Why Pop-Ups Have an Essential Role in Modern Retail
About 7,000 stores closed in 2017, according to retail think tank Fung Global Retail and Technology. That’s more than triple the number in 2016. In 2018, companies like Rite Aid, Best Buy, and Gap Inc. have all closed at least 200 locations, showing that this trend of store closures is not going away anytime soon. E-commerce sales grew 16.0% from 2016 to 2017, now accounting for $453.46 billion in total purchases.
This is not, however, the death of physical retail. According to the US Cenus bureau, e-Commerce still only accounts for 9.5% of total sales. While this number is ever-growing, signs point to physical retail locations being vital to our purchasing habits. After all, we usually aren’t comfortable buying something online that we’ve never seen in real life, touched, or tried on. This is backed by a Retail Dive Consumer Survey in 2018 that found 56% of customers like to go to a store to see products before making an online purchase. And, with over 90% of sales still occurring at physical locations this indicates that only a very small portion of product sales occur without a physical location’s influence.
So what is the solution for retailers who have seen their storefront sales decrease and yet know that such locations are indispensable to total sales growth? Brand exposure without full commitment to a permanent location. Flexibility to enter new markets and analyse performance on different products for a fixed amount of times. A temporary physical presence to gain awareness and trust with consumers, so that they feel comfortable buying a company’s products online for the long run.
And this is why the pop-up retail store has taken off over the past decade. Comme des Garçons, a Japanese luxury brand, is a famous pioneer for pop-ups to infiltrate new worldwide markets. Their ‘guerilla stores’ would open for several months in Japanese cities. The novelty of their designs combined with the ephemeral nature of their stores created an urgency to buy their products. Their merchandise, in essence, because more chic because it was temporary.
Tech giants like Amazon and Google have also opened dozens of pop-ups around the world. They use it as a way to make a marketing splash, a way to attract eyes to their brand name and show off their latest items and services. More importantly though, they do it to collect data on what people think of their new products. They monitor what portion of outside pedestrians enter their store. They collect data on which products attract the most people, and what makes them stop in their tracks.
Smaller companies and start-ups, meanwhile, have seen the pop-up as one of the only opportunities to be discovered by their own local markets and build brand recognition. Real estate prices continue to rise, and competition with big name companies makes it very risky to invest in a permanent location. Pop-ups, ranging from temporary kiosks to renting out full retail locations, makes it possible to understand their market and determine whether a permanent location is both possible and profitable.
Paradoxically, pop-up stores have become a normal means of showing novelty. From Target’s shopping boat off of Chelsea Pier in New York City to Nike opening a pop-up in the shape of a shoe box, these locations have brought new excitement and interest to both household names and newcomers alike. Renting out locations has become a business of its own, with thousands of locations being available from pop-up ‘brokers’ like Storefront, Go-PopUp and Poppir.
