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Retail Pops

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The idea of a smart retailer grabbing some temporary space to clear excess inventory is hardly new. It is “pop-up” retail at its core – usually coinciding with the promise of a robust holiday shopping season or the need to boost fourth-quarter sales.

While large retail chains like Toys “R” Us have rolled out pop-ups nationally to boost their footprint during peak sales periods, others are adopting the concept specifically as a means to introduce and elevate their brands or target and test merchandise to distinct groups of consumers.

Whatever the impetus, clearly, the notion of the pop-up seems to be one that is gaining increasing traction.

“This isn’t seasonal anymore … I’m booked out all the way through [2011],” says Christina Norsig, founder and CEO of PopUpInsider.com, a New York City-based service that matches retailers with landlords seeking to fill vacant space. “These are individuals, companies or publishers that are looking for temporary space for all types of ideas.”

Trendwatching.com, an independent consumer trend firm, credits itself with coining the term “pop-up retail” in the early 2000s when marketers sought ways to get around expensive real estate. Pop-up stores can dot the retail landscape anywhere from a few days to months — fueled today in part by the glut of vacant commercial real estate the past few years.

Testing the waters
One Norsig client is French luxury home fragrance company Lampe Berger. It opened its first pop-up store on Manhattan’s trendy Upper East Side for a month at the end of 2010, occupying a vacant storefront property. Lampe Berger USA, headquartered in Somerset, N.J., saw the pop-up as an opportunity “to work on our presence in Manhattan,” says vice president of marketing and sales Cherry Robinson.

Lampe Berger markets its home fragrance systems worldwide in boutiques and via the Internet. The pop-up store was designed to bring the experience directly to a certain class of high-end consumers the company was looking to reach, Robinson says.

“We felt it would be a wonderful test for the organization to see, going forward, how we could play that out,” she says. “The situation that we have in Manhattan, and the location, we would love to see that replicated in other areas.”

The Manhattan pop-up had a larger space than Lampe Berger boutiques and included couches, carpeting and other fixtures to create a relaxing atmosphere. Additionally, Lampe Berger presented the complete range of its fragrance compositions and signature lamps for customers to experience.

Robinson says sales weren’t the big consideration in opening the store, but rather tapping into the imaginations of intrigued potential consumers.

“Our capture rate has been wonderful,” she says. “It’s a process of discovery because we aren’t as well-known here and so people are intrigued and interested and they want to know the story and they stick around. The sales have been greater than we thought we were going to get.”

Chains move aggressively
Companies like Lampe Berger represent one end of the spectrum for pop-ups, but the opportunity has not escaped the attention of the large chains.

In 2003, Target opened a pop-up in Manhattan’s Rockefeller Center to promote a new women’s clothing line, and later operated a temporary floating store on the Hudson River. Toys “R” Us went a long way to cementing the pop-up trend when it announced the opening of some 600 temporary Toys “R” Us Express stores in vacant shopping center space nationally for the 2010 holiday shopping season. The rollout added 2.4 million sq. ft. of selling space to the chain’s 587 permanent stores. The company hired some 10,000 associates nationwide to staff the pop-up stores, in addition to its traditional holiday workforce expansion for its full-size stores.

With vacant domestic retail space estimated at 11 percent by global real estate specialist Collier International, chains are moving aggressively with their temporary stores.

“In light of the numerous store closings the past two years, and in light of vacancies that the landlords have been incurring, there seems to be a lot more pop-ups because people realize they can serve multiple purposes,” says Richard Hauer, managing director at BDO Consulting, a New York firm that provides business restructuring and other legal and risk management services to retailers and corporations.

In the case of Toys “R” Us, the chain saw the opportunity to move into temporary locations in malls following the demise, in late 2008, of competitor KB Toys that closed more than 450 stores, Hauer says.

“[Toys “R” Us] knew there was this void in the malls where there wasn’t a traditional toy store selling toys,” he says. “They decided that is where they would focus.”

Robinson says Lampe Berger expects to expand its use of pop-ups to other parts of the country in the future.

“We’ve identified markets where we believe there is some real opportunity,” she says. “How it manifests itself through what venue is really based on the locale.”

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