Pop-up stores are spreading quickly across the retail landscape. Representing approximately $10 billion in sales revenue according to Inc., the pop-up segment is booming and getting attention from ecommerce companies such as Alibaba and Amazon as well as established brick and mortar brands including Calvin Klein and Macy’s.
The strategy is a cost-effective way for many types of retailers to experiment in physical retail. Sometimes, pop-ups are referred to as the “Uberization” of retail, because just as the ride-sharing service makes optimum use of an under-used car, they make use of an underutilized asset such as a vacant storefront, for example. These temporary retail outlets let retailers have fun, often using the opportunity to introduce new customers to the brand.
Pop-up stores also offer a testing ground for a brand to learn if a location or particular mix of products is suited to a more permanent physical location. Many retailers cite the success of a pop-up location to prove that they can leverage their online customers and stand out from their online-only competitors. Eyewear retailer Warby Parker is an example of a successful clicks-to-bricks strategy that found having stores is a rich source of in-person customer data.
Pop-up stores that have brick and mortar parents tend to be small and focused. Often, they center around new brands or trendy items, which can easily be curated and tested in a pop-up shop. Once inside the stores, shoppers’ movements can be tracked with video cameras, allowing retailers to learn what items piqued shoppers’ interests, and what didn’t. A twist on the traditional pop-up are marketplaces, which are supported by large department stores that provide floor space and associates, but feature new, innovative products not generally available through mainstream retailers. The Market at Macy’s, for instance, provides a full retail experience for participants.
Being a good neighbor
Ecommerce companies looking to form a local connection have found popups an ideal solution. Alibaba, for example, opened 60 physical pop-up stores in 52 malls across 12 cities in China for Singles Day last year. More than 100 brands participated, including L’Oréal, Unilever, Procter & Gamble, and Lego.
Another example is a pop-up venture from Amazon Fashion and Calvin Klein. The Fall 2018 event at the NYC Market brought the Calvin Klein Jeans Fall ad campaign to life, encouraging visitors to buy the campaign shoot “look.” Then, Amazon tied it back to ecommerce by offering an online exclusive Calvin Klein “A$AP Rocky Trucker Jacket.”
Hosting a pop-up shop provides ecommerce and physical retailers the opportunity to experiment with their revenue models for a smaller investment than the cost of typical storefront leases; there is also considerable savings in the small amount of inventory needed to fill that much larger space. Pop-ups are also very effective at building buzz for a brand. making them an excellent way to add a revenue stream in a local area with little risk and significant profit potential.