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Pop-up stores are becoming an overnight sensation

Major chains are legitimizing the phenomenon. It lets merchants move quickly, opening up shops to test a new product or market and closing them without much fuss.

October 17, 2009|Andrea Chang

For most retail stores, staying in business for only a few days would be considered a major flop.

But a growing number of merchants are opening shops and abruptly shutting them down soon after -- on purpose.

These quickie retail operations -- known as pop-ups -- are showing up throughout Southern California and around the nation, filling in the gaps at recession-battered shopping centers for a fraction of the regular rents.

Once limited to seasonal shops and dusty liquidation centers, pop-up stores are now being opened by some of the nation's biggest retailers.

It's a trend that could reshape the nation's retail landscape if it continues, diminishing the power of commercial landlords and making it easier for merchants to test new locations and products with little commitment.

"It's something that's just getting bigger and bigger every day," said Marshal Cohen, chief industry analyst at market research firm NPD Group.

Designed to generate buzz and lure shoppers with a get-in-while-you-can appeal, pop-ups allow merchants to move quickly, opening up shops to test a new product or market, and closing them without much fuss.

Gap Inc. recently opened a pop-up shop on trendy Robertson Boulevard to promote its new premium denim line; celebrities including Halle Berry and Ashlee Simpson-Wentz turned out to the shop's launch party. Toys R Us Inc. is setting up about 80 temporary toy shops nationwide, including several at upscale malls previously unavailable to the chain. J.C. Penney Co. touted its back-to-school offerings through interactive pop-up displays in half a dozen Southern California malls.

On a recent afternoon on Robertson Boulevard, Jill and Zac Stafford made an impromptu stop at Gap's pop-up shop.

The couple aren't regular customers of the casual apparel brand, but they said they were curious about the store, whose neighbors include Chanel, Rock & Republic and paparazzi haven the Ivy. Half an hour later, they left with $100 worth of new clothes.

"You feel like when you're in there that you're kind of lucky," said Zac, a 33-year-old advertising consultant.

Pop-ups' move to the mainstream was born out of the recession: Desperate landlords are able to fill vacancies in their shopping centers, and nervous retailers can get space for a few weeks or months without signing a long-term lease.

"It used to be that the landlord was in the driver's seat -- you used to beg to get into a mall," Cohen said. Now, "the landlord is just happy to get anybody into a space."

Landlords were once able to demand leases of 10 to 20 years, he said. Now retailers are able to get spaces for 10 to 20 days.

The trend could have lasting implications for the industry, said Carol Schillne, first vice president of commercial real estate brokerage CB Richard Ellis.

"The mind-set before was that pop-up stores were Christmas stores and Halloween stores and it had a negative connotation," Schillne said. "Then all of a sudden some of the trendier retailers started to do it."

A glut of open real estate allowed Toys R Us to nab dozens of temporary locations around the country for the holiday season, including stores at Irvine Spectrum Center and Stonewood Center in Downey. The toy giant is using the spaces to launch Holiday Express toy shops, its first major pop-up effort.

"We were able to get into some of the finest malls in the country and into some of the spaces that we really wanted to get into that we would not have been able to in the past," Toys R Us Chief Executive Jerry Storch said.

The end of the recession, he predicted, would not necessarily bring an end to the model.

"Once we learn more about where these work and how these work, we'll be able to maintain a pop-up strategy in good times and bad," he said.

But for some shoppers, the stores' here-today, gone-tomorrow tactic will take some getting used to.

"I like stability," said Jon Delgado, 41, as he shopped at a Toys R Us Holiday Express store at Citadel Outlets in Los Angeles. "I want to know a store is going to be there."

Citadel Marketing Director Jess Irwin said the outlet center agreed to allow Toys R Us to sign a temporary, 4 1/2 -month lease -- significantly shorter than Citadel's typical multiyear leases -- in the hopes that the toy giant would ink a long-term agreement once the holidays were over.

"You do have to be a little more flexible in these times," Irwin said. "Now is the time to really reach out to the tenants and work with them."

But even if it doesn't stay, the Holiday Express location has been "a blessing," Irwin said. The store, which opened last month and is scheduled to close in mid-January, filled a 6,000-square-foot space that had sat empty for more than eight months after previous tenant KB Toys went out of business. It brought the center's retail occupancy to 100%.

Lease arrangements on pop-up stores are simpler than their long-term counterparts -- and usually much cheaper for retailers.

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