3 Reasons Why the Pop-up Retail Economy is Booming

Pop-up stores are temporary shops set up typically for three days to three months with distinct purposes — launching new products, spreading awareness, introducing new partnerships, or to move inventory. Businesses are channeling their budgets towards brand activation as the millennial consumers are leaning more towards novel shopping experiences. On the other hand, real estate is becoming even more expensive deal for retailers. In this context, the pop-up retail model is flourishing for one reason or another. According to Storefront’s founder Tristan Pollock, it is estimated that globally businesses are spending more than $22 billion on creating pop-up retail experiences.

Test the New Waters with Pop-up

During their growth cycle, businesses should be experimenting with new products, expanding to new locations, and engaging in commercial agreements with new tenants. On that front, retailers are increasingly relying on the temporary stores, given their low entry barriers, to try new products or expanding to new locations. The fun, interactive environment of these pop-up stores are enabling brands to get true feedback from their customers to further decide on their new range of products.

eCommerce giant Amazon has been betting big on brick-and-mortar retail ever since it launched its first bookstore, Amazon Books, in Seattle in 2015. Undeniably, the e-commerce industry is going at a faster pace. Having said that, it only accounts for only about 10% of the total retail sales. Brick-and-mortar stores hold the lion’s share and will continue to, as they are open to technology disruption. Besides Amazon Books and Amazon Go, the company also sells electronic gadgets including Amazon Echo, Kindle, and tablets in retail outlets. The company wanted to expand its physical footprint in these segments and hence, ran experimental pop-up kiosks for more than four years. Reviewing the results of these kiosks, the company has expanded to larger physical stores in more locations across the US.

Driving Brand Loyalty

Pop-up retail creates a platform for brands, who usually follow the traditional retail model, to interact with their customers directly. Pop up stores enable retailers to immediately address the pain points, which their customers might have, over face-to-face interaction. Such authentic customer interaction also provides businesses with a chance to share their brand story with the customers to drive brand loyalty.

“Once somebody walks in and gets sucked into the cool features and values of the brand, they become loyalists,” said Allison Sommer, director of marketing at The RealReal. The luxury consignor ran pop-up stores, combining its high-end apparel with a flower shop and a cafe. Through workshops and private shopping times for VIP customers, the pop-up stores spurred massive turnout and drove sales worth $2 million. Allison Sommer, speaking further on the brand loyalty driven by the pop-up stores, said: “These shops help to build awareness in new markets that lives on when the pop-up is gone.”

Profitability

Setting up pop-up shops is way cheaper than establishing a permanent store. While this helps retailers test new products and markets at low risk, this model is also proven profitable during holiday seasons. The Christmas holiday season of 2018, which lasted for just 30 days, was estimated to cross one trillion dollars.(https://www.emarketer.com/content/holiday-shopping-2018-roundup) Clearly, the short-term demand is an unmissable opportunity for retailers, whereas a permanent store could cost them an arm and a leg. This is why temporary retail shops are popping up quickly.

The retail industry is already being disrupted by new business models like direct-to-consumer, which are bringing OEMs closer to their consumers. The pop-up store model is parallelly growing and is leading to a retail revolution that empowers brands to scale their businesses with strategic moves.

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