-risk solution to occupying some of the vacant retail space in the world. I don’t really see this as another channel, however. This is a temporary store scenario. There are plenty of short-lived concept stores that never intended to be “pop-up” stores, however, that’s what they ended up being.
Adrian Weidmann is correct in saying, “Shoppers want to be surprised and delighted.” The novelty and unexpectedness of the pop-up store is its strongest advantage. Customers enjoy getting exclusive deals that their friends may be missing out on — because of this cachet, these experiences create buzz, particularly via social media.
And the tendency for traditional e-tailers like Amazon, eBay, PayPal and Android to install pop-up stores only confirms the viability of the physical, face-to-face brand experience. It’s simply worth the investment for these companies, as it is for store-within-a-store formats like Apple booths at Target.
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Pop-up stores bring vitality into the retail mall, to the event, to the show, to wherever they pop up. The key challenge is deployment.
How exactly does a pop-up retail store operate? Technology is the key. First from a POS standpoint, mobile POS should be the only option explored. Payment should be robust, but I don’t think it is necessary to take cash — too big a risk and hassle. The mobile POS should be a complete window into the chain’s supply chain.
The second key is replenishment. The little space for assortment in a pop-up must be deliciously assorted every day This means that the upstream supply chain systems must be extraordinarily responsive with plenty of back stock to fill in broken and shallow assortments.
I am not sure I would classify it as a different channel, rather a derivative or version of the current physical or “brick & mortar” channel. That being said, it seems to be a great way to take advantage of real estate availability in order to accomplish two different goals: 1. Establish the ability to take advantage of demand that may be temporary due to season, event, or other factors; 2.Create an environment where new concepts, approaches, and locations can be tried and evaluated for more permanent locations to follow.
‘Pop up’ retail is becoming a viable channel strategy. Shoppers want to be surprised and delighted. The reward of finding a unique item or deal unexpectedly is a wonderful experience. JCPenney will be trying this approach in their center store in the coming months. Another example of this evolution is the ‘shop-in-shop’ layouts being used by Apple and Miele.
Pop-Up is a legitimate strategy for some, but not all, merchants. It works particularly well for merchants who cannot afford or do not want a year-round presence in a particular location. It allows small companies to offer their wares directly to consumers without a long-term commitment to a lease. Finally, it offers retailers with large footprints a way to be constantly evolving by allowing pop ups within their stores.
I do see the pop-up retail as a legitimate channel that will take advantage of business opportunities. There have been seasonal kiosks in malls and at outlet centers for years that have been very successful.
A lawn and garden store in my area is in their second year of putting up temporary nursery outlets on vacant commercial lots (probably for very reasonable rent) in areas not serviced by their main brick & mortar location or other competitors. They must be successful, given the fact that they are “popping up” again.
I see opportunity for many different types of retailers to use pop-ups to build businesses. Being nimble can create new business!
People change to accommodate their preferences, their prejudices and points of interest. If enough consumers respond to pop-up retailing, it will prevail and large number of retailers will use pop-ups.
But if consumers are captivated in the future by yet another magnetic technological creation, pop-ups may be just another wagon in the passing parade. So let’s just watch, be flexible and stay on the cusp of change.
The classic pop-up is the Halloween store. Or, the Christmas shop. For specialty retail with a defined beginning/end date so that the shopper recognizes that the merchandise is unique/exclusive, it makes sense. I am intrigued with the Oakland, CA initiative. Love the idea of supporting entrepreneurs to test store concepts.
An emerging trend will be retailers subleasing space to specialty retail partners — placing their unique product on the floor within an established store concept — Forever 21 inside a Sears, for example. The JCP concept is much anticipated as well.
What’s new?
We have had “pop-up” retailers for eons. They were called street vendors. Or farmer’s markets. Or bazaars. Or even “peddlers.” The common strategy is to “appear” wherever consumers can be interrupted (awareness) in close proximity (convenience) with a product they either may need or want at the time (impulse).
Good grief.
Commercial real estate managers and landlords need to do a better job of accommodating pop-up shops. There are way too many vacant strip malls, but when you speak to a landlord about a pop-up shop, they still want 12-36 month leases!
This is why many pop-up shops are looking at high street/main street locations instead of traditional retail locations to create pop-up shops. In the same manner that Regus is leasing “office space” by the hour or the month, mall managers need to get with the times and realize not all retailers require a multi-year lease anymore.
Pop-up shops work best as concept stores and for showrooming. The Missoni/Target implementation in Manhattan last year was an excellent example of how a pop-up shop should be executed and Target is definitely the leader in creating and executing successful pop-up shops.
For me the least interesting element of a pop-up shop is the utilization of unleased retail space. I know that may have been one of the original drivers of the concept, but pop-up shops have moved way beyond a way for landlords to get a little better utilization.
Pop-ups have emerged as a great to offer a terrific brand experience that wouldn’t be sustainable as traditional retail operations. I’m thinking of the pop-tarts, Charmin, Wired Magazine, and Pay-Pay pop-up concepts in high traffic tourist areas.
I really like the mobile pop-up concepts that leverage social media to generate buzz. For example, the Uniqlo portable “cube” pop-ups encourage users to “stalk” them on twitter to learn about the next location (cleverly taking a page out of the food cart marketing playbook).
Lastly, I think we’re going to see a lot more uses of pop-up shops to extend retail to synergistic events and locations. Such as Zumiez pop-up shops at skateboard and snowboarding events. This trend is only going to continue as the technology makes it painless for retailers to extend their mobile POP and endless aisle programs outside of the store.
I think Bill Robinson is on the right track. It’s all about the execution. Does the cost and investment needed to support the pop-up offset the revenue/profit derived? Not every retailer has a mobile POS solution that can flex to a pop-up or the logistical expertise to handle multiple deliveries per week to a small box format.
A small box format to get into retail locations that the big boxes hold is a strategy. Pop-up stores then become marketing.
I don’t see pop-ups as a separate channel, but as one of many brick and mortar format options that retailers and brands are exercising. As for evolution, pop-ups used to be one-off, loss leader marketing stunts; now they are viable, scale-building weapons that retailers are deploying at will and often without warning. On that last point, gone are the days of retailers declaring start and end dates or phase roll-out plans in advance. They are reserving the right to change their plans, selectively parlay elements that worked or quietly fold concepts without fanfare.
Pop-up stores are the perfect solution for too much retail space and too skewed seasonality. Any retailer that does not cut their everyday square footage and increase their seasonal square footage is missing a big profit opportunity. If the month to month revenue can not carry the month to month overhead, eliminate it. Then increase the overhead when the revenue expands.
Doug Stephens makes great points, as usual. Pop-up or temporary, campaign-based retail locations not only provide flexibility and agility for the retailer, but also create a more powerful sense of consumer engagement. Pop-ups can create a sense of exclusivity or “get it while you can” urgency. They also allow for easier testing of product lines and getting quick results on marketing campaigns and test strategies.
In addition to physical pop-ups, it will be interesting to see how retailers may test e-commerce pop-ups or “micro-sites” online.
New creativity attracts. This can develop in to a channel to test new products or lines on customers. Retailers might be prudent to study this; but not waste too much time in the boardroom or risk getting left at the gate by others more aggressive.
Some of these stores can actually become permanent if they do well all year. I think it is a lower-risk solution to occupying some of the vacant retail space in the world. I don’t really see this as another channel, however. This is a temporary store scenario. There are plenty of short-lived concept stores that never intended to be “pop-up” stores, however, that’s what they ended up being.
Adrian Weidmann is correct in saying, “Shoppers want to be surprised and delighted.” The novelty and unexpectedness of the pop-up store is its strongest advantage. Customers enjoy getting exclusive deals that their friends may be missing out on — because of this cachet, these experiences create buzz, particularly via social media.
And the tendency for traditional e-tailers like Amazon, eBay, PayPal and Android to install pop-up stores only confirms the viability of the physical, face-to-face brand experience. It’s simply worth the investment for these companies, as it is for store-within-a-store formats like Apple booths at Target.