Why Pop Up Shops?

As the weather gets colder and with the holiday season gearing up, I've been spending a lot more time in shopping malls. Since, I've noticed a change in the number of pop-up shops filling the empty store space than in past years. I called the Mall of America and learned that this year they have about 20 temporary stores plus 80 to 100 kiosks and carts, a lot more than before.

This got me to thinking, what are the benefits for a product or business if they are only going to be around for a little while? With my background, I've always thought and learned that you want to build a brand and build relationships with your customer. That it's not good enough to just make a quick profit on a short sale.

Pop-up shops, or temporary stores, is a trend gaining popularity. Businesses and renters are finding the process beneficial. Stores do not have to make a long term commitment since sales have not been great and renters are able to leave the lights on in their vacant spaces and attract new customers.

Before our recession, landlords had the upper hand, demanding lease terms of 10, 20 or 30 years. But, now malls have put more emphasis on attracting retailers who want to sign leases for a few months to a year.I did some research and found that the retail vacancy rate in the Twin Cities is 7.1 percent, according to Colliers Turley Martin Tucker, and the near future doesn't look better. In the past year, national chains such as Circuit City, Linens 'N' Things and KB Toys have gone bankrupt. Many others, including Zales jewelry, Talbots, Starbucks and Regis-owned hair salons, have shuttered hundreds of stores.

• Businesses do not have to sign a 5- or 10-year lease. It makes them a little less nervous.
• Temporary stores are less expensive for retailers because they usually just need some paint and minor adjustments instead of expensive build-outs needed at a more permanent location.
• Rent is often more affordable, too, with fewer fees and a simpler cost structure.
• Usually, they are less costly than television ads, which can run in the millions of dollars to produce and broadcast, and the stores generate similar buzz and publicity for new brands.
• With temporary shops, stores are able to create a sense of urgency in their customers.

So, how are companies changing their strategy to make a quick impact on shoppers and still build a relationship with them?

• Target and other retailers have used pop-ups to create buzz and "limited-time-only" urgency for shoppers who relish the treasure hunt. Target likes popping up in New York City, especially during Fashion Week, where it gets in and out quickly without having to pay Manhattan rental rates.
• The retailer opened 80 Toys 'R' Us Holiday Express stores in major malls around the country in October, including Southdale Center in Edina and the Mall of America. It also added smaller Express stores within 260 Babies 'R' Us stores. The company is banking that their investment in temporary stores will help its market share, end KB Toy chains and to push its close competitors, Sears and Target, into the background. Wal-Mart is the country's largest toy seller.
• Twin Cities based Becker Furniture World hopes to find an upside in the downturn too. The company has opened two liquidation centers in empty Steve & Barry locations. A Becker Furniture Liquidation Superstore opened in Burnsville Center in July and on Wednesday in Blaine's Northtown Mall. The company is buying up one-of-a-kind furniture because manufacturers and retailers are struggling through the recession. Real estate is also plentiful.
• Nike opened a pop-up store in New York for just four days for the sole purpose of selling 250 pairs of the Zoom LeBron IV NYC basketball shoes, named after the popular NBA All-Star LeBron James.
• Gap kicked off a '60s style tour, where it used a school bus as a traveling pop-up store that made appearances in Los Angeles and New York and stopped at beaches on both coasts. Instead of seats, the bus sported shelves filled with t-shirts, flip-flops, and beach hats that people bought and paid for at a cash register near the driver's seat.
• Wal-Mart adopted the concept in the Spring, when it showed its new fashion line Metro 7 in a Fashion Cabana in Miami's South Beach district, open for only two days.
  Electronics company JVC opened its pop-up store, it offered karaoke and let people film themselves using its newly launched video camera and make their own DVDs, which folks could then carry home as gifts.
• Sneaker maker Fila let people draw their own designs on a computer, which they printed on a T-shirt that shoppers could take home with them for free.

I guess retailers have clearly discovered that pop-up stores can bring brands to life and let people sample products in a great format, without much cost.