Pop-up stores here to stay
Text: Katja Hamilton. Article from the Oct/Nov 2012 issue of SA Guide to Business Opportunities Magazine.
With the ever-increasing popularity of pop-up stores many young entrepreneurs are using the concept to test the market and expose their products before moving to a new venue, but would this be the right model for your business?
Pop-up stores are makeshift stores that open up for a few weeks or months at shopping malls in vacant retail spaces, development sites, or promotional areas. They operate in what would otherwise have remained unused retail and rental space.
“The benefit of a pop-up store is to bring something new and fresh to the retail experience and point of interest in a shopping environment, such as trialing a fashion retailer’s new diffusion line, introducing a Christmas decor store in the lead-up to the festive season, or showcasing elements of an upcoming exhibition,” said Alex Kabalin, Retail Executive at the V&A Waterfront.
While shopping malls and landlords stand to benefit from the rental income which covers the period of time often required to finalise a long-term lease on premises, entrepreneurs stand to benefit from their product exposure without being tied down, and are in the best position to extend their market by moving from one venue to another.
This was the case with Pop Shop – a successful pop-up store which ran during July and August at the V&A Waterfront last year. On sale was a treasure trove of high-quality, local design products. Pop Shop was the physical manifestation of the online Design Indaba shop. “The whole idea was to create a platform for the sale of the products of the small to medium enterprises that exhibit at our expo. The exhibitors are creative, they’re artistic but they don’t necessarily have the funds or the resources to create their own shops, which is where we came in and provided the space for our exhibitors to promote their products. We didn’t charge a rental fee, only a commission on the products sold,” said Kim Terblanche Design Indaba expo floor production manager.
“Because we are a reseller of products the pop-up shop was a great success for our exhibitors. We created a lot of awareness of the individuals who sold their products. I think they got a lot of exposure from it and this increased the number of visitors to our online shop,” said Terblanche.
Many of the products customers loved at Pop Shop continue to be available at the online shop.
Red-flag warning
But not all business owners who’ve seen their brands gain exposure in a pop-up store are convinced the model’s all it’s cracked up to be.
Alan Tamaris of fashion-label empire Callaghan, recently opened a pop-up store at Cavendish Square. While he said he would certainly consider running a pop-up store for Callaghan again once their lease is up or even for respective suppliers, the experience of running a pop-up store in Cavendish Square has, he said, “not been a mad success” and has not been a good way to test the market and their product. “I would not consider extending our lease on a long-term basis, as it’s not sustainable,” he said.
He added he is also steering away from opening and managing multiple pop-up stores concurrently in various shopping centres. Doing so, he quipped, would become a business in itself that would draw attention away from his core business focus: fashion.
“In South Africa the concept of a pop-up store is often confused by some retailers and considered to be a store where they can pay little rent, do minimal shop fitting and sell off surplus stock for close of business sales. This perception isn’t true,” says V&A Waterfront’s Alex Kabalin.
“The pop-up store concept in its purest form was created to trial a new product, item or a new brand within a select target market environment. While it may not require as much initial capital expenditure as a traditional shop, it does require significant upfront marketing spend in order to create the initial awareness, so that as soon as the doors of the pop-up store open they have feet in the door and are able to generate sales.”
The secret to the success of Pop Shop, Terblanche said, lay in the fact that they were able to tap into an existing infrastructure of support, which made setting up, running and marketing their pop-up store seamless. “We were lucky because the space we were allocated was already fitted – thanks to the tenants before us – so we had instant access to working lights, and we had shelving and rails which could otherwise have been a huge expense.
“We also had access to resources from our company – a stylist who helped us with our interior design and we made use of exhibitors’ furniture in-store. In addition, we had the Design Indaba’s marketing manager assist us with our communications, and our finance department was completely set up to help us with the invoicing and billing systems.”
Novices who come unprepared may fall short.
To maximize the benefit of a pop-up shop, think long term rather.
“Making a profit takes time,” said Terblanche. “Obviously the longer period of time an entrepreneur is able to rent a space, the more time there is to offset setup costs and the more financially viable his business becomes.
“In order to realise the benefit of starting out as a pop-up store, the store should remain open between two to six months,” said Kabalin. This depends on the store, the product offering and time of the year. The key benefit to both landlord and tenant is that the store is a success and can transform into a permanent retail presence at a centre and hopefully expand to other locations.”
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