Business

Short-term stores 'pop up' at malls

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 in a trendy area of Los Angeles to promote its new premium denim line; celebrities including Halle Berry and Ashlee Simpson-Wentz turned out for 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 a half-dozen Southern California malls.

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."

Toys R Us' Holiday Express toy shops are 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 in the past," Toys R Us CEO Jerry Storch said.

The end of the recession, he predicted, will 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.

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

A traditional retail lease is at least five years long, and the merchant has to pay not only rent, but also property taxes, insurance and maintenance fees, Schillne said. Some leases even require the store owners to pay a portion of their sales to the landlord.

That's far less often the case with pop-ups, which often get by with just a flat fee, she said.

To highlight its offerings during back-to-school season, J.C. Penney opened mall pop-ups featuring interactive displays of the department store chain's new denim products. To appeal to tech-savvy teens, the pop-ups would send text messages to compatible cell phones when shoppers came within 35 feet.

Although the pop-ups didn't offer merchandise, getting landlords on board "was a pretty easy sell," said Gretchen Ganc, the chain's corporate strategic planning director.

"It's a win-win-win situation," she said. "It's a win for the customer — it brings something new and different to the mall; it's a win for J.C. Penney because it allows us to step outside our traditional walls and meet a broader audience; and it's a win for the malls — it gives them more traffic and a much prettier picture than a boarded-up storefront."

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