Advice for Retailers

How to Open a Pop-Up Store

Pop-up stores are taking the retail industry by storm. Here are the key ingredients you'll need to leverage this retail model for profit or other business benefits.

There are a lot of reasons why pop-up stores are "popping up" in record numbers.

A deflated economy has caused many retailers to take a closer look at overhead costs. This has created a retail philosophy that limits operations to peak seasons and encourages the development of new business opportunities. At the same time, the commercial real estate industry has a high volume of vacant properties that are ripe for short-term retail leases.

Pop-up retail offers advantages for the right retailers. But the fine line between success and failure is determined by the goals the retailer hopes to achieve through a temporary retail approach and the amount of planning he invests in the business model. Entrepreneurs looking for low overhead, short-term business opportunities may discover that pop-up retail fits nicely with their business strategy while startup owners with a long-term outlook may struggle to rationalize a pop-up approach.

Consider Your Goals

Before you decide to launch a pop-up store, you need to have absolute clarity about your goals. There are a lot of good reasons for starting a pop-up . . . But there are plenty of bad reasons for starting a pop-up, too. Thoroughly educate yourself about pop-up retailing and make sure that your business goals line up with the outcomes you will achieve through this approach.

Locate Space

In today's real estate market, you shouldn't have any trouble locating space for a pop-up store. Commercial landlords are currently experiencing vacancy rates of 12% or more, and are eager to lease to new tenants, even if it is only for a short-period of time. So the challenge is to identify space in a location that supports your goals and traffic requirements.

Tailor Your Business Model

It might surprise you to learn that profit isn't the primary motivation for most pop-up retailers. There are various other motivations for pop-up retailing, each of which requires a tailored business model.

  • Inventory dump. Larger retailers use pop-ups to dump excess inventory. By outsourcing merchandise to a pop-up, the retailer can offer atypical discounts without jeopardizing their primary business model.
  • Marketing buzz. Some retailers use pop-ups for the sole purpose of generating buzz about a product or business concept. High-traffic, high-energy locations are best for this model.
  • New market or concept. In many instances, pop-ups are used as a way to test a new market or business concept. In this strategy, the retailer carefully defines the parameters of the exercise and tailors the pop-up to deliver metrics for later evaluation.

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