The basic concept of a temporary, limited-inventory retail space goes back to the dawn of civilization. Even in the modern era, there are plenty of easily overlooked examples, like seasonal shops, festival vendors and flea markets. But pop-up shops are something new, and mark a genuine change in how former brick-and-mortar retail space is used. Analysts claim that the pop-up shop market has bucked the overall retail decline, growing by nearly 16 percent since 2009. What’s the appeal?
Cutting Costs
Amount spent by fashion house “The Hundreds” on a profitable weekend-long pop-up in New York City
Average cost to start a new business from scratch
Increasing Curiosity
Number of visitors Procter & Gamble’s New York City pop-up store had in the first 10 days
Total number of items on sale by the 76 designers at Fast Company’s 2010 pop-up store
Time between the Teso virtual grocery pop-up store on a Seoul subway platform and the openeing of their permanent location
Number of pop-up stores Toys“R”Us opened before Christmas in 2010
Testing a Niche
One of the biggest driving factors in the growth of pop-up shops is the high availability of vacant retail spaces in commercial districts. When the economy tumbled, a lot of anchor businesses closed up shop, turning once-thriving shopping districts into ghost towns. Landlords who would once never have considered granting a short-term lease now found themselves re-examining the concept. A huge supply of choice spaces makes it a true buyers’ market for short-term retail rentals.
Empty Storefronts
Average Retail vacancy rate in major market cities in:
Falling Rental Prices
Average national price per square foot of retail space in:
Average 2013 price per square foot for retail rental in Brooklyn
Monthly revenue loss for the landlord of a vacant 1,000 square foot retail place
Desperate Landlords
While their temporary nature makes finding hard facts about pop-up shops a little difficult, it’s clear something significant is going on. To get some insight, let’s take a look at pop-up shop marketplace startup TheStorefront.com, which currently serves the New York City and San Francisco areas. Investors are taking startup seriously, recently investing more than $1.6 million in the concept.
Vacancy Volume
Number of daily/weekly retail spaces available in Brooklyn/Manhattan
Number of those spaces offering less than 1,000 square feet of space
Daily rental price of the 12,000-square-foot Grand Central Terminal’s Vanderbilt Hall
Daily rental price of a 226-square-foot retail space in Lower Manhattan
Price-Point Power
Opulent Options
Typical lease period, in days, for Storefront customers
Square feet of retail space available through Storefront in San Francisco
Do pop-up shops really have long-term viability as a business model? While there’s not much data on pop-up retail in general, the data on seasonal Halloween stores can offer some interesting insights. As the most successful example of pop-up retail on a wide scale, these short-term lease operations may well be the model for thousands of future businesses. These stores are only open during the height of demand in September and October, allowing them to take over huge vacant retail spaces and turn huge profits. Estimates place annual Halloween spending at around $8 billion per year.
Average start-up costs for a Halloween Express, mostly inventory
Franchise fee to open a Halloween Express
Creepy Costs
Number of pop-up Ricky’s Halloween stores in New York City area each year
Yearly profit of those stores
Profane Profits
Number of Spirit Halloween stores in 1999
Number of Spirit Halloween stores in 2011
Ghastly Growth
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Like any emerging trend, it’s hard to know exactly what the future holds for pop-up shops. But with big-box retail on the decline and new, innovation-savvy startups on the rise, the odds are good that pop-up retailing isn’t fading away any time soon.
