Pop-up up retail business model
Google's holiday pop-up store showcases tech gadgets. Retailers this year are using temporary retail spaces in more creative ways.
During the Great Recession, shoppers could stroll down just about any major city block and find one, or two, trendy storefront pop-up stores. But those days are long gone. With less vacant commercial retail space available this holiday season, pop-up shops—temporary retail stores—are evolving and finding new outlets.
The vacancy decline in fact is a sign of a stabilizing economy, said Chuck Lanyard, a retail analyst for the Goldstein Group, a real estate brokerage firm.
"Retailers are feeling better about the economy. They are not as reluctant to open stores and they are leasing up, " Lanyard said. "Landlords want long-term tenants, and shoppers want to be able to go back to the same stores and know that they are there."
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Vacancy rates at U.S. regional malls and local shopping centers fell to their lowest since 2009 during the second quarter and third quarter, according to real estate research firm Reis. Lanyard expects the growth of pop-ups to slow as retail occupancies rise.
"I don't view less real estate as a decline in overall pop-ups, " said Christina Norsig, chief executive of PopUpInsider, an online exchange for temporary real estate. The pop-up concept has matured with the improving retail market, she added, and more business owners are embracing the store-within-a-store concept.
Some merchants prefer pop-ups because they can swoop into a physical space, set up shop quickly and take advantage of existing foot traffic.
"There is a need for quick merchandising, " Norsig said. Plus, she said, "not every product is ready, or able, to stand on its own."
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New York-based men's store Rothmans incorporated a "permanent pop-up store" into its business model. Co-owner Jim Giddon said featuring a different pop-up every three months or so within their larger space has helped his store reach new customers.
"It works out great because they [the pop-up retailer] get a chance to test out the market, without making a large financial investment, and we get to supplement our inventory by offering items we don't normally carry, " Giddon said. "We end up grabbing a customer that may not have walked in normally."
The store-within-a-store evolution makes sense because there's less space for pop-ups anywhere else, said Cedrik Lachance, senior analyst at Green Street Advisors, which provides real estate research for investors.
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