Popping up: Major Minnesota retailers try temporary stores | Crain's Twin Cities

Popping up: Major Minnesota retailers try temporary stores

Mall of America has long hosted versions of pop-up concepts like Best Buy's Tech Home, above. | Photo courtesy of Best Buy

 

A couple of decades ago, pop-up shops were a tool used primarily by farmers, fireworks vendors, artists and Halloween-supply retailers.

These days, the temporarily staged product outlets are big business, drumming up some $10 billion in sales across the nation each year, reports marketing consultant PopUp Republic.  Even large national retailers are stepping up to stage short-lived but fun shops that can showcase their products and engage with customers in new ways.

Big players in Minnesota certainly are grabbing their piece of that pie, says David Loranger, an assistant professor of retail merchandising at the University of Minnesota. As examples, he points to pop-up concepts staged at various locations over the past several years by Minneapolis-based Target Corp.

“[Pop-ups] have solidified themselves as a valid operating paradigm in retailing,” Loranger says. “What with the various locations, merchandise permutations and collaborations, the possibilities are limitless. Pop-ups can be used for a variety of reasons, including reviving a brand, connecting with new customer bases and locations or reinvigorating current customer bases with exciting new concepts.”

Behind the phenomenon  

Loranger says the trend is driven by changing demand related to demographics: The baby boomer segment is coming into discretionary income in retirement; millennials are increasingly pursuing customization and enjoyable experiences in their shopping; and various other consumer segments are “flexing their muscle” by demanding specific products. The temporary nature of pop-ups often imparts a profitable sense of urgency among shoppers, and the fleeting stores can be a big attraction for those who prefer in-person shopping to e-commerce.

“Customers are interested in fresh merchandise, unfamiliar brands — or collaborations or takes on brands — and a lack of a sense of permanence, which leads to a fear of missing out,” Loranger explains.

Retailers are responding by using pop-ups to test new markets, efficiently promote new product mixes and/or reinforce brand recognition — all without expensive leases, lines of credit or significant new infrastructure.

And of course, real-estate developers appreciate the opportunity to optimize their vacant commercial space.

The temporary stores come with challenges related to regulations, staffing, set-up and deconstruction. But overcoming those hurdles must be paying off; a study earlier this year by Square and Mercury Analytics found 21 percent of U.S. business owners have either staged pop-up stores or arranged to have pop-up presences at events.

In Minnesota: Big fish, smaller ponds

Since 2002, retail giant Target has experimented with temporary store spaces in select locations throughout the United States.  These include on a 220-foot boat (the U.S.S. Target) anchored at New York City’s Chelsea Pier; in a 3,500-square-foot “smart home” in downtown San Francisco;  inside a re-outfitted London-style double-decker bus parked in Manhattan; on college campuses; and in a building within the heart of New York’s Chelsea district. The latter project was a well-publicized 16,000-square-foot holiday entertainment and shopping extravaganza known as “Wonderland.” The corporation has also staged at least one pop-up overseas: a display at Selfridges department store in London to promote its line by clothing designer Alice Temperley.

The chain has no further plans for temporary pop-ups at this time, says Target communications representative Kristy Welker; instead it’s focusing on some 130 permanent small-format stores planned nationwide.

Richfield-based Best Buy has made its own forays into the pop-up community. In 2014 and 2015 it established temporary holiday Geek Squad pop-ups at Chicago O’Hare International Airport and the Minneapolis–St. Paul International Airport. The kiosks offered free tech assistance, along with demos and sales of the year’s hottest tech gifts. Other Best Buy pop-up concepts have included a “Tech Home” that showcased connected devices and appliances at the Mall of America, as well as an elaborate home theater display called the “Ultra HD Lounge,” installed last year at John F. Kennedy International Airport and Hartsfield–Jackson Atlanta International Airport.

“These locations have allowed us to either bring the latest technology to people in an unexpected location or have allowed people to experience our Geek Squad service during a busy time for travelers,” said Jeff Shelman, Best Buy’s senior director of external communications.

Mall of America has long hosted versions of pop-up concepts; an example was last year’s 2,500-square-foot store debut, which rotated collections from national retailers such as Woolrich, local retailers such as Minneapolis’ Askov Finlayson and other vendors wishing to showcase limited product lines.

Popping up for nonprofits

True to Minnesota-nice form, many organizations statewide have used the pop-up concept for altruistic purchases. For example, last May, Blaine-based cosmetics manufacturer Aveda Corp. staged a bring-your-own-bag shopping event through which the company donated 10 percent of proceeds to the local charity Community Emergency Assistance Programs. 

In the future, Loranger predicts, the internet of things may allow for new concepts in pop-up shopping, such as personalized product mixes put together through mass customization.

“I do think the pop-up is merely one part of a micro-trend we're seeing in retail stores, meaning stores are [pursuing a] smaller format, with more tailored merchandise selections,” Loranger says. “Companies are operating more efficiently with smaller merchandise commitments and better sell-throughs. Consumers like this format because they feel it speaks to their personal lifestyle.” 

October 13, 2017 - 12:19pm