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Pop goes the shop.

This story first appeared in the December 21, 2009 issue of WWD. Subscribe Today.

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.”

 

“Pop-up stores work if they reflect the brand, from merchandise to decor to location,” said Ranier Evers, founder of trends firm Trendwatching.com. “They need to be an integral part of a brand’s strategy, campaign and feel. They can be profitable, but in most cases, are more about marketing.”

Nor is the phenomenon expected to wane once the economy picks up, Evers said. “Because it’s tied in with the experience and transient trend, it will continue to grow. Mature consumer societies will continue to see an abundance of [products,] which makes the fleeting nature of the pop-up shop an appealing alternative. As long as a pop-up store doesn’t become a fixture, it’s OK. Obviously, the less time it’s around, the more exclusive it seems.”

Last year, Rei Kawakubo collaborated with Louis Vuitton on a limited edition handbag collection that was sold exclusively at a pop-up shop in Tokyo’s trendy Aoyama district. The store, which had a three-month life span, was designed in keeping with Comme des Garçons’ spare aesthetic. Kawakubo will return to the pop-up well again this summer when she introduces Comme des Garçons’ Black collection with 10 units worldwide.

A.F. Vandevorst seems determined to uphold the underground mantle with a rollout of guerrilla stores that began Thursday. The Belgian designer’s first pop-up shop will operate through March 31 in an as-yet-unidentified Antwerp location. Additional stores subsequently will launch in locations around the world. Vandevorst’s main clothing and accessories collections will be featured along with the designer’s new affordable line, A Friend, as well as books and design objects.

Gucci Icon-Temporary pop-up store concept was developed to showcase 18 exclusive sneaker styles in the Gucci Icon-Temporary sneaker collection, as well as a limited edition sneaker style designed by Mark Ronson. The first pop-up shop bowed on Oct. 24 at 43 Crosby Street in New York’s SoHo for two weeks. On Dec. 1, the second installment opened for two weeks in Miami’s Design District, and other cities are on the circuit.

“Pop-up stores have opened up a new and focused window in retailing that is highly targeted in terms of product, location and audience, and simultaneously provides a communications opportunity at a time when driving traffic to stores and creating interest is so important,” said a Gucci spokesman. “The Gucci Icon-Temporary store is neither a pure marketing nor a pure commercial exercise. It’s a blend of the two. Therefore, success is determined by outputs, both in terms of sales and the echo it creates in the marketplace. The results achieved following the first opening in New York have met our goals and have created a strong momentum for the next stops for the pop-up in Miami.”

Since 2002, Target has launched more than a dozen pop-up concepts. “We credit ourselves with pioneering [pop-ups],” said Joshua Thomas, a spokesman for Target. “Each pop-up has a new layer to it. The Target Bodega in New York City [in 2008] had four different locations. Luella Bartley’s pop-up shop was a double-decker bus store. They’ve been extremely successful. Pop-ups are primarily a buzz marketing tool.”

To introduce Isaac Mizrahi’s fashion collection for women, the mass chain opened a 1,500-square-foot pop-up in Rockefeller Center. For Christmas one year, it tied a 220-foot barge with bull’s-eye-shaped bows to a pier in the Hudson River. Target in September turned a town house at 54 Crosby Street in SoHo into a pop-up shop to promote its Anna Sui for Target Designer Collaborations launch. Rooms in the town house were decorated to reflect the taste of the four lead characters on “Gossip Girl,” which inspired Sui’s collection. Target To-Go, the most recent pop-up incarnation, had a brief run in December at Gansevoort and Washington Streets at the entrance to the High Line. Products, including home items, electronics, toys, jewelry and limited pieces of Rodarte for Go International, were listed by number on a menu. Consumers placed their orders and paid at one window, then went to the next window to pick up their purchases, fully gift wrapped.

Pop-ups sometimes appear within existing stores, an arrangement that exposes customers to a new visiting brand and gives the host store a different point of view. That was the idea behind DecadesTwo’s recent pop-up shop at Kiki de Montparnasse on Greene Street in New York’s SoHo. Japan Brand, a holiday pop-up shop at Felissimo’s 10 West 56th Street flagship from Nov. 23 to Dec. 24, offers 400 artisan products from 30 regions in Japan. The items, curated by Felissimo, range in price from $8 for Awaji Island’s incense to $100,000 for a limited edition series of Alexander Gelman-designed chess sets made of lacquer, silver plating and gold.

Roger Vivier’s pop-up store inside 10 Corso Como’s shopping gallery in Milan presented an “added value because 10 Corso Como is one of the most important concept stores in the world,” said Sabine Brunner, general manager of Vivier. “Setting up a pop-up store at 10 Corso Como is a bit like having an art exhibition. We re-created our ‘salle d’argent,’ or Parisian-style room, which is eclectic, refined and particular and displays 10 original collages by Mr. Vivier alongside our accessories collection. The opportunity to present the Vivier collection exclusively in a unique setting seemed positive and profitable for both [Vivier and 10 Corso Como]. It is, however, an exception to our retail policy. We normally open flagships, such as the ones in Taipei and Osaka that bowed this year, while a Miami flagship will open in December, or we do shop-in-shops like the recent opening in Harrods.”

Sometimes there’s a consignment arrangement between the pop-up shop and host store, and at other times, the larger store may receive a percentage of sales.

One of the goals of pop-up shops is usually to generate buzz. Part of the draw for consumers is the aura of exclusivity that surrounds pop-ups. However, critics of the genre warn pop-ups are in danger of becoming less effective as they reach critical mass. Also, most of today’s pop-up stores are more widely advertised than ever, whereas in the past, word of mouth spread virally.

“It needs to be used strategically and not overused,” said Ilaria Alber-Glanstaetten, ceo of Provenance, a strategic and creative marketing agency in London. “Pop-up shops can work for luxury retailers. With a brand like Hermès that’s so traditional, it’s a really interesting to use a pop-up store. [The brand] is so classic and traditional, yet at the same time, has a sense of irony, and a pop-up store can bring that to life. Hermès opened a pop-up scarf store in Liberty in London in the fall. Here was this brand that everyone holds up as the most pure example of a luxury brand, doing something off the beaten path.”

“It was a chance for us to reach a different audience with our concept,” Sean Dixon, managing director of Richard James, said of the pop-up shop the Savile Row tailor opened for two weeks in London’s financial district in May. “The store has to be fairly impactful. You can have a bit more fun with it and be a bit more creative, and it doesn’t have to be too slick. The costs of setting up the shop was 10 percent of our overall turnover.”

Dixon said the recession has made the phenomenon of pop-up shops possible. “Lots of very expensive retail properties are empty,” he said, adding the cost of renting the space was minimal. “It was important [to the landlord] that the shop was seen working. The key is to have a fairly forward-thinking and sympathetic landlord.”

While many landlords hope to raise the rent on a temporary space once a permanent tenant is found, retailers do occasionally strike a deal and stay. Jodi Arnold will convert the pop-up shop she unveiled in October at 5 University Place and 10th Street in New York into a permanent store after successfully previewing her fall collection there. Besides selling her collection, which was freshened each week with new deliveries, Arnold has been holding events at the pop-up shop after normal retail hours, ranging from VIP evenings to art exhibits. For example, an artist from Uruguay who is collaborating with Arnold on her spring collection had his work displayed at the shop.

Azzaro, which opened a pop-up store on London’s Mount Street for six weeks earlier this year, liked the neighborhood enough to relocate to a permanent space on the street in February. The performance of the pop-up shop helped convince Azzaro’s board to launch the brand in the U.K.

Encouraged by brisk business at its SoHo pop-up shop at 134 Spring Street in New York, The Limited is turning a four-day limited engagement in October into a longer run and will operate the store through the end of this month. Sales weren’t disclosed, but were high enough to persuade the company to extend the life of the 3,400-square-foot shop. Brokers said asking rents on Spring Street have dropped by about 25 percent to $300 a square foot since the market peaked two years ago. If The Limited wants to make the store permanent, it may be too late: Reportedly, the landlord has another tenant lined up and has asked The Limited to vacate after Dec. 28.

“Since this is the first time The Limited has engaged in a pop-up concept and its first time in the Manhattan market in 10 years, we were interested to discover the reaction of consumers to the brand and collection,” said Linda Heasely, chief executive officer of The Limited. “It is very much about letting one of the most important markets in the world — New York City — know that The Limited is still alive and better than ever as the new Limited.”

 

 

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