Why are so many pop-up shops popping up?

Having just been through the Christmas and New Year retail rush most people will have witnessed the rise of the pop-up shop. As an increasingly common form of temporary or short term retailing, pop-up shops are without doubt here to stay for the next few years at least. We look at how pop-up shops work and what retailers need to consider before setting one up.

Pop-up shops are an increasingly common form of temporary or short term retailing and are without doubt here to stay for at least the next two to three years at least.

Perhaps the new pop-up shop trend has been inspired by the usual pre-Christmas tendency for discount seasonal shops, selling reduced price decorations and other festive items, to appear at the beginning of December, only to disappear over the course of the January sales.

That still happens, of course, but it now seems that high street retailers are also keen to make significant use of the pop-up shop format. Small retailers are taking advantage of the number of empty units by securing short term occupations to test the market and major retailers, such as Harvey Nichols and HMV, are increasing their retail presence by introducing pop-up shops to their retail portfolio. Others set up pop-up shops on the back of sporting events such as Wimbledon.

How does a pop-up shop work?

As the format suggests the period of occupation will be short, with the norm being anything up to 12 months.

This suits the landlord because in a difficult market it provides a level of rental income and avoids the property being empty or boarded up.

From the retailer's perspective it has flexibility to stay or go when the tenancy ends and when it does vacate there should little scope for any significant dilapidations issues to arise. Whether it is seasonal, event based or just aimed at testing the market in a new location or as a means of advertising a brand quickly and cost effectively, the pop-up shop format is a very attractive proposition for retailers.

Are there any health warnings that come with the pop-up shop format?
There should not be a great deal involved in setting up a pop-up shop. Obviously the property owner and retailer need to agree terms but once that has been agreed the documentation can be short and to the point.

Although the idea is to provide flexibility, the retailer needs to make sure that it does inadvertently end up with more than it had bargained for. What is the rent? Does it include service charge and insurance? Do any works need to be undertaken? Will the property owner want them removed when the period of occupation ends? Is the retailer's use permitted by a planning permission? What standard of repair is required by the property owner?

The message is simple. Pop-up shops can provide a retailer with a very wide range of benefits and market opportunities without the burden of having to enter into a long term property commitment. Set up properly the format works very well. Get it wrong and when you come to leave you might get find a painful sting in the tail is seen to suddenly "pop -up".

Richard Honey is a partner in the Michelmores Real Estate Team. For further information on the issues raised in this article, please contact Richard at richard.honey@michelmores.com.  

See our website for information on our Retail Team.