Three reasons behind the surging popularity of pop-up stores

Retail start-ups are being encouraged to consider pop-up stores as a low-cost way to promote their wares and gauge the level of interest among consumers, on the back of a new retail report.

According to a report by CB Richard Ellis, titled Retail MarketView, pop-up stores have helped fill vacant stores on prominent shopping strips, particularly in Melbourne.

Max Cookes, CBRE associate director of retail services, says growing inquiry from pop-ups has helped keep the vacancy rate on Melbourne’s prime strips at historic lows.

The overall vacancy across Melbourne’s top 10 retail strips fell to 3.5% over the second half of last year, the report reveals, with the most marked decrease on Bridge Road.

On Bridge Road, the vacancy rate fell by 2.7% after the leasing of 10 shops, four of which were tenanted by pop-up stores.

StartupSmart identifies three reasons why pop-ups are revolutionising retail:

1. Everybody wins

Cookes says pop-up shops appeal to retailers because they benefit from the low upfront cost while testing the market or clearing excess stock.

“At the same time, landlords benefit by avoiding vacancy while letting tenants try before they buy or while waiting for the right long-term lease deal or concept,” he says.

Brian Walker, managing director of The Retail Doctor Group, agrees pop-up shops are an ideal way for retailers to test the market, and “landlords love them”.

2. The “now” factor

According to Cookes, the pop-up shop concept has become popular among brands targeting the youth market, which likes the spontaneous nature of what is often regarded as a retail “event”.

Walker believes pop-ups are most effective when they are in fact planned around an event or some sort of special offering, such as a new line of clothing, but says promotion should be kept to a minimum.

“Tell your VIPs and your database customers that something exciting is happening. If you tell the world something’s coming, make sure you have something good,” he says.

“Pop-up shops do tend to have a clearance shop look. They’ve got to be quite artistic [in order to be effective]… They’re not there for a long time but for a good time.”

3. The surprise element

“A pop-up shop should appear where you wouldn’t expect it to appear… It doesn’t limit itself to classic retail thoroughfares. It’s often more effective when it’s a little quirky,” Walker says.

“The whole thing about a pop-up store, as the name implies, it that it’s visually appealing and represents the brand in a different way.”

“If they are done well, pop-up shops can be an exciting extension of a retailer’s brand.”