Ever wonder how costume stores stay afloat year-round? After all, the overwhelming bulk of their business happens in the months leading up to Halloween… as that’s typically the only occasion of the year in which Canadians dawn quirky creative disguises. It may not be worthwhile for many costume stores to remain open from November to the summer. In order to optimize productivity for a short window of opportunity, the “pop-up shop” business model has gained traction in recent years.
Canadian retailers large and small are jumping on the pop-up shop business model band wagon now more than ever. Whether it’s a mom and pop homemade holiday ornaments kiosk, or a popular, well-established brand like Nike, these stores are short term, temporary shops that aim to make a lasting impression in a short period of time. Pop-up shops are an ideal business model for seasonal businesses in particular, who look to maximize the bang for their buck while minimizing operational costs.
What are Pop-Up Shops?
A pop-up retail space, often known as a pop-up shop, is a temporary retail venue that follows the mantra “here today, gone tomorrow.” The space could serve as a sample sale one day, and fireworks kiosk the next.
Pop-up shops are employed by retail companies and entrepreneurs to assess or build interest in their product / service over a short time period, or to sell their time-sensitive goods and move on. Pop-up shops provide a low-cost method to start a business and test products, markets and locations.
Many seasonal pop-up shops include Halloween costumes and decorations, Christmas gifts and trees, fireworks and many other specialty items. Some well-established brands can also set up a pop-up shop to test uncharted areas, and gauge the appetite for their products in different locations. The pop-up retail model is also used for entertainment venues like concerts and music festivals, as well as travelling fairs or amusement parks.
Pop-up shops are effective because they can create a sense of urgency. The idea that they’re not going to be around for long is a definite driver for consumers to come and “get it while they can”. Customers want exclusive, limited edition or other products they can’t otherwise get normally, and the pop-up shop offers exactly that
Pop-Up Shops Gaining Popularity in Canada
In the last couple of years, pop-up shops have gained a lot of popularity in Canada. On average, most of these types of stores are only around for a month or two for the specific purpose of satisfying the need of consumers during a holiday or season. Christmas and Halloween are both prime examples of when you’ll see more pop-up shops, as these holidays have risen in popularity with consumers resulting in heightened revenue opportunities for retailers. Seasonal savvy retailers have seen the benefit of using a pop-up shop business model, and many others have followed.
Before Japanese clothing retailer Uniqlo opened its first Vancouver location, it ran a pop-up shop for just one day. Its overwhelming response and popularity propelled its establishment of a permanent location in Vancouver, and now the brand has three locations in Canada. Another Japanese retailer worthy of mentioning is Muji. This popular overseas houseware store chain also opened up a pop-up shop in Vancouver, in order to test out the market. Muji was greatly anticipated by consumers, so much so that the store actually took reservations for consumers to visit! Naturally, this excitement resulted in a permanent storefront opening up in several locations around Canada. These are prime examples of how stores can use the pop-up shop business model to spark excitement, create an initial media buzz and be successful long-term.
Maplea Girls, the Canadian equivalent of American Girl, was established in 1988, and the dolls were based on a famous Canadian storybook character, Anne from Anne of Green Gables. Decades after its establishment, the company has skyrocketed into success, in large part because they followed the seasonal pop-up retail model. This year, Maplea Girls has opened a pop-up shop in Newmarket, Ontario, where consumers are welcomed to shop in-store and online over a limited time from October to December. Their store openings are highly anticipated and generate amplified traffic given their limited time availability.
How Pop-Up Shops Work
Pop-up retailers have a unique business model. Many of them work on consignment, so basically the retailers don’t pre-pay for inventory. Instead, they pay a set deposit amount and in exchange they receive enough inventory to stock their entire store. Sometimes, as part of the agreement, retailers must agree to use a specific POS system and credit processing system, such as the Clover Flex POS. Retailers keep a percentage of the credit transactions throughout the season, which is applied to the total cost of inventory; so essentially, they are paying down their inventory costs gradually instead of upfront. In addition, whatever inventory does not sell by the end of the season – as long as it’s still packaged and in good condition, the retailer can ship back to the brand for a merchandise credit. Using this low risk system, retailers don’t have to fund all the inventory in advance and they don’t have to carry inventory over to next year.
Companies employing a pop-up retail strategy can effectively target customers who shop at malls as well. Pop-ups have the ability to offer a lower-cost alternative to year-round retailers as they don’t have the burden of a long-term lease commitment with the malls that they pop up in. The malls also benefit from these stores’ presence by being able to experiment with their tenant mix. Pop-ups can help malls determine whether a store is well-received by shoppers before committing to a longer lease period.
Location is often a key factor in determining the success of pop-up shops. Being situated in a high traffic area that is easily accessible makes the whole consumer shopping experience a pleasurable one. Since these pop-ups are often in competition with the well-recognized stores, they should ideally be strategically situated in an area that intercepts traffic that would typically go to the established permanent retailer. If they are not situated conveniently, consumers will often default shopping with the competition – regardless of the product range.
Seasonal Businesses and Pop-Up Shops
One pop-up shop that comes to mind in autumn is Spirit of Halloween. Spirit of Halloween is the oldest and largest temporary Halloween pop-up shop company that’s been around for 34 years. Spirit of Halloween opened its doors to Canadians in 2003 and has been very well received, allowing it to return every year since. The store opens at the beginning of September and shuts down at the beginning of November. The locations are scattered strategically throughout the city, hitting some very popular shopping malls and accessible high traffic areas. There are also several other Halloween specialty stores that use the pop-up business model like Halloween Adventure in the US.
A lot of seasonal businesses like fireworks retailers and Christmas tree farms follow this pop-up business model as well. However, there are several companies with established and successful branded storefronts that have also hosted pop-up stores temporarily via kiosks in malls, including Hickory Farms, Nordstrom’s, Aritzia and Indochino, to name just a few. This strategy helps these companies to “test-drive” their products in different locations, and allows them to see how well (or unwell) their products are received by that geographic audience. It provides them with valuable, real life market research that they would not be able to get otherwise.
Street front pop-ups are also becoming more popular in Toronto. Queen Street West seems to be the ideal area of choice for new retailers trying to gain exposure in the market. Retailers like Ikea, Sears, Nestle and Bär Häagen-Dazs have all popped-up around Toronto in various temporary street front locations. Many of these retailers can capitalize on the season that their products are more sought after, such as Bär Häagen-Dazs raking in the profits over the summer months, when ice cream is in high demand!
Pop-up events have been a long standing pop-up business model as well. Traveling fairs or amusement parks are a good example of such events. Concerts and music festivals have also climbed on board the pop-up retail model, by offering branded clothing and merchandise for sale, in addition to food and drinks.
Pop-up retail has grown quickly in popularity, and experts are predicting that it will continue to gain momentum into early next year. Pop-up shops may be temporary, but it seems that this retail trend is here to stay.
MONEXgroup Partners with Seasonal Businesses and Pop-Up Shops
MONEXgroup offers cost-effective payment processing solutions for pop-up shops. For example, the Virtual Terminal has seasonal functionality and can be turned on and off. So when businesses shut down for the season, they can simply turn off the terminal and not have to worry about incurring any fees for the duration that it’s turned off. When ready to get back into business, a simple phone call to MONEXgroup will allow a merchant turn the terminal back on and begin again. Watch our video testimonial from one of our clients who runs a seasonal summer boat tour business.
Given that pop-up shops are only present for a short period of time; their locations are usually quite busy. Therefore, payment processing speeds need to be optimal at all times, since time is of-the-essence for pop-ups and they need to maximize every second they have. MONEXgroup supports merchants across all seasons with optimal processing speeds, highest level of security, as well 24/7 service and a guarantee of 2-4 hour on-site service if needed. MONEXgroup partners with merchants of all sizes across Canada to help them achieve their business objectives backed by worry-free payment processing… allowing managers to focus on what they do best.
When partnering with the number one payment processor in Canada; MONEXgroup will increase your efficiency and quality of service and lower the related costs. Request a Cost Comparison Analysis today.