These days, for retail to survive in the real estate space, brands must get creative—and one of the industry’s latest tricks up its sleeve is shorter leases, with a focus on a much more curated experience. So now, rather than immediately committing to a brick-and-mortar space, retail up-and-comers are pursuing a more temporary pop-up shop model. The pop-up market has indeed become increasingly popular in recent years, dramatically changing both the face and flexibility of real estate’s retail arm.
Pop-up shops offer a more targeted approach for the retailer taking their business from e-commerce to physical space. “They definitely go into brick-and-mortar with much more data than brands open brick-and-mortar spaces first,” Melissa Gonzalez, founder of pop-up architect firm The Lion’Esque Group told Mann Report. “Brands know what products get the most views online, as well as what their demographic is, allowing them to target specific cities.”
Take for example brands like Birchbox, The Period Shop, and Glossier, all of which were able to use data from their prominent online presence to great success in their pop-up shops. Brands can even integrate technology into the space itself to track traffic and figure out where people are going in a store.
This ties into another rather obvious advantage of the pop-up model—their short-term lease. As the name would suggest, pop-ups appear and disappear within a few months, creating a revolving door of vacancy and occupancy.
“Pop-ups are now not just seasonal marketplaces—they’re being used for new product launches, new partnerships, and to explore growth in a new neighborhood,” added Gonzalez. “Brands are using them to test the viability of a long-term lease in certain markets before committing to them.”
Does it complicate an already ever-changing commercial real estate landscape? Absolutely—especially since, although the pop-up concept has been around for years now, its meteoric rise to prominence still has older real estate execs nervous. After all, the words “instagrammable,” “experiential,” and “influencer-driven” do not exactly inspire confidence in the seasoned real estate elite. Especially if you’re pitching, say, a pop-up museum with a giant egg carton or a sprawling vat of sprinkles.
“It just took a lot longer than what it should have,” Andrew Mignott of LG Fairmont, told Commercial Observer of the deal for Manhattan’s Rosé Mansion. “I understand it’s not a traditional deal for the landlord, but it took some convincing.”
However, at the end of the day, a tenant that comes and goes is better than no tenant at all—especially given the fact that a good amount of pop-up shops can potentially become long-term tenants.
“Things change so drastically these days, it’s harder for retailers to consider a long-term deal,” said Winick Realty Group broker Kelly Gidinsky. “Unlike five years ago, landlords are more open to pop-ups because so many tenants are coming to them and their brokers saying, ‘Look, we want to test this market for a year. If it works, we’d be happy to look into a longer-term deal.’”
And when these tenants eventually go long-term and commit to a brick-and-mortar lease after a good pop-up run, it behooves landlords to have their space be the one of choice, as often these new, hip brands are quite popular and in-demand—especially among the elusive millennial clientele.
And pop-up shop designers seek to court not only millennials, but also others with immersive experiences and shareable moments. “It’s all about diving into the storytelling aspect,” said Gonzalez. “Social currency is everything these days, so people want to share the things they discover and be enlightened. So stores that create these moments and entice people to share what they have learned tend to be more successful.”
This can be anything from Gwenyth Paltrow’s clean-cut, minimalist elegance at her many Goop pop-ups to the more heavy-handed approach of museums like Mignott’s Rosé Mansion, where visitors can lounge in a bathtub of pink rose petals to create shareable moments that can increase a brand’s digital footprint when posted to social media.
However, that’s not to say that pop-ups are a panacea for an ailing industry. They come with their own set of challenges and considerations—most notably the issue of staffing.
“A lot of brands underestimate that staff is still one of the most important touch points in the store,” said Gonzalez. “It’s very important that shops allocate a portion of their budget to training and properly paying employees—usually that means more than minimum wage.”
To further bolster their staff, pop-ups typically hire storytellers: actors or stylists who can interact with guests and convincingly match a person to a product. These staff members can even be knowledgeable influencers or micro-influencers.
All of this is not to say that the pop-up model is completely eclipsing permanent brick-and-mortar. “It’s more of a shift,” concluded Gonzalez. “I don’t see brick-and-mortar going away, but evolving how it’s being utilized. Look at Nordstrom. Their stores are not all the same format—in the Los Angeles market, one of their biggest, they are testing a lot of their men’s store and bringing tailoring services in-store.
“Ultimately, it’s a lot of rethinking. Each market is different, so it’s all about finding what each one needs.”
So while the burgeoning pop-up market certainly creates a great deal of clickworthy chaos, permanent brick-and-mortar fixtures can remain—for those retailers who are willing to innovate and take a page out of the digital playbook.
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