Long gone are the early days of pop-up shops that only appear for a limited time to promote sales during the holiday season. Pop-ups have evolved into a valuable business development and marketing tool, and brands like Lululemon, Bonobos, Kit and Ace, BaubleBar and Warby Parker are using them to get in front of consumers, create buzz, enhance brand awareness and launch new products.
PopUp Republic, a retail marketing database tool, reports the pop-up shop industry is valued at $50 billion. In 2014 its online directory housed information on more than 7,000 pop-up shops.
Pop-ups are particularly valuable to online-only retailers as they provide a way for customers to physically interact with a product and make a connection with the brand in a unique environment. They are also a way for retailers to test the waters and gain market knowledge, which can contribute to business decisions like deciding on the best location for a flagship store in a particular market.
BaubleBar, a jewelry retailer that was strictly eCommerce at its inception, began implementing pop-up shops in its marketing strategy in 2013. The brand opened its first shop in the meatpacking district of New York City early in the year and focused on creating an interactive consumer experience to connect with loyal customers and reach new ones.
Brandchannel recalled BaubleBar’s efforts to enhance and personalize the customer experience by featuring in-store touchscreens, a bar serving Godiva cocktails, and even launching an App to help engage shoppers. Pop-up shoppers were encouraged to take photos while browsing and upload them via Olapic, a platform that places user-generated content directly on a brand’s website, which drove even more traffic to their site.
Not only was BaubleBar’s pop-up successful in expanding brand awareness, it helped the company gain valuable market knowledge and now they are planning to open their first brick and mortar location in Long Island’s Roosevelt Field Mall.
Nationally known technical performance clothing brand Kit and Ace has taken a similar approach to the use of pop-up shops, especially for market research during expansion.
Kit and Ace on Henderson Ave. in Dallas, TX
CBRE’s Scott Muller and Katie Braden represents the brand in their search for pop-up space throughout the U.S. They currently have 35 stores in the U.S.; nearly 20 of which are pop-ups. Six more stores are set to open in 2016.
Kit and Ace have used pop-ups as a way to gauge a market and gain brand recognition before deciding on the best location for a flagship store. For example, their pop-up shop in Nolita, New York became a permanent location based on its positive performance. The Dallas location on Henderson is in the midst of its pop-up lease and will determine soon if staying on Henderson is the best fit or if the store would be better off at a different location.
With leases that can last from six months to two years, a brand can experience firsthand the demographics the location attracts, area foot traffic, and sales. The ability to test a market before investing huge amounts of money is a great advantage for the future success of a company.
When it comes to finding space for a pop-up shop, one of the challenges Katie and her team work around is trying to find space in a tight market where landlords are less interested in short-term leases.
“Building long-term relationships in markets is crucial with any type of real estate deal, but it is especially valuable when trying to find space for clients such as pop-up shops due to their need for short-term leases,” said Katie. “The landlords we work with trust us when we bring them a tenant that we believe will add value to their property and have positive gain.”
Pop-up shops are a great marketing tool for startups and established brands alike. While the pop-up shop trend grows along with the retail market as a whole, it will be interesting to see how their role in business development continues to evolve.
Do you have a fabulous new concept that you passionately want to share with the rest of the world, but are having difficulty fronting the initial overhead costs that oftentimes accompany brilliant ideas? Incubators may provide a solution. Let’s call it the musical chairs of the retail/restaurant industry with a whole lot more winners.
Since the economic disruption of the Great Recession in 2008, landlords and brokers have embraced new approaches to successfully leasing properties. One such strategy includes the revolving tenant showcased in the incubator model.
In the business world, an incubator is referred to as “an enterprise that is set up to provide office space, equipment, and sometimes mentoring assistance and capital to new businesses that are just getting started.”
Today, entrepreneurs have taken the incubator idea a few steps further by forming like-minded collectives of small businesses still in their formative stages. Incubators offer business owners affordable retail space, a collaborative environment, and administrative support that they would otherwise have to handle alone. Perhaps most importantly, they create opportunity for small businesses to succeed and grow, often supporting local and regional talent.
Dallas’ Trinity Groves is home to a restaurant incubator model, Kitchen LTO. Kitchen LTO provides chef-driven concepts and artists the opportunity to present their wares in an established environment for a limited time, typically for six months at this venue. Incubator retail has become quite the catalyst in re-igniting the restaurant scene for many local economies.
Pink Magnolia, a Kitchen LTO protege, is scheduled to open a permanent location in summer 2015 and offers patrons tasty fare with what chef, Blythe Beck, describes as “swanky Southern flair.” Chef Beck’s concept spent a year in the Kitchen LTO environment before deciding to launch Pink Magnolia with restauranteur, Casie Caldwell.
In the national arena, venues such as DC’s Union Kitchen have been a notable proponent for the retail/restaurant incubator model. Since it’s launch over two years ago, over 120 start-ups have graced the facility, many simultaneously. One delightful concept is Potomac Pastry. To date, 15 of the start-ups have successfully opened in permanent locations around the DC area. These successes have spawned additional growth with a new incubator location, a 15,000 square-foot warehouse, in the Ivy City area of DC.
The affordable retail lease approach has also gained global momentum over the past five years.
In the United Kingdom, IncuBus Ventures has partnered up with Camden Market to launch a retail start-up that will “nurture” 18 selected applicants who will literally be mentored on a bus. The applicants’ concept backgrounds are broad; ranging from e-commerce, to fashion, to food and drink. The program is set to begin running in September 2015 for a three-month period and offers expertise from successful businesses like ASOS and Burberry. The end result will hopefully create new market opportunities for landlords, brokers and retailers and restaurants alike.
Looking for proven direction in finding the best incubator option for your retailer or restaurant concept? Reach out to one of our knowledgable brokers at CBRE.