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Commercial Real Estate

Pop-up Goes the Retailer

Though not new, today's re-branded pop-ups are having a moment.

“Pop” is a fun word. It can be your father, a cold drink, a tart, or even a lolly! Now “pop”—as in pop-up stores—has become the buzz word for retailers, especially the digitally native brands entering the brick-and-mortar space.

Steve Zimmerman, The Retail Connection

The goal of pop-up retail is to have a physical location to sell goods and services without a long-term commitment. Pop-up retail is nothing new, it’s just been re-branded. By the purest definition a garage sale, selling Girl Scout Cookies in front of a grocery store, or the neighborhood lemonade stand are examples of pop-up retail. Everyone remembers pop-up kiosks in malls and airports, where we all got some killer sunglasses back in the day.

Next came the store-within-a-store concept such as Sephora inside JC Penney, Starbucks inside several stores including Macy’s, Barnes & Noble, and grocery stores, as well as Samsung and Sony placing mini-stores inside Best Buy. Traditional retailers like Party City currently operate temporary stores like their Halloween City to test the market for viability for a permanent store, factoring in not only demographics and location but the added KPI of sales volume. Shelley Taylor of The Retail Connection who represents Party City says “Party City will review Halloween City sales to prove up not only new stores but potential relocations of existing stores. Historically landlords have viewed a temporary store in a negative light but now they see them as a benefit to their center due to increased traffic, immediate cash flow and opportunity for a permanent store.”

The world of retail continues to evolve, and as online retailers begin to mature their interest in brick-and-mortar stores continues to grow. The pop-up store is a great way for digitally native brands, (those companies that started as ecommerce only), to get proof-of-concept for their products and ideas without the financial commitment of a full storefront.

According to a Storefront Magazine article, the cost of setting up a pop-up shop is approximately 80% less expensive than a traditional physical retail outlet. For the retailer, this makes it easier and less of a financial risk to experiment with new revenue streams as well as introduce new products and experiences. Although the millennial generation now accounts for nearly $1.4 trillion in sales and certainly are comfortable and enjoy shopping online, these shoppers still want to see and touch items before they make purchases. A pop-up offers a great way to do just that and this type of retail real estate now represents nearly $10 billion in sales revenue, according to Inc.

Pop-up stores also offer a great way for landlord to offer a variety of choices for shoppers and thus increase traffic to their center and district. By example, Parachute—the online retailer of fine linens and bedding—recently occupied a pop-up store in the Knox District in Dallas. Bennett Bark, of The Retail Connection, represents the owners and described Parachute as the perfect tenant for the district, “Parachute will continue drive traffic but without the restraints of a long-term lease, so the owners retain the flexibility to pursue their current course for redevelopment.”

To survive in today’s environment, retailers—both traditional and digitally native brands—must continue to be nimble and adapt to the needs of their customers. Providing brick-and-mortar pop-up stores is the latest example of retailers and owners working together to meet these needs and enhance the shoppers’ experience. Given the consumer’s demand for variety, expect this trend to continue for quite some time.

Steve Zimmerman is a managing director at The Retail Connection.

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