Pop Up into Retail

Peter Buckingham, Managing Director, Spectrum Analysis

Pop ups are a phenomena that is now becoming a regular part of the retail landscape.

Overseas and locally we are seeing pop ups in many places, and maybe an after effect of the recent global financial crisis (GFC) has been that it gives Lessors with closed retail space another option to at least have a short term tenant.

Many franchisors are encouraging their franchisees to consider pop ups, often as a second short term outlet, as a lead generator or to cover a certain period in the market.

The idea of the pop up comes from a low set up or entry cost. New ideas are constantly being put forward, changing from a few clothes racks and trestle tables, to properly engineered marketing furniture that is light and easily removable, and in some cases even recyclable. If the cost of fit out is greatly reduced, or can be removed and reused, then a pop up becomes much more palatable.

I was in Hong Kong, and the classic was Shanghai Tang – a very famous retailer who was displaced from their traditional store in Central on Hong Kong Island. They had resorted to a series of pop ups in Hong Kong until they could secure a new long  term arrangement. Even their staff wore tee shirts describing them as ‘The Nomads of Hong Kong’.

Pop ups can be used in many different ways within a marketing landscape:

1. The very seasonal store that has a few months of life. Examples of this can be Christmas cards, Easter eggs or ice cream through the summer period at a beach resort.
2. A special sale to put out reduced price stock.
3. A new product launch.
4. A trial for an area, or in a shopping centre or strip that you want to see the take up.
5. Use of the window as purely a display, or even for use with the web and QR codes.

In Australia, a short term lease falls outside of the Retail Leasing Act, so a short term commitment can be made, with possibly if successful, a longer term commitment to come. From a landlord’s view, if they have a shop sitting vacant for two years,  and are offered a three month tenancy, that may lead onto a longer term arrangement, it could be quite attractive.

Short term leasing is something shopping centres have been using for some years. Whilst the long term tenants may not be all that happy, we have seen wide spaces that were originally built for good aesthetics or other purposes, turned into short  term book sales, Chinese massage areas and small kiosks for mortgage brokers amongst others, where the cost of set up is very minimal. All that may be needed is a desk, a few trestle tables and partitions. Shopping centres now see this as an  attractive revenue source, with some setting up short term leasing divisions accordingly.

Zambrero’s CEO, Stuart Cook told the Franchise Council of Australia’s breakfast in Melbourne last year how they are rolling out a new modular fit out that can be installed (or removed) overnight! This will give them the flexibility to undertake pop up  type concepts, as well as not be held to ransom on future rentals due to their sunk fit out costs. It will be very interesting to see if other franchise systems follow Stuart’s thinking, and also give them this flexibility.

Pop ups need the link to make it happen, as whilst most real estate agents will have seen it or thought about it, and many retailers will also have looked at the concept, most people cannot see where to start.

Pop Union (popunion.com) ‘popped up’ late last year as a company that services and supports pop up as an industry. According to Director Bec McHenry, Pop Union is set to become the “permanent part of pop up” – “here to industrialise and strengthen the growing pop up movement and transform it from a ‘trend’ to a ‘trade’.”

Pop ups could serve as a powerful way to reinvigorate main street shopping strips. Bec has been engaged to work on a reactivation project in collaboration with the Bridge Road Traders Association and the City of Yarra, taking place on Bridge Road in  Richmond, VIC. This project combines pop ups with creative marketing strategies, and aims to kick start the Bridge Road shopping strip, which has suffered quite a deal due to all the reasons retail is hurting.

For those who haven’t visited in a while (which safe to say is a fair few of you), Bridge Road has, in the past, been a celebrated discount and sale area. The shift to online shopping, the emergence of DFO outlets, and the GFC broadly, all had a grave impact on the strip. The reactivation project sees this project as an opportunity for Bridge Road to explore new opportunities and test new identities.

A store sitting vacant, or using its window space to draw attention to products for sale, either physically or via the net is much better for a frustrated landlord, who has had a vacant shop for a couple of years!

Think of pop up as a way to test an area, test the market, or sell items that are very seasonal without you committing to a long term lease for 12 months or more. Pop ups are becoming part of the new retail landscape.

Peter Buckingham is the Managing Director of Spectrum Analysis Australia Pty Ltd, a Melbourne based mapping and statistics consultancy, a Certified Management Consultant, and Victorian Chapter President of the Institute of Management Consultants.

Spectrum specialises in assisting clients with decisions relating to retail location, using various statistical techniques.

P: 03 9882 6488
E: peterb@spectrumanalysis.com.au