Big idea, small footprint: The business of pop-up shops
Marketing expert Darrin Duber-Smith explains the strategy behind seasonal sidewalk sales and temporary retail outlets.
By their nature, pop-up stores are temporary. But they are here to stay.
The idea of having a satellite extension of a store isn’t a new concept, said Darrin Duber-Smith, professor of Marketing at Metropolitan State University of Denver. They’ve become more popular as the pandemic, however, and the evolution of online shopping has forced those who run brick-and-mortar businesses to rethink their strategies for serving current customers and attracting new ones. RED interviewed Duber-Smith to get the lowdown on what’s up with temporary stores.
What is a pop-up shop?
Duber-Smith: Simply put, it’s a business that’s occupying a temporary space that’s at a cheaper price per square foot than a permanent location. There are fewer fixed costs, and it’s naturally easier to access than, say, securing a 15-year lease. Pop-ups can also serve as a test market to figure out what works or what doesn’t and where.
The key is a needs assessment to make sure it’s the right fit for the individual business. Think about the hospitality industry and food trucks: You might have a product to offer that people want, but the upfront capital for renting a storefront is cost-prohibitive. It could also be a store-within-a-store for established locations that get creative reaching buyers who otherwise wouldn’t be able to travel to a specific physical location.
Pop-ups have been around for decades. Familiar seasonal examples include the Spirit Halloween stores that occupy vacant retail spaces or the Christkindl outdoor holiday markets. You can even look at live-music merchandise as a kind of pop-up – I’m a Deadhead, and every show has folks selling T-shirts and other goods.
How has Covid affected retailer interest in pop-up locations?
During the pandemic, the government has eased zoning restrictions and allowed businesses more flexibility in moving beyond indoor spaces. This kick-started ideas, and savvy owners started making use of sidewalks and other public spaces – think of the extended seating areas for restaurants that have remained popular.
The question is if these regulations remain relaxed. Zoning ensures that people don’t put just anything out in a public space, but I have to think some of these temporary experiments might become permanent. Just look at locations like Olde Town Arvada or the Pearl Street Mall as pedestrian commercial hubs that could be models for a new tradition.
Location: Tivoli Student Union (old Canvas Credit Union, 2nd floor)
Days: Monday-Wednesday, Nov. 29-Dec. 1
Operation hours: 9 a.m.-3 p.m.
Items: T-shirts, hats, beanies and more, plus a $5 bin
Thursday and Friday, the pop-up will be in the PE/Event Center during games.
MSU Denver Athletics is hosting a pop-up shop in the Tivoli Student Union (see sidebar). How do you see this in relation to the University’s larger brand?
Historically, generating excitement for extracurricular opportunities like athletics is tough for commuter schools. Students are balancing work and family obligations, so they’re often here for classes and gone again.
Lately, though, I’ve seen more people wearing MSU Denver gear. That means we’re doing a better job of reaching students to build the brand presence and pride in the institution. It’s pretty cool and makes sense to have an extension to reach people where they are.
What does this all mean for permanent storefronts?
Brick-and-mortar retail locations in the United States have been overbuilt by about 25%. That’s because our commercial real estate is relatively cheap compared to places like Canada and Germany. Think about Walmart securing large swaths of land for next to nothing at the edge of cities and towns. The recent result is that there’s been a bit of a culling in physical storefronts to reduce their footprints and adapting the space. CVS is closing retail outlets but also increasing medical services.
All this to say brick-and-mortar isn’t going anywhere. Amazon’s actively building storefronts – or acquiring them, with the purchase of Whole Foods. E-commerce is critical but only accounted for about 15% of companies’ total sales pre-pandemic. It will likely settle at 20%, which is much higher than it’s been for the last 25 years as some new consumer movement to online will be permanent to supplement physical locations.
The bottom line is that today’s successful businesses really have to have an omnichannel strategy of online and physical options, wherever they may be, and offer it all in a seamless customer experience.