Pop-up stores are growing in popularity
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The element of surprise, diversification of the retail offer and the chance to attract a new group of customers – these are the main benefits of opening pop-up stores, which are increasingly recognized by owners and tenants of retail locations around the world. Interest in this format has grown on the wave of COVID-19. The pandemic has re-evaluated traditional sales models and further increased customers’ shopping expectations. Many global brands, such as Gucci or Prada, have already responded to these changes. Will this trend also reach Poland?
The pop-up store, or a store that operates for a short period of time, is not a new trend in global retail markets. One of the first concepts of this type was created in 1997, and it was The Ritual Fashion and Music Expo in Los Angeles. Also in Poland, many customers have already taken advantage of the offer of such temporary retail locations, however the pandemic that has been going on for almost a year now may further increase their popularity.
– The fact that pop-up stores are available for a very limited time enriches and diversifies the offer, which may translate into an increase in customers and attracting a new group of consumers to a given location. Therefore, we expect that the number of pop-up stores in Poland will grow in popularity to meet the individual needs of shopping centre owners – explains Mariusz Czerwiak, Director in the Retail Department at JLL.
Pop-up brings benefits to landlords and tenants
The global pandemic has had a negative impact on the retail market worldwide – a phrase that has been repeated like a mantra for almost a year now, with experts pointing to the need to diversify sales channels and look for new channels to reach customers. This is especially important in view of the growing vacancy rate in shopping centers. According to JLL data, the level of vacant space in Poland has grown from 4.4% in the country’s major agglomerations at the end of 2019 to 5.3% in August 2020. In such a situation, short-term agreements signed with tenants opening pop-ups may be a good solution to cope with the turbulence in the market. However, according to Mariusz Czerwiak, the benefits of such a temporary store are much greater.
– We should not treat pop-ups only as a lifeline in the case of temporary difficulties with the commercialisation of a center. This is a rather unfair approach to this shopping format, which gives a wide scope for testing new products, creativity and innovation of a large spectrum of brands operating in the market – explains Mariusz Czerwiak.
In contrast, the temporary nature of such a store means that the contract is signed for a much shorter period of time, under conditions typical of short-term contracts. – In the case of pop-up stores, contracts are usually concluded for a few weeks or months. This group of tenants usually decides to occupy small premises, rarely exceeding several hundred square meters and which do not require additional arrangement works. The rent is set individually and is usually lower than in the case of long-term contracts – adds Mariusz Czerwiak.
Such conditions translate into significant savings, which can benefit both start-ups and established brands. In this way, the tenant can test new ideas, make sure that its business model will be successful, launch a new product or try out a new location. – It often happens that a pop-up has very good prospects of functioning as a traditional store. In such a situation the tenant often has priority in negotiations with the landlord to extend the lease for a few years – adds Mariusz Czerwiak.
From influencers to luxury brands
The range of brands and industries that open pop-ups is quite wide. However, this type of sales is usually chosen by fashion brands. – A tenant who opens a pop-up tries to avoid costly, time-consuming interior design work and targets spaces that are already ready. A clothing store can move into such premises within a few days. The situation is similar in the case of brands offering accessories or footwear – says Mariusz Czerwiak.
The relatively low cost that a pop-up generates is the reason why smaller and unknown brands can also enter this type of sales. Pandemic stressed the need to support local retailers, designers and entrepreneurs who are gaining popularity through social media, among other means. Flexible lease terms, which can be negotiated in talks with shopping center owners, provide an opportunity to try their hand at the traditional sales channel.
– The best proof of the benefits of pop-up is the fact that luxury brands are also investing in this format. At the beginning of February Prada announced the opening of such a store in Hong Kong, and in January this year we got to know the details of the awaited by the market capsule collection of Gucci and North Face. The effects of the collaboration between the two brands could be seen until February 14 in selected locations in the United States and Canada. Some of the temporary stores were also opened in existing Gucci stores in a “store within a store” formula. This is a fairly new format on the market and is an opportunity to increase customer flow, among other things. Reviews of the cooperation between Gucci and North Face are very enthusiastic, and some media even write that their pop-up has brought shoppers back to the streets – concludes Mariusz Czerwiak.
