Pop-up shops aren’t about sales

October 25, 2013  |  Mira Shenker for Profit  |  Comments

A model for online retailers, new concepts and anyone else who wants exposure to shoppers without a lease

Joseph Fuda runs a sparsely appointed studio on Toronto’s Ossington Avenue strip, but on this particular Saturday afternoon, the space feels like a vibrant marketplace. At least 50 people are crammed into the narrow gallery, browsing baroque textiles, leather purses and beaded jewelry. For one week only, Canadian-born, Mumbai-based fashion designers Amrit Kumar and Mriga Kapadiya are selling their NorBlack NorWhite line at Fuda’s Oz Studios. The temporary shop gives the Indian business a chance to spread the word among the city’s style brigades in the hope of turning them into regular visitors to the company’s online boutique.

Such short-term, pop-up stores have been sprouting with growing regularity in high-traffic areas of major cities. The format, introduced about a decade ago by fashion labels seeking quick hits of intense exposure, is gaining popularity today with operators large and small. A ramen eatery popped up in a vacant shop in Vancouver’s Gastown; the Guggenheim Museum set up pop-up “labs” to host discussions of urban issues; one-night-only table-tennis clubs have appeared in London, U.K. Restaurants are giving the trend a mobile twist by using food trucks to bring their fare to different locations. A pop-up can showcase almost anything, as long as its presence is temporary—although that can mean a day or a year.

Pop-up outlets are often test-runs to gauge the viability of a permanent location, but there are many other reasons businesses are jumping on the trend. Retailers of seasonal goods see pop-ups as opportunities to grab a desirable short-term location without making the commitment to a year-round store. Existing retail chains may use a pop-up store to raise their visibility with new consumers. Online merchants find pop-ups particularly appealing because the format lets their customers touch and feel the merchandise and, as with NorBlack NorWhite, boosts exposure.

“The pop-up is a great way to be opportunistic, no matter what you sell,” says self-styled “retail prophet” Doug Stephens, based in Toronto. For instance, Tesla Motors has rented a small shop on a high-traffic strip in Brussels that’s also home to Versace, Louis Vuiton and Prada. “It’s a very small space,” says Stephens, “just the car and marketing collateral. Obviously, they had procured that space purely to make a statement: this is the company we keep.” With its small size and limited inventory, the Tesla store serves as a showroom for the brand.

Stephens believes that pop-ups are partly a response to a new consumer mindset created by the unprecedented range of products and services we can access via the Internet today. “We have a totally different frame of reference when it comes to selection and newness,” he says. “The idea that you would build a shopping centre, put 150 shops in it and not change that lineup for 10 years is insane.”

Pops-ups also closely align with the growing showrooming trend. In a recent survey of 3,000 shoppers in the U.S., U.K. and Canada, 70% said that they showroom—that is, check out products in-store and then buy them online. Large retailers are “freaking out right now over showrooming,” says Harley Finkelstein, chief platform officer at Shopify, an Ottawa-based developer of e-commerce tools. “They have massive stores with massive overhead and people are coming in, playing with [products] and then buying them elsewhere.” Rather than fearing the new shopper behaviour, Finkelstein argues chains should accept the sea change and adapt to it, perhaps by opening smaller stores intended to serve simply as showrooms.

Retail increasingly demands a multi-channel sales strategy, and pop-up stores should be part of the mix, says Finkelstein. He points out that roughly one-third of the 65,000 online merchants who use Shopify’s e-commerce platform also sell off-line, be it through a permant store, a temporary location or in a group venue like a farmer’s market.

The challenge lies in securing the retail space for a pop-up. While New York City hosts about 200 pop-ups on any given day, the trend has been slower to take hold in Canada, in part because of fewer empty storefronts to accommodate temporary tenants. As well, Canadian landlords are less open to short-term leases. Lawrence Mosselson, vice-president of retail leasing and consulting at S&H Realty Corp., says most stores are rented through personal contacts: “For an individual retailer, especially one who’s never had a bricks-and-mortar space before, it would be very difficult.”

The level of difficulty varies from city to city. Toronto, for example, offers a vacancy tax rebate to owners of commercial or industrial buildings that discourages them from settling for short-term tenants. Calgary, conversely, is embracing the pop-up trend through its Pop-up Places program, which helps to match vacant retail space, private lands and sidewalks with organizers of temporary shops and exhibits.

Some enterprising small businesses are skipping the property managers altogether. This autumn, furniture-maker JM & Sons set up shop in a retrofitted shipping container placed in a parking lot along Toronto’s Dundas Street West. A more realistic approach, though, is to hook up with an organizer of pop-up events. This spring, home-furnishings retailer West Elm partnered with design blogger Jan Halvarson to host 18 local artisans at a pop-up showcase in Vancouver. Toronto’s Danforth East Community Association has organized several rounds of pop-ups. Shopify, meanwhile, set up eight e-tailers in an empty storefront in Ottawa’s ByWard Market this summer as part of a weekend pop-up experiment called Popify.

While the pop-up movement in Canada remains largely grassroots, U.S. companies such as Brand Republic and Storefront are a forging a business niche in helping brands to find pop-up spaces. In the U.K., brand consultant Roger Wade has gone even further, creating a pop-up mall—the world’s first—out of nothing more than shipping containers. London’s Box Park, a railway yard now filled with metal-box storefronts, rents to vendors for £1,000 a week and up to £20,000 a year.

It may be some time before landlord practices and municipal bylaws catch up with changing shopper preferences, but Finkelstein feels it’s inevitable. “The future of retail is about consumer choice, and that’s different than anything we’ve ever seen,” he says. “As an SME, you need to be ready for that.”

This story originally appeared in Profit

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