Japanese industrialist and “king of electrical appliances” Konosuke Matsushita once said, “Businesspeople need not care about boom or recession. No matter how bad a recession is, they need to survive with their own means.” Although it is an undeniable fact that the retail industry is now sluggish, quick-minded shopping complexes are introducing “pop-up stores” to stimulate foot traffic. How are these seemingly casual “mini stores” rising to the rescue of the retail industry?
Kitty Choy: The flexible lease term and format of pop-up stores help create a win-win situation
During this bitterly cold winter for the retail industry, shopping complexes are urgently implementing countermeasures. “Pop-up stores” are gradually becoming the answer to this bleak situation for many shopping malls in Hong Kong.
If you have visited a shopping mall in recent years, you should have noticed an influx of small and temporary stores. They are not heavily promoted, and may suddenly show up in a certain corner of a shopping complex to catch the eyes of customers within seconds. Yet, they only operate for a short window of time. When their lease is over, you can only bemoan their disappearance even if you want to visit them again.
Flexible use of space to create wealth
Situated at Causeway Bay, Hysan Place certainly does not lag behind the market trend. According to Kitty Choy, Director of Retail and Marketing of Hysan Development, they began planning to utilize the atrium space about three or four years ago. At the time, it so happened that a few stores were unoccupied, so the shopping complex decided to open “pop-up stores” at these spaces.
Summing up their experience, Choy concluded that “pop-up stores” are highly beneficial for the development of shopping malls. First of all, “pop-up stores” are set up at vacant spaces. Making good use and bringing in rental income is therefore already the most direct benefit for the mall.
As trendy and updated as magazines
Secondly, the flexibility and versatility of “pop-up stores” have unquestionably injected much vibrancy to the shopping complex. Choy compared “pop-up stores” to magazines – they are regularly updated – so the shops are constantly bringing something new to the shopping mall, giving customers a reason to revisit it.
For merchants, short-term “pop-up stores” also have their values. The lease terms for “pop-up stores” are short, making them relatively low-cost and therefore can work as test runs for merchants. If the pop-up stores prove to be well received, the merchants can then consider expanding through a permanent shop space. This practice gives merchants the option of not having to rashly engage with a long-term lease, significantly reducing operation risk.
On the other hand, some existing tenants with a permanent shop space at the same mall are also opening additional short-term pop-up stores. Why so? Choy explained that these usually occur during festivals or certain commemorative events.
More gimmicks for festive functions
During festive seasons, “pop-up stores” also serve as much-welcomed celebratory attractions. Choy quoted Ferrero Rocher as an example. The chocolate brand invited French chocolatiers to demonstrate the craft of making confectionery from chocolate on Christmas Day. Made-to-order and personalized chocolate gifts were also offered on site.
Looking forward, Choy believes that “pop-up stores” can offer flexibility, versatility and mobility. As they create a win-win situation for shopping complexes and their tenants, they should be here to stay. Choy reveals that a new wave of refreshing experiences has been prepared for customers through “pop-up stores” this summer.
Kit Chan: Pop-up stores are subverting retail conventions
PopUp Angels Founder Kit Chan points out that, lease term aside, pop-up stores are not very different from traditional shops. Consumers may not be able to tell one if it is not indicated as such.
Low risk and investment relative to traditional shops
According to Chan, pop-up stores are set up chiefly for bulk selling within a short period or branding promotion. As an emerging and successful business model, pop-ups offer both promotion effectiveness and lower cost compared to traditional retail stores. The owner of a traditional retail store has to commit to a tenancy of several years, which entails considerable risk. “By contrast, you can calculate quite accurately what it costs to set up a pop-up store in a busy shopping district. Operators can make adjustments based on effectiveness as they go along.”
Pop-ups are most common in the fashion industry. When promoting their products, online shops and independent designers without brick-and-mortar retail outlets are often restricted to advertising on Facebook and similar channels. By setting up a prime-location pop-up store for only a month, however, they can reach a large number of potential consumers within that short period and encourage those clients to buy from their online shops in the future. Pop-ups are also a good touchstone for foreign brands aiming for entry to the local market. Chan says a Danish sports brand offering collections that combine jogging and fashion opened a pop-up store earlier to test market response.
Flexibly geared to specific themes and timing
Flexibility is another advantage of pop-up stores. A leading cosmetics brand from Japan has set up a three-day pop-up store for high-impact promotion of its new lipstick line. Chan points out that while the brand has a number of long-term retail shops, it is impossible for them to offer just one single item. These conventional outlets cannot compare with a pop-up store when it comes to featuring new products. Cultural and art workers often have difficulty operating long-term art galleries. Cost performance is much greater if they set up shop to reach their audience in a specified period. He says many artists grasp the opportunity to attract overseas art lovers with pop-ups during the local art spectacular Art Basel.
A little decoration goes a long way
Chan is pleased to share some keys to success for pop-up stores. He says interested operators should first understand the goal of opening a pop-up store ― to gain long-standing customers. He suggests choosing a high-traffic location and putting extra effort into shop decoration. For example, simple spotlights and stickers can already make the shop much more appealing. He also points out that pop-up stores should be aligned with media and online advertising and supported by brand events, such as online opening previews and a grand opening. Cost control is also very important. Operators should carefully calculate the number of staff required as well as the fitting-out cost and its impact on the operation period. Timing is another factor to consider. For example, some fashion brands open pop-up stores regularly, while some cosmetics brands opt to set up shops in November and December in the run-up to Christmas and New Year to attract gift shoppers.
It is not easy to satisfy all the above requirements, and PopUp Angels has identified a business opportunity here. Online brands often have difficulty finding the right shop space for pop-ups because landlords are not familiar with these businesses and have reservations about leasing. They find PopUp Angels more reliable and easier to deal with because as an agent it can supply a continuous flow of potential tenants. In addition, PopUp Angels can advise clients on location selection and other planning issues, as well as arranging temporary staff and leasing basic equipment like lighting and fittings through partner contractors.
Subverting retail conventions
Chan says pop-up store is still a new concept in Hong Kong but it has been around for three or four years in North America and Europe. The idea is now catching on in Asia’s shopping core cities. PopUp Angels joined the Hong Kong market from Singapore last year. Chan says that Hong Kong is the first access point to the Asia market for overseas brands and has nearly twice the demand for pop-ups than Singapore. He thinks the greatest challenge is to convince the landlords because many of them are accustomed to dealing with long-term tenants and have reservations about pop-ups. Some would even leave their spaces vacant to wait for long-term tenants rather than signing short-term leases. However, as the retail landscape has changed in recent years, more landlords are now willing to consider leasing to pop-up stores, and quite a few large shopping malls have allocated special areas for pop-ups to ensure there are crowd-drawing new elements all the time.
Chan believes that the pop-up store is not a short-lived idea because the retail model is different today. Brick-and-mortar shops are no longer essential. Instead, they have become a promotion tool for online shops. “Just as any business can be run online, any business can be operated in the form of a pop-up store.”
