Commuters in the metropolitan D.C. area can now pick up a hot new book release or bottle of award-winning wine to pair with dinner on the way home at the Urban Pop retail plaza at the Wiehle-Reston East Metro Station in Northern Virginia. These glass jewel box pop-up shops, which host “emerging and established artisan brands,” opened last fall and feature a changing list of vendors.
As e-commerce continues to shake up the retail industry and customers turn to shopping experiences – not just goods – pop-up stores provide an avenue for retailers to test out new, interactive concepts with customers while maintaining flexibility and keeping costs low.
“More party than hard sell, this new breed of pop-ups is becoming increasingly innovative and fun – far more than the seasonal pop-ups that once prevailed,” observes The New York Times. “And they are also increasingly profitable, experts say, since consumers crave these new experiences.”
Warby Parker took a fun spin on the pop-up concept: “The company turned a school bus into a traveling eyewear shop, tricking it out with leather couches, wood paneling and even vintage books, and then took it on [a] road trip across the country.”
The physical aspect of pop-up shops is key; research credits millennials as a main driver of the trend towards spending on experiences, not just goods. The Washington Post cites a 2015 PwC survey which revealed that “millennials said some 52 percent of their holiday spending would be on experience-related purchases, compared with 39 percent for older consumers.”
Companies that can create a unique twist on the typical shopping experience can set themselves apart. Fashion, jewelry and home décor shopping website Tictail Market began its physical retail presence with holiday pop-up shops and now has a permanent home in New York City; it attracts shoppers interested in learning the story behind the work and artists from around the world. “Retailers that can figure this out – telling the brand stories – will be filling a big white space,” Christopher Brace, CEO at Syntegrate Consulting in New York, told Adweek. “Millennials are especially influencing this area because they don’t buy things, they buy stories.”
“[Specialty leasing and event experiences] allow brands to get a message in front of large volumes of people at attractive rates,” according to Mike Kelleher, vice president-specialty leasing of Federal Realty Investment Trust, in Development magazine’s summer 2016 cover story, which explores “The Rise of Experiential Retail.” “Specialty leasing for a few days, a month or an entire season can create an experience that’s not to be missed, enabling customer interaction on a big stage.”
Transforming idle shipping containers into trendy retail venues can provide built-in flexibility and portability for small businesses and established retailers. As Vinay Patel, a digital marketing strategist at Boxman Studios, told investment website Seeking Alpha, shipping containers provide appealing interchangeability, enabling a store to sell flip-flops and swimsuits in Florida in the summer before moving to Aspen to sell gloves and goggles in the winter.
Specialty leasing can provide advantages for a nimble retail company, but what does it mean for the landlord or development company? Short-term leases can make use of otherwise unoccupied space and generate fresh energy and additional foot traffic for retail spaces. Jacob Cooper, managing director of commercial real estate firm MSC Retail, told Philly.com that these agreements carry benefits and risks. There is a potential for temporary tenants to tie up space that might otherwise be leased by long-term tenants. This is in addition to the high costs of lawyer fees, insurance and other expenses, which Cooper noted can cost as much for a six-month lease as a 10-year lease.
What innovative pop-up stores have you seen in your area? Do you think this trend has more benefits or disadvantages for commercial real estate? Share your thoughts in the comments below.
Marie Ruff is Communications Senior Manager at NAIOP.