Why pop-up stores are an easy sell
Pop-ups are a compelling proposition for landlords and small-business owners alike. Some have done so well that they’ve turned their temporary retail space into a permanent home
It’s a busy Monday afternoon at a distribution warehouse in Midrand, where workers are packing Bathu sneakers for distribution to the company’s two retail outlets and to fill online orders.
The brand was founded by Theo Baloyi in 2015, and launched online a year later with a stock of 400 pairs of shoes. But with increasing demand — and customers wanting to get a "look and feel" for the product — Baloyi opened his first store, a pop-up shop in Joburg’s Newtown Junction mall.
Pop-up stores are a smart way for mall owners to fill empty retail space on a temporary basis, and for businesses to punt their product without the overheads of the full store experience.
In this vein, the landlord of Newtown Junction invited Baloyi to provide shoppers with a flash retail experience of the Bathu brand. The mall has a regular influx of artsy, creative visitors, given its proximity to the Market Theatre and Museum Africa. While it is home to traditional retail stalwarts such as Mr Price and Clicks, it also makes room for unconventional retailers that come and go.
Bathu was one such venture. But one month into its six-month lease — and after tripling its sales — it moved into a bigger space on a permanent lease.
"[Newtown Junction] is designed for young up-and-coming creatives," Baloyi says. "Our brand fitted very well with what [the mall owners are] trying to achieve."
But while the pop-up model served to make Bathu visible to customers, Baloyi says it did not go far enough to represent the brand. This was something only a physical, more long-term presence could achieve.
"Pop-up stores often are like a mobile type of a set-up. You don’t get to experience the full brand promise. Retail stores — they give you brand promise."
The transition has worked in Baloyi’s favour: he now has a second store in central Pretoria, and plans to expand into Port Elizabeth, Bloemfontein and Polokwane.
Pop-up stores would seem to offer some relief to struggling mall owners. Brick-and-mortar structures are under increasing pressure in the face of a stagnating economy, which has resulted in dwindling shopper footfall. Research from Lightstone and Tracker, for example, shows that visits to malls in SA were down 5% in the first half of 2018 against the year before. And landlords’ troubles have been worsened by anchor tenants either moving out of malls or aggressively reducing retail space to cut costs.
Stanlib listed property analyst Lawrence Koikoi says mall owners have to work harder to stay relevant in the changing retail sector. "A changing market due to the tough economy or changing shopping habits needs to be reflected in the change in tenant mix," he says.
When Mummy Mthembu-Fawkes launched her natural hair-care brand, Earthy, in late 2014, she also used a pop-up model. But while affordable rent topped her priorities at the time, she was also concerned about whether the brand would be visible enough in a mall setting. And she had to manage the "Earthypreneur" programme — 400 resellers punting her product in pop-ups across SA. She has since set up a permanent presence in Menlyn, Pretoria. "We’ve got a big clientele in [the city]," she says. "Pretoria is very supportive of our brand. It’s about where our customers are."
But Earthy doesn’t rely solely on "passing trade" in the mall. Success lies in the 14,000-odd customers it generated from its online offering and numerous pop-up resellers.
There are no easy wins for smaller businesses that want to dive into the formal retail pool after the pop-up experience. In part, there are concerns around retail space itself.
Says Baloyi: "The thing about being the new kid on the block is that we’re not a big retailer. I think the application [for rental space] takes a while. With new malls, big brands get preference. They choose their spot before the mall is even built."
And, while pop-ups on paper seem to benefit all parties, Koikoi sounds a word of caution. "Pop-up stores serve a purpose in that they can reduce interim vacancies while the landlord is working on re-tenanting, while providing an opportunity for retailers for brand awareness," he says. "However, it could indicate a potential problem for a specific landlord if they are becoming a sizable, permanent feature in a lettable area."