Our Thinking

The pandemic is proving to be a catalyst for many retail trends that, pre-COVID, were already occurring or on the horizon. Online shopping was an option provided by many retailers, but not all shoppers bought in. Now, late adopters see it as a lifeline.


A trend that will likely accelerate during this time is pop-up shops. Be they in the form of a store-within-a-store, standalone kiosk or motorized vehicle, pop-ups offer opportunities for retailers to respond to customers’ current challenges. As the worst of the pandemic subsides and customers adjust to the new normal, pop-ups provide a flexible medium that retailers can leverage to bolster their recovery strategy, whether as a test and learn engine, stock reduction plan, or tenant partnership opportunity.


Test & learn engine

Many retail startups in recent years skipped bricks and mortar altogether and embraced ecommerce as their format of choice. But how to attract and connect with customers online was often a struggle. Ecommerce retailers soon learned that their cost per acquisition was rising and the lifetime value of customers was declining. The solution, however counterintuitive, was – you guessed it – setting up a physical store.


As online shopping continues to be a big part of the new normal, digital natives can look to occasional pop-ups as a way to experiment with physical retail stores without making the investment commitment until the proof of concept is fully realized to validate the return on their investment. The smaller, temporary model will enable them to collect data and test market receptivity, brand engagement, new product ideas, and really get to know their customers.


These strategically executed learnings will help the retailer determine with greater confidence whether to continue as an online-only offering or take the leap into physical retail to strengthen its competitive growth strategy.


Stock reduction plan (inventory management/inventory fulfillment)

In cases where pent-up inventory levels are a result of shutdowns or slower moving supply chains tied to the pandemic, retailers can conceive pop-ups as part of their strategy to clear old stock quickly and drive customers back to engaging with their brand. What motivates customers are the opportunities for exposure to wide and deep product assortments and the excitement of “bargain-hunting.” When selling the end-of-season inventory at discounted prices, a pop-up retail operation is a most appropriate choice. Due to its temporary nature, it communicates a sense of urgency and provides a unique hedonic shopping experience.


Tenant partnership opportunity

The pandemic’s full impact on retail has yet to be felt, but no doubt many stores will reduce in size or go out of business altogether. We are seeing evidence of this already happening. The sudden availability of retail real estate presents a unique opportunity for retailers to contemplate sharing their space or malls to conceive new models that offer greater support and services for pop-up models to easily and successfully deploy.


Nordstrom provides an early example of how this use of space might work. The store’s main floor consists of small spaces available for businesses to rent on a short-term basis, often to showcase wares that are seasonal. As malls re-open, tenants that fail to recover will free up space that can be re-purposed specifically for pop-ups.


The tactical response to the coronavirus should be permanent

As consumers adjust to the new normal, many shopping behaviours triggered by the pandemic will persist. The pop-up model can respond well to these new behaviours and presents new opportunities for retailers to access spaces temporarily, test products, collect customer data and clear stock. Within both short-term and longer-term strategies designed to address the new normal, there is merit in considering pop-ups as a permanent fixture in retailers go-forward plan. Pop-ups are cost effective and low risk formats that can play a vital role in any post-pandemic recovery strategy.