Pop-up stores keep popping up; They’re not just for Halloween

by Dan Rafter

Seem like there’s a Halloween pop-up store — open in September, closed by early November — in every strip center in your town? You’re probably wrong. But not by as much as you’d think.

Halloween pop-up stores have become big business. Business research firm IBISWorld reported that operators opened 1,706 Halloween pop-up stores across the United States last year. That’s an increase of 30 percent from four years earlier. Spirit Halloween, one of the biggest operators of these shops, is running more than 1,100 locations in the United States and Canada this year.

But here’s the most surprising part: Pop-ups aren’t just for Halloween, or for Christmas. Many retailers open these temporary retail locations to promote new products or services.

A good example? Shorenstein Properties LLC earlier this year signed a pair of these short-term retail leases at Minneapolis City Center, a 1.5-million-square-foot mixed-use property in downtown Minneapolis: The Elixery, an artisan cosmetics retailer, and Indulge & Bloom, a floral design and gift store that has already operated in Minneapolis for 15 years.

Earlier this year, Ronnie Ragoff, senior vice president at Shorenstein, told Midwest Real Estate News that such pop-up leases will continue to grow in popularity as more retailers seek less expensive ways to test out unproven products, concepts or locations.

“For us, it’s a way to allow artisans the opportunity to come into a center and show their wares,” Ragoff said back in February. “Some might not have been able to do that in the past. They might not have the money to sign a long-term lease. These short-term leases also provide additional activity in a center that we are trying to transform. It’s an opportunity, too, for our tenants at the center to have exposure to local artisans.”

What’s behind the surge in pop-up shops? Joanne Podell, vice chairman of Cushman & Wakefield in retail-clogged New York City, said that pop-up shops come with a number of advantages for landlords.

It’s true that landlords would rather sign long-term leases for their empty storefronts. But a pop-up store at least provides an influx of temporary cash. And having a pop-up store operating in a location might make it easier for landlords to eventually rent that space to a long-term client.

“Having a store open and operating, having people walking in and out of the store, can be very helpful when landlords are trying to lease a store,” Podell said. “For a broker or potential tenant to walk into a dark, closed store, that is not as exciting or inviting.”

There are potential pitfalls with pop-up stores, too. They simply aren’t good fits for every retail location.

Podell points to first-floor retail space located in high-end office buildings. Landlords might not want to set up a pop-up store in such storefronts, Podell said.

“You don’t want a junky store in the ground floor of a beautiful office building,” Podell said.

Podell said that she has during the last few months received inquiries from overseas clients about the potential of pop-up stores. These clients aren’t sure if they can succeed in business in the United States. Opening a temporary pop-up store gives them the opportunity to discover if their business can survive here.

Expect more pop-up stores — of greater variety — to open in the coming years. Podell cites the National Basketball Association. During its yearly draft in New York City, the league opens a pop-up shop to sell branded merchandise. Several years ago, retail giant Target opened its own temporary pop-up shop in Times Square to promote new products.

“If an existing retailer wants to open a pop-up store for some introductory purpose, it has to be tied to a new product or timed for a specific launch,” Podell said. “It has to be in a well-traficked area. You need a lot of foot traffic. It’s a tougher concept to pull off than you might think.”

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