The hottest trend in retailing this year isn’t Zhu Zhu pets or over-the-knee boots — it’s pop-up stores. Global luxury brands, mass merchants and even small, independent designers have opened an avalanche of pop-up stores in the last 12 months to introduce new products or collections, generate buzz or motivate the ever-elusive shopper to buy. They also can be a way for a retailer to test a neighborhood before plunging head-on into an expensive real estate commitment.
But the question is whether all these pop-ups are too much of a good thing.
Observers believe the concept may be wearing thin and, in 2010, retailers might need to come up with another idea or a fresh angle for the pop-up to excite consumers. That’s key, since the main role of pop-ups is primarily to be marketing vehicles rather than drivers of significant profits and sales.
“Pop-up stores have a role in emotionalizing a brand,” said Lucian James, founder and creative director of Agenda Inc., based in New York and Paris. “We’re seeing the demise of the flagship store mentality.”
James said pop-up stores became widely accepted this year, which compelled many brands to jump on the bandwagon. He cautioned, however, that the impact of pop-up stores is losing some muscle as they proliferate — just as excitement over high-low collaborations may be waning with the torrent of launches — and predicted pop-up sales online will likely be the next expression of the concept. Already, Outnet.com offers one-off “pop-up sales,” and neimanmarcus.com and saksfifthavenue.com initiated a midday dash, a two-hour sale on regular full-price merchandise. Then there are the Internet shopping sites such as Gilt Groupe and Rue La La that are attracting increasing attention and memberships.
“The success of a pop-up store is linked to the novelty of the concept — a boutique that proposes a capsule, or monothematic, collection and is supported by a targeted communications campaign,” said Jean Bousquet, president of Cacharel. “The ideal duration of a pop-up store is six months. I don’t think this phenomenon will be successful after the recession is over. It’s extremely linked to the economic downturn and will probably lose momentum in the future once economic indicators become positive.”
Once an underground phenomenon, pop-ups sprouted in fringe neighborhoods and seemed to be an act of defiance on the part of the retailers or designers operating them. Rei Kawakubo played the role of saboteur when she unveiled her first Comme des Garçons guerrilla store in 2004 in a blighted section of the former East Berlin. Kawakubo intentionally left the 750-square-foot space raw for shock effect and to heighten the store’s impermanence.
Other brands quickly adopted her idea, and the phenomenon was born. The recession and tough retail conditions over the last year added fuel to the fire of the idea, which was eagerly embraced by both retailers and realtors. As retailers began curtailing or halting expansion plans, it has been taking landlords longer to rent space. As a result, property owners have shown a growing willingness to do short-term leases because occupied stores are easier to rent than empty ones. And for many landlords, pop-ups are now real moneymakers.
“To me it’s inconceivable that an owner would leave stores empty,” said Steve Tarter, a principal at Tarter Stats Realty in New York. “If I can keep an owner’s cash flow going for two days or two months,” it’s worth it. A few years ago, the rule of thumb for short-term rent was 50 percent of the long-term rate. “It became so popular over the last two years that the rates are basically the same as normal long-term rates,” Tarter said. “The going rate in SoHo, for example, is $1,000 a day.”
“[The rent] is almost an irrelevance,” Keith Wilson of Wilson McHardy, retail leasing agent for London’s Grosvenor Estate, which owns property in retail areas including Mayfair and Knightsbridge, said of pop-ups. “A creative landlord won’t be concerned with rental costs. Pop-up shops are an interim strategy that allows a landlord to establish a business relationship with a retailer and gives retailers an opportunity to test a market at minimum risk with an exit strategy.
If early pop-up stores were in off-the-beaten-path locations, any neighborhood is fair game today. For example, 3 East 57th Street, a prime Gold Coast address next to Bergdorf Goodman, had been occupied by Fortunoff until January, when the bankrupt retailer closed its doors. EBay leased the 3,300-square-foot space in the fall for several days as a pop-up venue. Now, Under Armour has taken over the space for a pop-up store that will operate through Jan. 24.
“The environment is conducive to executing pop-ups, with the sheer number of footsteps and the international shoppers,” said Christie Walsh, Under Armor’s senior vice president and director of retail. “Down the road, there may be a permanent opportunity [in Manhattan].” The store displays uniforms for the U.S. Olympic freestyle ski and bobsled teams, sponsored by Under Armour. “This has a very different look and feel,” Walsh said. “It doesn’t reek of pop-up. We focused on marketing elements that support telling the history of the brand. The design is very specific to the location. If a brand is not terribly accessible, like ours [Under Armour operates only four freestanding stores], a pop-up will still have cachet. Brands doing [pop-ups] day in and day out have to figure out how to trump” previous efforts. For a brand that’s underpenetrated, “it’s still going to be fresh and unexpected. We don’t want to wear out our welcome. This wasn’t set up to be a long-term solution for us.”
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