Part 3: Practices and Strategies for Pop-Up Retailing – Primary Activities
The choice of location is a critical decision for any pop-up business. The age old maxim “location, location, location” underlines that the level of success of a business is heavily dependent on operating the business from the right location. This chapter looks at the factors that need to be considered when evaluating where to locate a pop-up shop. Some locations will work well for certain types of pop-up concepts and not for others. In this chapter we unpack all the elements of the pop-up store location decision.
Location is EVERYTHING. You can have the best product at the best prices but if the customer demographic of an area is not right, then your pop up shop is not going to be as successful as you need and want it to be.1
Upon completion of the chapter, readers will be able to:
- Define different location types.
- Identify the differences and similarities between pop-up shop and traditional retail location decisions.
- Understand the three levels of market analysis related to location decisions: market, neighbourhood and property.
- Determine the key success factors associated with pop-up shop location decisions.
- List the key stakeholders involved in selecting and operating pop-up shops.
Setting the Context
The following video helps to set some context about the considerations that may go into selecting a location for a pop-up shop.
In this scenario, a business owner is meeting with a leasing agent outside a streetfront retail strip and discussing the pros and cons of setting up within a vacant store in a nearby area or in a traditional shopping mall.
1. Types of Retail Location Decisions
Retail location decisions refer to a variety of activities related to changing the physical store footprint, including:
- opening or closing single stores
- acquisition or disposal of groups of stores
- expanding the store network in international markets
- refascias and the development of new store concepts
- expansion or contraction of operating square footage at existing stores
- refit or renovation or stores
- relocation of stores to new locations within the same market or shopping centre/retail strip
The figure below shows the type of of location decisions made by major Canadian retailers in 2011.
1.1 Traditional Retail Location Decisions
Retailers have traditionally provided consumers with access to their goods and services through retail stores. Location decisions are critical to the ultimate success of the retail enterprise.
Good locations allow ready access, attract large numbers of customers and increase the potential sales of retail outlets… even slight differences in location can have significant effects on market share and profitability.3
In terms of costs, location decisions often represent major capital investment and therefore risk for retail organizations. While many elements of retail and service strategy are dynamic and fast-changing, location decisions are by contrast traditionally long-term and binding. For example, it is relatively straightforward for a retailer or service provider to change pricing, product/service assortment or advertising. However, the physical “bricks-and-mortar” of store locations are a form of grounded capital that cannot be easily altered or quickly changed. As such, there is an underlying inertia to retail location decisions; once made, the organization usually must live with the decision for many years to come.
For example, a retailer may decide to open-up a new store in a major shopping centre. The shopping centre landlord may be able to charge a high price for the lease of the property due to the high demand for space in the centre. The landlord may tie the retailer to a long-term lease commitment over 10 years, with significant financial penalties for vacating the property before the termination of the lease. The retailer may even have to wait for the right space to become available in the shopping centre. In some cases, as part of the lease agreement, the retailer might be pressured to open up other stores in shopping centres owned by the landlord elsewhere in the country. The retailer may also need to investment in refitting the store to meet their specific brand requirements (e.g., store frontage, interior design of the store, fixtures and fittings, etc.). In the case of a retailer looking to build a new store, they will need to: secure the purchase of land; put in place all of the necessary municipal planning approvals; perhaps be subject to lengthy delays due to challenges in gaining approvals; then work with a developer/construction firm to build out the property to meet the design and branding standards of the retail concept. Whether the retailer is taking up existing space or building their own new space, the traditional retail location decisions can be extremely costly and time-consuming.
A great spot is the alpha and omega. Everything rises and falls on the right location. Even the most convincing concept won’t brew, if the spot is shady.4
1.2 Traditional Retail vs. Pop-Up Shop Location Decisions
Pop-up stores are still vastly under-utilized as a retail device. They provide rich, 3D experience, so can provide seasonal or in-campaign brand impact. Pop-ups can serve to test-market a new concept prior to full investment. If sales hit a threshold, morphing to a permanent location is a logical progression.5
Now, let’s contrast the onerous location decision for a traditional retailer against that of a pop-up shop. Since pop-up shops are temporary, the level of investment is significantly lower than it is for traditional retail. It is important to note that while pop-up shops are not subject to the same level of long-term commitment, the decision to operate from the right location is still critical. Many pop-up concepts are generated by small start-up businesses that do not have large reserves of capital to spend on a store location. For many of these businesses, they are using the pop-up model to test their business concept. Location decisions for pop-up stores are short-term but they do have long-term implications for the ultimate success of the business concept – they may lead to the formation of a permanent business.
In Vancouver, pop-ups are increasingly turning permanent—from food trucks like Tacofino and Pig on the Street opening restaurants to businesses blooming from The Chinatown Experiment, an empty shell on Vancouver’s Columbia Street that is rented out to an ever-changing roster of pop-ups that inhabit the space for a few days, weeks or months.6
Check out these examples of pop-up shops that went permanent in Vancouver.
- Why are location decisions of critical importance to retailers?
- Which types of location decisions do you think are most prevalent for retailers?
- What makes pop-up shop location decisions different from traditional retail location decisions?
2. Making Location Decisions
When researching prospective locations for a pop-up shop, here are some important questions to consider.
- Who are your target customers?
- Are you dealing with a seasonal pop-up concept and focusing on high traffic areas during a particular time of the year?
- Do you have a set of new products and services to test on a small scale and gain customer feedback before investing in the roll-out of the concept?
- How “retail-ready” is the location you are considering?
- If the location is part of an institutional pop-up program, what additional support and resources may be available? (e.g. marketing, leasing assistance, insurance considerations.)
Do the research before you move in. Where are your customers likely to be throughout the year? Instead of viewing seasonality as a challenge, see it as an opportunity. At the same time, a great venue does not mean a great location. Make sure you are positioned optimally on the venue to ensure your potential customers can find you. That will maximize your impact.7
Finding the right neighborhood or store location is critical to ensuring the success of a pop-up shop. This includes doing due diligence on area demographics, other retailers present in the neighborhood, visibility, foot and vehicle traffic counts, and neighborhood safety. Speak to neighboring stores for the real scoop.8
You know your brand better than anyone. The space you choose should mesh visually with your brand and look like an extension of your website, if you have one. Think about it: if you owned a vintage clothing e-store, would it make sense for you to rent a corporate event space for your pop-up?9
In order to make your location decisions, it’s important to:
- Know your pop-up goals: Pop-up shops can serve many purposes, from generating sales to raising brand awareness. Deciding why you’re opening a pop-up will help you determine the best type of space for your event.
- Know your target demographic: Knowing your target demographic is crucial, as you’ll want to pick a neighbourhood that fits your brand. Researching the demographics of neighbourhoods that you’re considering for a pop-up will help you get the right kind of foot traffic in the door. The best place to pop-up is in an area where a good number of your target market hang out.
- Research locations: For a pop-up shop, location is key to ensure that your shop gets the foot traffic it deserves. Talk to nearby businesses and walk the streets to make an informed decision about the right space for your brand.
- Be strategic about your hours of operation: After determining your goals, target and location, set hours of operation that will bring you the most success. For example, SK-II’s pop-up studio in San Francisco offered half-hour lunchtime facials for women on the go. These details can go a long way, especially if you know who your customer is.
- Find a space: Once you’ve considered these goals and needs, start looking for a location. There are many companies that provide “find a pop-up space” services. These pop-up store marketplaces have sets of filters that can be applied to narrow down your search for the best location. Alternatively, look out for empty premises and then find and approach the owner; leasing agents and brokers can help with this.
- Communicate your needs: Let the space owner know what you’re looking to do in their space, when you’re planning on popping up, how much inventory you’ll bring and any other special needs you may have.
- Negotiate: Remember you will often be doing the landlord a favour. Some rental income from the property is a lot better than none and your buzzing pop-up will help liven up the area. You can negotiate to get the best deal.10, 11
3. The Market, Neighbourhood and Property
When locating a pop-up shop you need to decide on the marketplace in which you want to locate, then the neighbourhood and finally the specific property. Each of these levels of location have different sets of interrelated questions associated with them.
3.1 The Market
- What type of demographic does the pop-up offer appeal to?
- Do you already operate other businesses/have brand awareness in the market?
- Will the concept be best suited to a downtown, urban, suburban, exurban or small-town setting?
- Do you want to test your pop-up in a small market before taking on the higher costs of a major urban market?
3.2 The Neighbourhood
- Which neighbourhoods in your chosen market best fit the target audience for your pop-up offer?
- How vibrant is the neighbourhood? What size is the neighbourhood?
- Where are the commercial hubs and high traffic areas located?
- Does the image of the neighbourhood work with your pop-up concept?
3.3 The Property
- What is the potential target market foot traffic in the immediate area of the property?
- Who are the other notable retailers and consumables in the immediate area and are they complementary?
- Are there events or community gatherings taking place in the vicinity?
- Is the space in a nondescript building with a small entrance sign, or does the building have a grand entrance with a large logo? Can you alter the signage easily?
- What’s the cleanliness level like in the area?
- Is there parking nearby? If so, how much and at what cost?
- Is the location accessible by public transit? Is there a bike lane?
- Is there a large window that you can dress up for a display?
- How easy will it be to access deliveries?
- Can you place display signs outside?
- What is the location’s capacity? Retail square footage?
- Is there back stock space?
- What does the lighting communicate? Can lights be dimmed or alternative lamps and lighting brought in?
- Is there a camera to prevent theft and shrinkage? If not, what other loss-prevention tactics can be made available?
- Is there Wi-Fi to carry out credit card transactions with your POS solution? Can it be made available to customers?
- Is there a sink and a washroom?
- Can you make amendments to the space?
- What hours can the property be open?
- Can you serve food and beverages? Are there facilities to prepare or store foods?12, 13, 14
The look and feel of a pop-up has to match other shops in your pop-up location. You want shoppers passing by your shop to feel your shop has a seamless, integrated feel with the rest of the area. Keep the shop organized as you would a permanent location and display merchandise attractively. Avoid blatantly giving off the impression that your retail shop is a temporary location.15
4. Types of Locations
In their Ultimate Guide to Pop-Up Shops, e-commerce giant Shopify identifies different types of locations.13
- Store-within-a-store: some of the advantages of this type of location include being able to open your pop-up quickly in a place that complements your scope of supply and services while offering you a lower cost lease and operating charges.
- Gallery or event space: the open concept floors and minimalistic set-up of these types of spaces can be very inviting for a pop-up.
- Shopping centre or mall: usually this type of location has two options – a kiosk/booth space or a vacant store space that the shopping centre reserves for pop-ups or has a hard time renting out.
- Vacant street level retail space: often commercial real estate agents will settle for short-term leases for properties they are having a hard time selling or renting long-term.
In addition, each of these location types may exist within the broader context of an institutional pop-up program where a key location decision is the identification of an area in need of some economic revitalization initiative.
Other types of locations for pop-ups include:
- Other (e.g., modular/container temporary retail spaces)
5. Working with Stakeholders to Close the Deal
Pop-up shop location decisions often involve a variety of stakeholders, including the retailer, real estate leasing agents, landlords, developers, the local planning authority, etc. Clarke and Hallsworth (1994) remind us of “the process of bargaining, negotiation and tactical play between ‘actors’ surrounding, and impinging on, the decision to invest in a particular location.”16
The How to Pick the Perfect Location chapter in Shopify’s Ultimate Guide to Pop-Up Shops provides helpful information about things you should consider when preparing to make a location decision for your pop-up.
Another helpful resource is the Canada Business Network’s blog post on temporary retail. Remember that you may have to adhere to certain bylaws or acquire additional permits or licences for a temporary location, especially if you operate on the street or the sidewalk, for example.
Pop-Up Shop Marketplaces Around the World
In this chapter, you learned:
- about the different types of location decisions that retail and service organizations undertake
- how important location decisions are to the success of a pop-up retailer and how they differ from traditional location decisions
- what factors pop-up retail operators need to take into account when they search for, assess and negotiate leases for their store location
- Location Decisions
- Location Analytics
- Location Type
Mini Case Study
Wolf Paw Apparel
Wolf Paw has traditionally sold its highly-desired outerwear at wholesale to partner retailers rather than in their own brick-and-mortar locations. Their entire business model revolved around them being business-to-business (b2b) rather than business-to-consumer (b2c).
However, with changing demand and an ever-increasing outcry for better selection and more styles, Wolf Paw has decided that the only way to meet the desires of some customers is to open their own brick-and-mortar stores. Due to the inherent risks associated with opening a brick-and-mortar location, Wolf Paw wants to ensure that each store is right for its local market. Additionally, Wolf Paw has no experience in running a retail location. All the retail strategies, policies, management, staffing, inventory, supply chain, customer service, point of sale (POS), and other related matters need to be carefully planned and implemented. Yet using their first store as part of a trial-and-error method to work out the details could seriously hurt their brand image, customer loyalty, and future sales.
Wolf Paw noticed that there was a short-term vacant space in the same mall where they wanted to launch their first permanent store several months later. They asked the mall leasing manager and found that the space was being held for a new international retailer but it would remain vacant for several months until construction on the new store was set to begin.
Given that the location of the vacant space was close to their future flagship store, they felt that it would be an ideal place to launch a pop-up shop and work out the above-mentioned details of running a retail shop; away from the high-expectations of customers expecting a major flagship store experience.
The pop-up shop served several purposes: to get people interested in the brand as a new retailer, to promote awareness of the upcoming flagship launch in the same mall, to understand the intricacies of running a retail shop first hand, to plan and execute different strategies in areas like supply chain management and customer service management, to develop staffing requirements and training material, to slowly build brand loyalty at the retail level, to test out customer loyalty programs, and more. Wolf Paw successfully opened its flagship retail store several months later and used the lessons learned at the pop-up shop to ensure a smooth and efficient transition from a b2b to b2c model.
Consider the following questions:
- Why is location such an important decision for pop-up shops?
- If the vacant space (near their eventual flagship location) was not available, what are some strategies Wolf Paw could have used if:
a) they still wanted to use pop-up shops to introduce their audience to their new retail venture?
b) they wanted to work out the details of running a retail location?
- What value did the pop-up shop at the mall offer to:
a) the mall and its owners?
b) other retailers in the mall?
c) Wolf-Paw’s retail partners?
- Colour Graphics (2015, September 28). The complete guide to finding a pop-up shop to rent.
- Hernandez, T. & Emmons, M. (2011). Corporate Retail Location Planning in Canada: Summary Findings. CSCA Research Report, Ryerson University.
- Ghosh, A.& McLafferty, S.L. (1987). Location strategies for retail and service firms. Lexington, MA: Lexington Book Publishing.
- Sanchez, M. (n.d.). How-To Guide: The Perfect Location For Your Pop-Up Store.
- BCBusiness. (2013, March 14). Pop-Up Stores Going Permanent.
- BCBusiness. (2013, March 14). Pop-Up Stores Going Permanent.
- Retail Category Consultants (n.d.). Why Execution Matters For Pop-Up Shops.
- Subramanian, S. (2013, December 10). 12 Tips to Open and Run a Successful Pop-Up Shop. ShoppinPal.
- Foley, G. (2017, January 23). How to Plan a Successful Pop-Up Store. Highsnobiety.
- Braun, S. (2014, August 10). How to Find the Perfect Space for Your Pop-Up Shop. lightspeed.
- Wiley, L. (2015, January 28). How to Set Up a Pop-Up Shop. Prowess.
- Khan, H. (2016, April 13). 10 Things to Consider When Scouting Locations for Your Pop-Up Shop. Shopify.
- Shopify. (n.d.). The Ultimate Guide to Pop-Up Shops.
- Popupshopup (n.d.). Finding the Right Space.
- Subramanian, S. (2013, December 10). 12 Tips to Open and Run a Successful Pop-Up Shop. ShoppinPal.
- Clarke, I. & Hallsworth, A. (1994). Interorganizational Networks and Location Investment Decisions: A Canadian Example. International Journal of Retail & Distribution Management, (22)6, 38-45.