Posted by: Daryl & Wendy Ashby | June 19, 2011

Ghost Stores Haunt Vancouver

Spring’s far from the only thing that’s a-poppin’ in Vancouver. A long-standing regular in major urban centres south of the 49th parallel, pop-up retail is steadily making its presence felt in Canada.

An alternative form of sticks and brick retail, pop-up is a simple concept – at least on the surface. Landlords turn the liability of a temporarily empty warehouse or shop into a short-term moneymaker by renting to vendors staging fast-paced, strictly time – limited sales events.

Occupancy ranges from a single day to several months and is often linked to seasonal events such as Christmas and Halloween. Pop in, pop up, pop out. Landlords make money, retailers make money, consumers gain access to great prices and unusual product. Pop-up can also be an effective method to liquidate overstocked and outdated merchandise or bankruptcy inventory.

However, like most simple concepts, there’s a flip side to this phenomenon – one that many industry watchers and insiders don’t like. Annette O’Shea, executive director of the Yaletown Business Improvement Association, describes pop-ups as “ghost retailers” comparable to any other fly-by-night operation and stresses it’s the epitome of buyer beware because once a pop-up has popped out, there’s no way to return a faulty or unwanted product. She refuses to patronize any pop-up outlet.

“Pop-up retailers also have no incentive to care about a neighbourhood’s reputation,” O’Shea said, adding that even during the hype of the 2010 Olympic Games, Yaletown imposed a minimum 30-day lease on vendors who applied for pop-up locations. “For us, the consistency of the Yaletown brand is extremely important – by definition, pop-up is not consistent.”

Agent angst

Details of lease rates appear sketchy at best. The most common phrase landlords use to evade answering the cost question is that “every case is different.” Most leasing agents refuse to talk about pop-up retail at all, saying it’s a direct negotiation between retailer and landlord. Matt Thomas of Avison Young Commercial Real Estate sums up what many other leasing agents only imply.

“There’s no incentive for an agent to negotiate [a pop-up deal], because it’s time consuming and we don’t make a commission. Sure I’ll do it as a favour for a friend or to help out a landlord I’ve worked with for a long time, but it’s not something that makes financial sense for a leasing agent,” Thomas said.

Thomas adds that while pop-up may help cover the costs of a vacant property, there are risks involved. “Temporary tenants are often very hard on a property. Plus it could mean turning down a high-quality tenant who wants to take possession immediately.”

Still, for its advocates, pop-up can be the best of all worlds. Deb Nichol, who is the owner of The Latest Scoop, made the move to a pop-up model in 2004 after almost 20 years of working in retail. “In traditional retail, some months you make a lot, some months you make a little, and others you make nothing. I decided to keep just the ‘happy’ months,” she explained.

But beneath her conversational, outwardly breezy attitude lies a sophisticated and meticulously honed system that she describes as “a well-oiled machine.” Nichol personally selects the ever-changing inventory from what she believes to be the best suppliers and brands in each category represented – suppliers who often include Nordstrom’s, Holt Renfrew or other high-end outlets – and then puts an eye-catching discount on the price tag.

The Latest Scoop’s selection is dazzling in its diversity – for good reason.

“In a conventional dress shop, you might be walking in and out without ever touching a thing because all you see are dresses,” she explained. “Here, you’ll find evening gowns next to sporting gear, patio furniture next to handbags and jewelry. It’s a cool mix of great values, so it entices my customers – something far too many large retailers have stopped doing.”

Clearly, the strategy is paying off. Nichol’s stores are alive with activity, and while she declines to give specific numbers, she does comment that her volume is “enviable. I turn over 20 to 30 per cent of my stock each week, and in the 11 weeks I had my last store open on West Fourth Avenue, I probably sold the equivalent of what many other local stores sell in a year.” At the end of her lease, she held a four-hour sale exclusively for previous customers.

When she vacated the 3,000-square-foot premises, she had only 12 boxes of stock to package up.

U.S. trend

Pop-up stores have been a force in U.S. retail for some time, and it is not only mom-and-pop retailers trying to cash in.

Discount giant Tiger, which recently began an aggressive push into Canada, has been sprouting pop-up outlets in New York City for nearly five years. These include a temporary beachwear-exclusive shop in Manhattan last year, and a Times Square outlet that sold only discount air conditioners.

Likewise, JC Penny opened a 2,500-square-foot store for only weeks in New York’s Rockefeller Centre that sold home decor items. The company also opened fashion pop-up stores in Los Angeles this year. Other large retailers that have used pop-ups include Virgin Mobile and Nike, which report they normally use the outlets to test new brands before a national rollout.

Test ground

Using pop-up retail as a living lab, a test ground for new products or new marketplaces, could become part of the shifting retail landscape.

“The potential to test a new marketplace while maximizing your advertising budget is huge,” said David Ian Gray, president of Dig 360º Consulting Ltd.

“But you need to be clear about what you want from doing this. For someone like Deb, it’s all about selling. On the other hand, if your main purpose is creating brand awareness, then you should focus on the best, most innovative features about your products and your company.”

Craftspeople and other creatives love the opportunity pop-up creates to showcase their art without the financial and time restrictions of a long-term lease – but they have to make the grade for quality and originality.

Salima Karim, leasing co-ordinator at City Square Shopping Centre in Vancouver, says a crucial part of the selection process for short-term tenants is the ability “to provide shoppers with something different than they ever expected to find in our mall.”

This spring, developer Rize Alliance took the concept one step further with Rize House Pop-Up Retail.

Located at West 10th Avenue and Kingsway in Vancouver, Rize House is part of the company’s community outreach program. Each month, two pop-up retail spaces are made available to carefully screened local artisans at a cost of $1 for the month.

April saw Hamburger Disco, a tee-shirt company with an off-the-wall attitude and funky, 1970s disco-themed product share space with Isabelle Dunlop’s limited-edition, vintage-inspired fashion and jewelry. The combination was, according to Rize’s Luke Harrison, electric.

In May, lifestyle publication Ion magazine took over the low-cost space.

“Main Street has always been known for its innovative proprietors,” Harrison said. “This is an opportunity for artisans and crafts people who want to be part of this neighbourhood but don’t necessarily have the financial resources.”

Still, he’s also pragmatic, noting the relationship is symbiotic because it brings traffic into the Rize presentation centre.

Will pop-up become a trend? Most say no. But for trailblazers like Nichol, pop-up is a wave of the future. And she’s firmly positioned herself to ride that wave to success.

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