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HOW ARE OMNICHANNEL RETAILERS USING POP-UP SHOPS?

The Definitive Guide to Omnichannel Real Estate

“Pop-up” shops are a relatively new but quickly growing brick-and-mortar concept worth an estimated $50 billion in 2016, according to social media marketing company PopUp Republic. While temporary or short-term retail leases have long been a part of specialty leasing strategies in shopping malls, the growing popularity of pop-ups among both new and established retailers has presented new opportunities for brick-and-mortar retail real estate. Below are four key ways retailers are leveraging pop-ups to drive revenue and reasons why the pop-up craze is likely to continue.

Easy entry for start-up retailers

Pop-up or short-term leases have been an attractive entry point for new or start-up retail brands that are looking to establish a brick-and-mortar presence but lack the capital or scale to sign a long-term lease. Many e-tailers—online-only retailers—have relied on short-term pop-ups to roll out their first brick-and-mortar stores. These terms can vary from as short as a weekend to as long as several years.

Testing products, markets and technologies

Though pop-ups were initially associated with new retail brands, they now also are used by large-footprint national tenants to test new markets and product lines. Major sports and activewear brands like Reebok, Adidas and Lululemon have leveraged short-term pop-up stores at key events like marathons or sporting events to test products and services on core customer groups. Such pop-up strategies allow brands to capture key data and insights on consumer preferences, while minimizing leasing costs. Casper, an e-commerce mattress manufacturer, launched pop-up locations (and a permanent store) for potential customers to test its mattresses in semi-private nap rooms. Pop-ups also allow retailers to experiment with new ways of leveraging technology, both client-facing and behind the scenes, to enhance customer experience.

Marketing and the element of surprise

Pop-ups are also being leveraged by brands as marketing strategies. With a short-term lease, brands can create the element of surprise, as well a sense of urgency and excitement for consumers. Many brands combine pop-up stores in unexpected locations with social media campaigns to create a buzz and drive traffic. Zipcar, the car-share service, used a San Francisco pop-up to attract customers and distribute exclusive coupons, encouraging new members to use its services. Celebrity Kanye West famously used a New York City pop-up store to sell merchandise and promote a music tour. Across categories and brands, pop-ups are emerging as an effective marketing strategy to generate attention and customers.

What about the landlord?

Landlords have traditionally dismissed the pop-up trend as high-risk and low reward. Short-term leases do not provide the financial guarantees of longer-term contracts and were typically associated with low-credit retailers. However, landlords’ perceptions of pop-ups have changed dramatically and owners are beginning to view short-term retail tenants as a key strategy to drive traffic and sales to shopping centers. Landlords Westfield and Simon Property Group are both embracing these concepts and dedicating space to short-term retailers. Once seen as a space-filler during unexpected vacancies, they are now viewed as a way to roll out local brands, perform demonstrations and offer shoppers a specialized selection of products. Simon Property Group, for example, offers a “scalable retail platform” called The Edit—a pop-up space that allows e-commerce startups to “test drive” physical commerce in front of a live customer audience. Its goal is to fix the old retail burdens that mall spaces often bear—inflexibility and expense—while also providing additional benefit in the form of buzz and foot traffic.

The sky is the limit for pop-ups, and retailers are finding endless ways to incorporate them into brand-loyalty strategies. By embracing this trend, landlords and retailers can find a mutually advantageous relationship that utilizes the strengths of both omnichannel and brick-and-mortar retail.

Related

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WHAT OPPORTUNITIES DOES E-COMMERCE OFFER RETAILERS? 

REVERSE LOGISTICS: PROBLEMS AND OPPORTUNITIES

WHAT IS THE LAST MILE?

WHAT IS AN OMNICHANNEL CONSUMER?

HOW DOES ONLINE SPENDING VARY BY GENERATION?

DO CONSUMERS REALLY PREFER SHOPPING ONLINE?

HOW DOES E-COMMERCE VARY BY CATEGORY?                                   

HOW HIGH WILL E-COMMERCE SALES GO?

WHAT IS E-COMMERCE'S SHARE OF OVERALL RETAIL SALES?

WHAT IS THE ROLE OF M-COMMERCE IN RETAIL SALES?            

HOW ARE RETAILERS ADAPTING STORES TO OMNICHANNEL?

HOW ARE MALLS ADAPTING TO OMNICHANNEL?

WHAT IS THE IMPACT OF E-COMMERCE ON INDUSTRIAL REAL ESTATE?

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