FROM TRANSACTION TO ATTRACTION

The decline of retail was in full force long before the pandemic, but COVID really showed us the fragility of neighborhoods, and how important street-level commerce is to the vibrancy of urban life. The same is true for the burbs, where you’ll find malls half vacant. Department stores, once the bastion of American consumerism, are now so quiet you can hear a pin drop. The easy thing to do is to blame COVID and Amazon. Yes, e-commerce has taken a chunk out of traditional retail, but the real problem lies deeper.?

Now more than ever, people want to get out of the house. But they also need a reason to visit retail stores beyond the basic transaction. People have been shopping exclusively online for over a year. When we leave the house, we want to make it count. The secret for retail lies in creating attractions: a genuine reason for people to come to your thing over every other thing. Pop-up shops are the perfect attraction. But they’re not easy to pull off cost-effectively.?

The biggest challenges for pop-ups are the cost of real estate and the preparation of existing spaces. Landlords prefer expensive leases that run over long periods. The longer the lease, the higher the commission and lower the stress in dealing with ever-increasing vacancies. Long-term leases provide security and a steady cash flow that developers can then use to obtain loans for new buildings. They view pop-up retail as a band-aid until they can find longer-term tenants, and as such, they hold the bargaining power in leasing negotiations.?

What brands and realtors don’t understand is that they could work together to help one another. If brands created more pop-up retail, real estate developers would have more incentive to make temporary spaces available, and to prepare those spaces as turnkey solutions for pop-up tenants. If landlords do that, it would lower the cost for brand to create pop-ups all year long, and developers would be better able to handle the turnover that's part and parcel to short-term tenants and leases.

Now, here’s the real kicker for landlords and brands: not only do pop-ups serve as an attraction in their own right, but they help communities as a whole. A hot pop-up with a line out the door keeps its surrounding area bustling and vibrant, attracting visitors to stores and restaurants nearby. Pop-ups are a solution to maintaining, and even building on, the value of residential real estate with commercial ground floors.?

Taking this a step further, pop-ups help the economy at large. They require labor for both construction and staffing, which provides an influx of temporary jobs. We’ve already seen the rise of the gig economy – this is just another form of freelance work that can help launch careers and keep money in the community. We’ve employed over 40 people to work at our AriZona pop-up. We had similar success with Jack Daniel’s, another brand without a retail presence outside of traditional liquor stores. Opening a permanent store didn’t make sense, but our multi-city pop-up, featuring live music and whiskey tastings, proved highly lucrative. Over 60 employees brought the experience to life.

Mall operators should be all over pop-up retail, but they’re working with an outdated model. A few years ago Macy’s acquired Story, one of the few concept shops with experiential retail credibility. This was a nice move and helped Macy’s become more creative and attract a class of customers who had never walked through their doors before, but what they really should have done more of is make deals with giant, well-known consumer brands to bring experiential concepts into their space. Let brands fund the experience, they’re the ones that have the money, creativity, and innovation to drive traffic back into department stores. I know that AriZona Iced tea would have been happy to put their SoHo pop-up in a Macy’s or Bloomingdale’s (FYI we reached out and they didn’t even bother getting back to us).

We can enact a smarter business model here that benefits malls and brands alike. A store like Macy’s already has vendor spaces on the inside, but they’re only used for brands Macy’s currently carries (think the Clinique makeup section). What if instead, they used their vendor space to set up pop-ups for big brands like AriZona, Ducati, Sonos, or even a Coachella pop-up with limited-edition merch, making pop-up experiences an integral piece of their repertoire? There are new revenue streams out there that haven’t even been discovered, much less tapped.

From a brand perspective, pop-ups need to be a line item in every budget, They need to be the channel through which all products are launched moving forward. For any brand that’s struggling, pop-ups are doses of real-life magic that you can leverage to glom sales back from e-commerce.

Every time a consumer product company promotes a new product, it should create a seasonal pop-up. Hell, create a few every quarter, consistently switching out the content with newer offerings. For the same price as a single spot on television, brands can create multiple pop-ups, touch multiple geographies, and create deep and lasting connections with consumers. Pop-ups pique curiosity and interest; their transitory nature makes them “a thing” that drives people to see it before it's gone. Publications like to write about them, earning brands a heap of free media.

People love change. They love the excitement of what’s next. We live in a world of “Look at that new building! Look at that new restaurant!” Malls get tired fast. Department stores are even worse. Pop-up retail can be the answer. It’s a real change of economics that will help two industries save each other. And we won’t just be saving brands and real estate – we’d be saving jobs and neighborhoods as well. As retail continues to diminish, pop-ups need to become synonymous with product launches and promotions. We need to give consumers a constant sense of novelty and entertainment in brick-and-mortar stores.?

We can only hope that?the last 18 months have knocked some sense into neighborhood real estate owners and mall operators. We believe brands have huge bargaining power to create spectacular retail attractions. Consumers have an insatiable demand for new experiences and they are more than ready for a huge dose of retail therapy.?The opportunities for brand and category collaborations are endless, and experiential agencies are ready to work. So let’s get busy saving neighborhoods, malls, and brands, and let’s have some fun doing it!?