- October 22, 2019
Halloween kicks off the season of holiday-themed pop-up shops that open their doors across the U.S., and the multibillion-dollar industry surrounding the holiday provides a multitude of interesting opportunities for commercial real estate (CRE) owners.
Rethinking the Effects of E-commerce on Retail
Pop-up shops are temporary stores that open for a pre-determined period of time. They’re a by-product of the shopping shifts taking place in the wake of e-commerce. For online retailers, they’re becoming part of the business model and evidence that e-commerce isn’t completely destroying the brick-and-mortar shopping experience.
Customers enjoy the convenience of online shopping, but it doesn’t meet all of their needs. Sometimes they want to try items on before buying them or just want to see them in person. In some cases, they may be lured to the mall by a brand touting an Instagrammable in-store experience. Online retailers can use a pop-up store to give these customers what they want. They’re also a way to show off new collections or product lines that might get lost on a website.
Some retailers turn to the pop-up concept when they want to test a new market. A physical location helps them determine whether or not an area is a good match with their brand before they invest a significant amount of money on permits, leases, and displays. In some cases, the retailer may later decide to convert the pop-up to a traditional store.
Of course, this concept is a great match for seasonal retailers. Instead of maintaining a store for the entire year, they can focus their operations on the period when they see the most activity. CRE owners can leverage this to their benefit, especially in markets that have seen a decline in traditional retail.
Renewed Purposed for Empty Stores
As big-box and other traditional retailers close stores, they leave behind a graveyard of empty buildings that have a variety of negative effects on the community. Halloween and Christmas shops have been able to move into these spaces and give them a purpose for a few months of the year.
Often, building owners in this scenario don’t need to make major improvements to the space. The open layout gives the retailer the flexibility to set up the displays as they see fit. This increases the potential profit for the building’s owner.
Increased Foot Traffic
One of the more exciting benefits of pop-up shops are the way they increase foot traffic to otherwise vacant or abandoned areas. When seasonal stores set up shop, the surrounding retailers typically enjoy a boost in sales as well. These businesses often have a hard time breaking a profit, so they appreciate the influx of new customers.
It also helps the building owner passively advertise the available space. Potential renters can see that the area is still viable for commerce and have a chance to imagine how they can use the space. Many pop-ups advertise their openings on social media, which increases the building’s exposure beyond the immediate area.
Seasonal retail and pop-up shops do bring in revenue, although not normally as much as traditional rental leases. The more successful seasonal retailers, however, will often sign a one-year lease to secure the space, even though they will only use the space for a small part of the year. This arrangement is especially helpful in economically depressed areas and places with an excessive number of vacant buildings.
As brick-and-mortar retail continues to evolve, pop-up stores are meeting a need for certain types of retailers, while also providing new opportunities for CRE owners.