During a recent visit to New York City, I passed through Grand Central Station. There, I saw a hotbed of shopping activity: A section of Grand Central had been converted into a series of pop-up shops. What had happened to the retail bust?
The small pop-ups were doing a brisk business, selling everything from jewelry to men’s toiletries to candles. The shops were small, but had tons of personality. The experience was interactive and fun.
This was not an isolated incident. Pop-up shops are making their presence felt across the retail industry. The concept is not new — bazaars and flea markets have existed for many years. But lately, pop-up stores have become ubiquitous in everything from restaurants to rock festivals.
They are used by online retailers who are looking to experiment within the bricks-and-mortar space, and by chain stores who want to experiment with new locations and venues. Fashion retailer Nordstrom has launched pop-ups at music festivals that offer products and feature photo booths.
According to PopUp Republic, a service provider to the pop-up retail industry, pop-up shops have grown into a $50 billion industry and expected to grow further in 2017.
Why do retailers invest in pop-ups? Smaller retailers or Internet start-ups can launch a low-cost shop to test the waters without a significant time or money commitment. A new bricks-and-mortar retail storefront can cost tens of thousands of dollars to launch and often requires a lease of at least five years.
With a pop-up shop, the commitment can be a matter of months, with an investment of a few thousand dollars. And consumers seem to love it. They can touch and feel the merchandise and get to know the creator or store owner. The interaction often results in a loyal following. According to pop-up expert, The Lion’esque Group, one international foods and goods marketplace increased their e-commerce traffic by 300 percent through pop-ups.
Another growing retail concept is the store-within-a-store. Large retailers have been partnering with smaller businesses to set up areas within their stores for a differentiated experience for the shopper. Macy’s announced a partnership with beGlammed to provide at-home grooming and makeup services, and Neiman Marcus recently announced a partnership with Le Metier de Beaute to provide services such as manicures and blowouts at affordable prices.
Plus, JCPenney has had a partnership with Sephora for years, providing a cute area within the store where shoppers can purchase cosmetics and get quick makeovers. In its 1st Quarter Earnings call, JCPenney mentioned Sephora as one of the areas in the store with positive comp store sales and there are plans to add 16 new Sephora locations in June. These partnerships fulfill the goal of the retailer to pull in a different customer set, while also fulfilling the desire for a quick, differentiated experience for the customer.
For retailers who want to test the waters with a low-cost concept, partnering with another retailer or setting up a pop-up shop may be a viable solution. And for the customer, it provides a new, interactive shopping experience.
Next time you’re in Grand Central during the holiday season, check out the shopping arcade. It may be a nice place to pick up that unique gift or chat with a person who makes hand knit scarves by hand.
Note: The views expressed in this blog are those of the blogger and not necessarily of Synchrony Financial.