This is the third in a three-part series on the way our relationship to retail is changing. We’ve discussed a move towards more automation in the shopping experience and the rise of the subscription box, and today we’re tackling the concept of pop-up shops as a game changer in the retail storefront category.
It’s an annual tradition: as the weather gets colder, out come the Halloween shops. You’ve seen them: retail storefronts with big signs in bright lettering and costumes on display in the window, appearing at the beginning of October and disappearing just as quickly at the end of the month.
For years, Halloween costume stores have been taking advantage of temporary space for short-term gains, and though they may not be the trendiest of retail, they have led the way on so-called seasonal “pop-up” shops.
From fashion and entertainment (everyone from Marc Jacobs to Kanye West) to sporting goods (see Nike’s temporary tennis court), the pop-up concept has quickly become a way for brands to generate word-of-mouth buzz, take advantage of seasonal trends, and generate a return on investment without having to pay for a showroom all year round.
Take the case of ModCloth, for example. The online clothing retailer had built a loyal following of female shoppers but had never invested in a brick-and-mortar space to showcase their clothes and allow their customers to actually try on items. So after a test run in Los Angeles, they launched a two-month shop in San Francisco, where customers could browse items and work with a “personal stylist” to find the right fit and style. Then, goods were simply shipped to their door, replicating the hassle-free delivery of an online retailer.
What ModCloth did there was a perfect encapsulation of what makes pop-up shops so effective: after building up interest or goodwill from customers online or via word-of-mouth buzz, a retailer opens a temporary space that compels shoppers to visit, both to see the goods in person and to take advantage of a limited-time opportunity. It’s all the benefits of their favorite retailer plus an adding sense of uniqueness and urgency.
The growth of pop-up shops has started to transform thinking around the need for traditional retail models, like fixed showrooms, which have a high cost for sometimes low returns. With the average high-traffic retail store rent for a major retailer hovering around $50-100 per square foot, the economics can become clear quickly, especially when comparably-sized storefronts and rental spaces are available for short-term uses.
And pop-up shops may, indeed, become our new shopping reality, where we do much of our shopping online but still value the tactile experience of trying on clothes or handling items. The statistics certainly support this trend: it’s estimated that pop-up shops and one-off classes and courses accounted for $10 billion in revenue in 2014.
But does it spell the end of the retail storefront altogether? We aren’t so sure. For one, pop-up shops are inherently unpredictable and temporary by their very nature, which doesn’t reward frequent shoppers who might stroll into a retail storefront and walk out with a big ticket item. Also, pop-up shops aren’t always the best fit for customers who aren’t already familiar with the brand, because name recognition drives a lot of the engagement with these temporary stores. In that sense, a fixed-location storefront that customers pass each morning will have an edge over a temporary site that changes monthly.
Nonetheless, the pop-up shop has proven its value as a one-off brand-enhancing experience for many online-only retailers, and we’ll see the concept grow and expand as more retailers transition to solely digital operations. It proves that, when it comes to retail, consumers value not only convenience but also a unique and charming shopping experience, too.