Pop-up stores seem to be popping up everywhere. The national retail vacancy rate is at a three-year high, so these temporary shops dropped into empty spaces have become an attractive option for both business owners and landlords. "It's a great way to market your products or your real estate," says Christina Norsig, CEO of PopUpInsider.com, a site that lists available pop-up locations. Here are four reasons entrepreneurs are opening pop-up stores.
1. To get the word out
Jason Revilla and Jim Grumbine were in New York City earlier this year when they stumbled upon some vacant retail spaces being used as pop-up stores. The two friends, co-founders of Faith & Fortune, a fledgling online apparel company, liked the idea and wanted to try something similar in their town of Beverly, Massachusetts.
In April, after six weeks of planning and scouting locations, the founders launched a pop-up store for Faith & Fortune on a main drag in Beverly. Their primary goal was to raise brand awareness. "Since we're a Web-based business, we were looking to get more people to interact with the brand," Grumbine says. "It's great having people come in and see the clothing, because the materials we use are unique, soft, comfortable, and vintage-like."
A friend in the real estate industry helped Revilla and Grumbine find an empty store on a street with high foot traffic. The space had wireless Internet access. To publicize the event, the founders sent messages to their Facebook and Twitter followers and handed out fliers around town. They used a laptop and an online application from First Data, a merchant processing service, to accept credit card purchases.
In one weekend, the company sold $1,000 worth of artist-designed T-shirts and sweatshirts; $200 of that was donated to a local charity as part of the company's dedication to charitable causes. After Revilla and Grumbine purchased signage, food, and office supplies, their costs for the event totaled just $150 -- plus a few T-shirts. The landlord let the founders use the space in exchange for a couple of shirts.
"One of the things we found in this economy is that businesses are willing to help each other out," says Revilla. "People are willing to negotiate, and it's something you should take advantage of."
2. To unload old inventory
Two weeks before New York City's International Contemporary Furniture Fair in May, Cheri Caso began hunting for space to exhibit the modern housewares she sells through her online store, Merchant No. 4. At first, she considered renting retail space, but she didn't have much time to shop around, and the landlords she spoke with were asking for thousands of dollars. Luckily, a friend who owns an architecture firm agreed to let Caso set up shop in the firm's office. The company was getting ready to move and had unused space in its fourth-floor loft.
Caso had two goals: to gain attention for her website during a time when many design fans would be in town and to sell some products she no longer carried on the site. "We have a lot of odds and ends that are just taking up space in our storage area," she says.
Caso spent about $1,000 on the event, including $200 for insurance, $400 for the space, and $400 for the materials she used to build display tables and room dividers. To get foot traffic, she announced the event on Twitter and sent press releases to design blogs and local publications. She also placed a sign on the sidewalk outside the building. Over four days, she made a small profit, with about 200 to 300 people passing through the shop. About a quarter of the products sold were clearance items. Still, Caso had hoped to sell even more. "Next year, it would definitely need to be in street-level retail space," she says, "so I'll have to start looking for something ahead of time."
3. To test new markets
By 2007, Bobby Kim and Ben Shenassafar had built a cult following in Los Angeles for The Hundreds, a clothing company influenced by the styles of California skateboarders. Kim and Shenassafar had a store in the city's Fairfax district and were looking to expand into other cities. Their first target was San Francisco. Opening a pop-up store seemed like a cost-effective way to gauge interest, so they teamed with several other brands to rent a gallery for a day. After the success of that pop-up store, The Hundreds opened a permanent retail space in San Francisco in 2008.
In 2009, The Hundreds opened its own weekend pop-up store in New York City. The event turned a small profit, even with $7,000 in costs. "Not only did we make a little money and move product," says Shenassafar, the company's CFO, "but we were able to market the brand in an area where we didn't have a lot of penetration." That persuaded Kim and Shenassafar to open a third store, set to debut in Manhattan this summer.
4. To vet a new business idea
For about a year, Dorie Greenspan, a popular cookbook author, and her son, Josh, had discussed opening a cookie shop in New York City. But permanent retail space in the city is pricey, they discovered -- as high as $1,725 per square foot per year for prime space. Before making a big financial commitment, the mother-and-son team wanted to make sure that people would come. "We needed to figure out if we could physically do this and if people would buy the cookies," Josh says.
In late 2009, Josh approached a friend who owned a Manhattan salon and pitched him on the idea of selling cookies there during the days leading up to Valentine's Day. The friend agreed to let the Greenspans use the space for free. He merely asked that they pay the associated fees if they used the salon's credit card swiper.
The Greenspans spent about $1,600 to rent a commercial kitchen in Long Island City, in New York's borough of Queens, to bake the cookies and set up a small table inside the salon, near the entrance. A few fans of Dorie's volunteered to help bake after she publicized the event on Twitter. Time Out New York and several food blogs covered the event. In six days, the Greenspans sold more than 4,000 cookies. "It was far beyond anything we expected," Josh says.
Not only did the pop-up prove that people would indeed spend up to $3.50 on a single cookie, but it also convinced Josh that a full retail store was unnecessary. He is now looking to permanently rent a sliver of space in someone else's store. "We had been thinking about getting a 1,000-square-foot space," he says. "At the pop-up, we had a 3-foot table. It made me want to try to figure out a better solution where we don't have as much space."