Pop-up shops are becoming increasingly popular among retailers, and this is particularly the case with start-up ventures. In fact, according to a recent study, close to a third of all new UK businesses start as a pop-up, before progressing to permanent retail premises. (1)
While pop-ups are ideal for new companies (thanks to the reduced risk and commitment), they’re restrictive for growing retailers. Here are the factors that may encourage a business to move on to a longer-term retail space.
Influences that inspire a retailer to invest in permanent space
- Sense of permanency. Pop-up shops are effective for creating immediacy and hype. However, in order to be taken seriously as a reputable retailer, permanent premises are a necessity. While customers are content to splurge on a one-time purchase from a pop-up shop, they might be reluctant to become a repeat buyer if they think the business won’t stand the test of time.
- Good impression. Most retailers agree that investing in longer-term premises sends out a powerful message. It tells potential customers that the company is confident that it will last, and that they’re willing to put money into the venture. Shoppers value brands that are a permanent feature on the high street, as this suggests that they’re trustworthy.
- Reduced costs. Pop-ups are perfect for those who don’t want to commit. They give retailers the chance to test their products on the public, without risking too much capital. However, they’re unsuitable for longer-term selling, and this is largely due to the costs involved. A longer-term lease usually works out as less expensive on a monthly basis.
- Tailored fit-outs. With a leased retail space, companies are free to fit out the store as they wish, and to tailor it to represent their brand. Pop-ups are more restrictive. No retailer wants to invest serious money in refitting temporary space, and as such, the image of the brand is diluted.
- Positioning. Leasing a retail space for the long term means that businesses can position themselves more effectively; selecting premises that are located in the right area to appeal to their customers. This means greater choice regarding factors such as average daily footfall, surrounding businesses, local demographic, and much more.
- Greater control. As the company grows, the retailer is likely to want to have more control over their operations. For example, they may wish to make changes to the building (such as adding an extension), which can be negotiated with the landlord. If the retailer owns the premises, they can make the changes without approval, providing they have the correct permissions in place.
Is it necessary to have long-term retail space?
Strictly speaking, there’s nothing to stop a retailer from operating as a pop-up shop for as long as they wish to (providing they’re happy to move around, as pop-ups are usually only available for a limited time period). However, most companies agree that this is too complicated logistically, and that it limits the rate of growth.
Pop-ups provide a handy springboard for retailers to launch from, but ultimately, the clue is in their name – they’re not practical for long-term use.