A pop-up isn’t just for Christmas. Could pop-ups become permanent?
As many of us may have only recently returned from summer holidays, it may seem a bit early to be thinking about Christmas, but this will now be top of the agenda for most high street retailers.
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Stock decisions will have been made earlier in the year and the Christmas decorations ordered but, for an increasing number of retailers, now is the time to expand their sales footprint by opening temporary ‘pop-up’ stores.
Gift retailers such as Hawkin’s Bazaar (who has just opened its first temporary store for 2019 in Exeter) are benefitting from a national shop vacancy rate of 15.9% (source: Duff & Phelps), which often allows them to trade from some of the busiest shopping locations in the country.
Short leases of three or four months allow these retailers to trade during the busiest quarter of the year, avoiding the negative impact of lower turnover and higher rent, rates and staff costs that are a significant drag on profits over the preceding three quarters.
In a year when the number of high profile CVAs has increased and rent reductions have become a headline feature of the press, it is perhaps surprising that more retailers haven’t also adopted this approach. However, anecdotal evidence suggests that some retailers are now resisting the traditional long term leases required by institutional landlords, instead securing leases of 1-2 years that still provide greater flexibility in the event of weaker than expected trading.
Pop-up stores being opened by Amazon and other online retailers (even Facebook in London) may be an indication that the ‘clicks’ are looking for the ‘bricks’ to allow them to engage more effectively with their customers.
So perhaps the market could shift towards a model where the landlords of many UK shopping centres operate a significant proportion of ‘serviced retail’ units, something that Shaftesbury Plc has been successfully doing in central London for over 20 years. Whilst lower rents and shorter leases are not good for property values, it might well encourage newer, more exciting and more entrepreneurial retail businesses back to our high streets. Surely this must be a good thing in the long run?
Christie & Co is currently handling the sale of Hawkin’s Bazaar. For more information, please visit www.projectgift.christie.com or contact Nick Bywater nick.bywater@christie.com