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.
Off price retailers have been capturing a lot of market share since the recession. Macy’s, Kohl’s and Lord & Taylor are all testing new off-price concepts, bringing even more weight to the idea that this class of retailer is only going to continue to grow. Historically discount/off price has always been a draw, even when the economy is not in a recession. The US has seen a 735% increase in the number of outlet shopping centers since 1975.
Fortune notes, “In a sign of how lucrative such stores can be is this nugget: Nordstrom’s Rack stores generate more sales per square foot than its full service department stores.”
Department stores have indeed been putting their money where the market is: in only six years, Nordstrom added 109 Nordstrom Rack locations, while only bringing on 3 additional Nordstrom department store locations. During the same period, Saks brought 28 OFF 5th stores to market while decreasing their count of Saks Fifth Avenue locations by 14.
Let’s take a look at some of the newer entrants to this sector and what the growth of this area means for the Commercial Real Estate market.
Hudson’s Bay Company, who have had much success with Saks OFF 5th, recently announced the launch of a new off price concept called Find @ Lord & Taylor, the first of which will open just in time for Thanksgiving. The 35,000 square foot store will be located in Paramus, NJ and plans to target younger shoppers with prices slightly lower than OFF 5th stores.
Macy’s has opened five new Macy’s Backstage stores this fall and will open their sixth location before the end of the year. Their inventory includes clearance items from Macy’s stores as well as specially purchased goods from well-known brands priced at 20-80% off regular price. The stores average around 30,000 square feet and are located throughout the NYC metro area. Macy’s Backstage will be entering Texas next and has selected CBRE as their real estate partner, with Karla Smith acting as the master broker of the Texas team.
Kohl’s opened a pilot Off Aisle by Kohl’s store in June that features items returned from Kohl’s stores and website offered at a 70-90% discount. The 30,000 sf store is located in Cherry Hill, NJ.
Forever 21 has opened five F21 RED stores and plans to open another 37 locations by the end of 2015. The stores sell fashion basics at an even deeper discount than Forever 21 stores. The first F21 RED store in North Texas just opened at the Shops at Park Lane in Dallas.
While J.Crew is not exactly a newcomer to the off price game (they currently operate 139 J.Crew Factory Stores), they seem to be trying something a little different with the new J.Crew Mercantile. The concept, pricing and merchandise are similar to the company’s existing Factory stores, but instead of targeting outlet centers they have chosen to locate in more easily accessible areas like the first location which opened this summer at the Shops at Park Lane.
These stores tend to draw a different demographic than their older siblings by catering to Millennials. Macy’s Backstage will have cell phone charging stations in dressing rooms and will offer free Wi-Fi throughout the store. The Brooklyn location will test out a café concept called Macy’s Taste Bar Café.
Another trait these new store models have in common is a smaller, more flexible footprint. Macy’s Backstage is 30,000 sf, about one-fifth of the size of a Macy’s store. F21 RED is about 17,000 sf, whereas Forever 21 stores usually average around 38,000 sf. These stores are small enough to fit into more modern shopping centers, yet still remain an attractive option for filling vacated mall locations.
With a long history of success, the ability to capture the attention of the fastest growing group of consumers and the ability to shape shift to fit into available retail stock, the current class of off price retailers is going to continue to meet the growing demand of consumers that are shopping for savings.Images courtesy of the Shops at Park Lane and Macy’s
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.
The Maker Movement is a trend that has received substantial media attention lately. Defined as a social movement with an artisan spirit, The Maker Movement culture has found a place in the ever-evolving world of retail. It’s hard to believe it’s been around for a decade.
It’s a safe assumption that almost everyone has shopped for or been the recipient of a handmade item. DIY online-shop culture has been in full force since 2005. Think Etsy. This long-term trend stems from significant upgrades in manufacturing which have allowed the individual and/or retailer to pursue smaller, more cost effective operations. 3D printing and other cutting-edge technologies have become more accessible in recent years, making it easier for the maker to take the risk of expanding their product line with minimal production overhead compared to the risk vs. reward of the past. The opportunities this technology affords are boundless.
On the forefront of every retailer’s business plan is enhancing the consumer’s retail experience. Collaborating on the creative process brings a new dimension to customization and further personalizes that retail experience; the customer is engaged and fully involved with the product. Clients want to know that their opinions and preferences are valid input to the creation process.
There’s also a bit of magic involved in the making of a handmade item. Each fine-crafted good has a unique story. Authentic, ethical and high-quality are buzz words often associated with handmade goods.
A beautiful example of the sustainability of the Maker Movement and the power of the client experience can be found in the business approach of The Sabah Dealer. The retail endeavor was first inspired by a gift of a traditional pair of handmade Turkish slippers: sabahs. Mickey Ashmore, son of CBRE Vice Chairman Mickey Ashmore, is the founder of the company and is himself known as The Sabah Dealer. Young Ashmore has become a passionate champion of the uber-comfortable, versatile sabah shoe. After a year of “test-marketing” the sabahs through his globetrotting adventures and in response to numerous inquiries and requests from friends as to where they could acquire a pair; Ashmore recognized he was holding a product for an untapped niche market. He reached out to the Turkish artisans and in late 2013, after cultivating a personal relationship with the craftsmen in Turkey (to this day they continue to directly consult each other), Ashmore launched his business. He harnessed the ease and accessibility of social media and opened his home once a week for wine/fitting sessions (dubbed Sabah Sundays). The end result: The Sabah Dealer created a memorable customer experience; one that stands out among the latest retail trends.
Word travels and the social media responses were extremely positive: The perfect slipper. Fits like a dream. Hand-sewn, quality leather. They were hand-delivered to me. Where do I get a pair?!
In true Maker Movement fashion, the slippers are made in small batches and the time afforded to sew them (they average an 8-10 week delivery timeframe) is well worth it. They are made from quality calfskin leather in an array of colors. (Fabulous limited editions are offered from time to time as well.) Firsthand accounts speak to The Sabah Dealer’s stellar customer service. Hospitable fitting appointments. Hand delivered orders. It is apparent that the customer’s experience is of paramount importance. Take note retailers. If the edgy, urban boutique around the corner doesn’t carry them yet, go visit The Sabah Dealer’s Instagram account, for need-to-know info on how you can slip into your own pair.
A strong majority of consumers view shopping as a social event. That’s where the retail centers enter the scene. Retailers are seeking out brick and mortar locations to provide the consumer with the opportunity to view the physical product before purchasing online. Consumers still crave a tactile yet personalized experience. They want to feel the merchandise and involve all their senses.
Customers want to try on the clothes, smell the scents and feel the textures. This creates opportunity for shopping centers to craft a unique destination experience. Through pop-up shops, trunk shows, workshops, and developing a more tactile experience; retail centers are taking the initiative in the hopes of luring consumers to the store and driving sales of these new niche products.
Sabah Sunday shoe fitting parties have been wildly positive and ever-the-globetrotter, The Sabah Dealer has segued into hosting trunk shows in a variety of cities across the country. Ashmore regularly travels to New York, Los Angeles, Atlanta, Miami, Dallas and possibly a city near you. These pop-up ventures have been heralded with much success.
The emergence of pop-ups launched by Etsy retailers have also received rave reviews. x Dossier in NYC (Lower East Side) and Etsy House in London (Covent Garden) have embraced the concept within the last year as part of their holiday marketing campaign.
Many retail real estate brokers are experiencing an uptick in tenant representation opportunities from the DIY e-commerce sector. From eBay to Etsy to Bonobos’ Guideshop retailers are seeking out space and keeping the brokers focused and innovative. The traditional large format isn’t satisfying the needs for these innovative retailers, they want to trim and tailor their specifications to fit the smaller operations platforms that dominate the pop-up… think kiosk only more refined. How creative are your brokers?
P.S. I predict The Sabah Dealer will be coming to a chic, urban brick and mortar retail location in the near future.
Photos courtesy of The Sabah Dealer.
The idea of the “Third Place” isn’t exactly a new one; urban sociologist Ray Oldenburg coined the term in his 1989 book, The Great Good Place. He describes the third place as that place where people spend their time outside of the confines of their home (the first place) and work (the second place). A third place is a place to be social, to feel comfortable and accepted, and to exchange information and ideas that are the foundation of community life. A third place is free or fairly inexpensive, provides free or inexpensive food and drinks and is nearby and easily accessed. It is a place people tend to go to on a daily basis that feels welcoming and friends new and old can be found there; the kind of place where you become a regular.
Sounds pretty nice, right? But why should retailers and property owners care? RetailWire explains that “We are shaped and defined by our third place, whether it’s a pub, a local store, or what has become the world’s most popular third place, Starbucks.” Of that ubiquitous retailer, Forbes states “The chain has inserted itself into the American urban landscape more quickly and craftily than any retail company in history, and has forever changed the way Western companies market themselves to consumers.” Trendwatching.com, which tracks global consumer trends, explains that retailers who have successfully put this idea to use are “accommodating consumers outside of the home and office, becoming a relevant and useful part of their daily lives offering them surprise, discovery, empathy, transformation.”
When retailers become a third place they increase their brand awareness in the public space; when developers and property owners actively shape their properties into third places, they attract successful tenants and in turn, consumers. Shopping centers that have a carefully curated tenant mix that provides for the full range of consumer needs like convenience, service and experience do well, but when combined with pleasing architectural design, thoughtfully landscaped outdoor space and easy access for both pedestrian and vehicular traffic, they become a third place. Fast Company explains, “Vital third places contain the physical elements—seating, landscape, a connection to surrounding retail and other public activities—that make people feel welcome and comfortable. Spaces that are visible and easy to get to, stay in, or move through are ideal third-place territory, especially when located near public transit and other civic destinations.”
The Shops at Park Lane is a great example of a center hitting all the marks. With a tenant roster that includes Nordstrom Rack, Old Navy, Ulta and Dick’s Sporting Goods along with Aveda, Whole Foods, Bowl & Barrel and plenty of restaurants like Bar Louie and Grimaldi’s, shoppers from all walks of life have reason to stop and stay a while. Close proximity to a DART station and plenty of onsite parking makes the center easily accessible and very walkable. The most recently opened addition that brings this center to third place territory is The Park, a green space with water fountains, seating, free Wi-Fi and charging stations nestled between a Flagship Starbucks and Zoe’s Kitchen. The Park plays host to public events like GrillFest and Fitness in the Park which offers free yoga and Pilates classes led by Studio 6 instructors. CBRE’s Amanda Gross, who leases the retail portions of the center says, “The Park has been a great addition to the Shops at Park Lane. This area has become the heartbeat of the project. People are using this space as a meeting point and also a place to hang out before or after shopping and eating.”
With the rise of trends like e-tailers opening brick and mortar locations and experiential retail, shopping is no longer about just getting in and getting out. Smart retailers and property owners are creating comfortable and attractive spaces with public amenities like Wi-Fi and charging stations that are giving consumers a reason to settle in for a while, make new friends and discover a new third place.