Why Malls and Department Stores Are Turning to Pop-Up Concepts to Fuel Business

The pop-up has evolved.

Once a novelty flitting around the margins, temporary retail is making a more permanent mark on retail as the establishment adopts and cultivates the concept.

And, as is often the case with all things retail these days, e-commerce is at the center of this transformation.

Last year, the obituaries for fallen stores were permanent fixtures in the news — and it seemed some were certain physical retail would die off entirely given the record number of store closures and chain bankruptcies. But even as e-commerce continues to surge, brick-and-mortar retailers have fared better in 2018 than would have been expected coming off the previous year.

“Maybe we’re beyond the initial wave of cynicism and doubt about brick-and-mortar retail. Because what you’ve started to see in some categories is that, yes, Amazon is an incredibly important part of retail but it’s not the end of traditional retail,” said William Wilson, managing director, head of leveraged finance, for Imperial Capital.

Instead of falling by the wayside, the old guard — represented by malls and department stores — is playing an important part in shaping the future as digital natives — which often rejected the idea that there was value in an offline presence — are looking to put down roots.

That’s translated into formerly online-only stores taking spaces left vacant by now-defunct chains. But not every brand has the heft of Warby Parker or Untuckit, which has allowed them to sign multiple traditional leases.

To answer the need from the smaller players, Simon Property GroupWashington Prime Group and Macy’s are among the traditional formats welcoming fledgling retail concepts and booming direct-to-consumer brands in their doors with dedicated spaces that come with the tech, marketing and operations all baked in.

This year, Washington Prime launched Tangible Collective, a marketplace specifically for physical retail novices, in four of its properties. Thus far, 18 brands have moved in, including performance apparel brand ScotteVest, Revtown jeans and Loctote bags.

Tangible Collective is showcased in the main thoroughfares of those properties and supported with signage, social shoutouts and microsites on its website.

“The biggest takeaway is the demand for physical space,” said Erin Urbanek, ventures associate for Washington Prime Group, of the company’s experience thus far. “We’ve learned that brands are very hungry to get into physical space, as they know it’s a necessary avenue to continue growth.”

The upside for the shopping center group is it drives an element of discovery for shoppers — both those who might recognize these brands but may have never seen their products in person, as well as those who are encountering them for the first time.

Welcoming these brands adds “a bit of theater” to the shopping experience, according to Macy’s, which hosts 12 The Market @ Macy’s areas within its stores.

Emily Goldberg, spokesperson for the retail chain, said it’s a win-win for all parties.

“As customers discover what’s new and what’s next, brands are able to take away meaningful insights enabling them to get to market smarter and faster,” she said, adding that for Macy’s, it’s a new way to engage the consumer.

To foster the more than 200 brands that have found a temporary home there, The Market @ Macy’s provides a turn-key operation that allows them to leave the operations, analytics and marketing to the department store. This retail-as-a-service is powered by b8ta, a tech concept that Macy’s took a stake in earlier this year.

For The Edit, Simon Property Groups’ retail platform, the company partnered with pop-up specialist Appear Here as well as staffing solutions firm AllWork. Tenants have included Rhone athletic apparel, Vitaly menswear and beauty brand Winky Lux. While the company said it’s too soon to fully evaluate its year-old concept, CEO and chairman David Simon anticipates scaling the venture.

Rick Sokolov, president and COO of Simon Property Group, elaborated on the potential long-term benefits The Edit represents.

“We’ve already had one of the tenants in there that is opening up some incremental locations with us throughout the portfolio because they were pleased with the experience they had there,” he said, during the company’s Q2 earnings call. “So, it does work as an incubator and we’re seeing positive results out of it.”

Editor’s Note: This story was reported by FN’s sister magazine, Sourcing Journal. For more, visit Sourcingjournal.com.

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