The Retail Revolution- Pop-up shops now popping up in Shopping Centres

We are in the midst of a retail revolution. Customers are demanding more experiences and unique offerings and less of the department store feel. Out are the stuffy, basic shopping centres and in are the exclusive shops providing particular experiences and technology immersion. Anchor stores, a once coveted spot, are left vacant, forcing shopping centre owners to re-think their strategy and work to fill the empty spaces piling up. It’s a fight to stay relevant and impress shoppers with innovative experiences.

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This last year has seen several announcements of middle to large department stores closing from the likes of Macy’s, GAP, and Office Depot. Even luxury brands such as Michael Kors are pairing back their store counts, realizing that overexposure does not always equal more profit. Shoppers no longer want the standard department store or luxury shop that can be found everywhere in the world. The allure of a luxury brand is exclusivity but if it’s too accessible, it loses that appeal. This movement is causing centre owners some financial pain. Shopping centres in the UK have seen a 2% drop in footfall since July of 2016. Shoppers are bored and as we are currently in a mostly trendless season, they have little incentive to go to a mall to fill their closets with things they already have. Shopping centre owners must find other offerings to bring customers back in and keep them.

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Barbican in London

In a move to encourage pop-up shops to rent with them, big shopping centres such as Westfield Corp. and Simon Property Group are building “white box” stores. These stores will have a simple interior, able to transform for each brand that sets up there. These shopping centres in particular are allocating 5% of their leasable space to these places. Centres in Asia are doing even more to cash in on the pop-up store popularity. Hysan Bay in Hong Kong has hosted everything from a Nespresso pop-up shop to yoga classes hosted by Lululemon in an effort to get more people into the mall. Shopping centre owners are seeing the investment possibilities of these temporary shops.

People queue in a line at a Nutella pop-up shop in Hong Kong, China, on Thursday, Aug. 11, 2016. Photographer: Anthony Kwan/Bloomberg
People queue in a line at a Nutella pop-up shop in Hong Kong, China, on Thursday, Aug. 11, 2016. Photographer: Anthony Kwan/Bloomberg

These pop-up shops are changing the “shopping centre experience”; breathing new life into an old concept. Many shoppers are tired of seeing the same concept luxury brands everywhere as they have oversaturated the market, making what was once exclusive so interesting. As well as welcoming back the once regular shoppers, pop-up shops are bringing in new clientele. The Kanye West pop-up shop in Northbrook brought customers from out-of-town that normally wouldn’t even be in that city, with attendees claiming they had driven quite a distance to get there. Rotating pop-ups encourage shoppers to keep coming back to see something different. We’ve seen successful examples of these shops for both well-known and obscure brands, each approaching the concept in a different way. As rent prices and vacancies go up, we are sure to see more of these strategies in use.

Food: The Experiential Movement

We’ve all done it, posted an Instagram photo of that carbonara you’re about to dig into, spent hours waiting for a table at the hottest new restaurant in town, or just gotten lost in the vortex that is Pinterest looking for a new recipe to try. Food. We love to eat it, post about it, and we spend most of the day thinking about what our next meal will be. As of 2014, 50% of millennials consider themselves to be foodies. What is it about food that makes it more than just a means of survival?

As millennials, we are all about the experience. We don’t want just a basic transaction between a business and a customer, we want creativity and novelty and to feel like we have had a memorable moment in our lives with that experience. We are also looking for communal experiences. Having a connection to the people around us is important, we don’t care if it’s with strangers or friends. About 55% of millennials prefer communal tables as opposed to private seating. The food movement is really a communitarian movement says author of several foodie books, Michael Pollan. We want to be involved and present with everyone and everything when enjoying our meal.

About 80% of millennials want to know more about how their food is grown and will spend more on ethically sourced meats and farm-to-table experiences. It is for this reason that community is an integral part in the investment we have in every step of the process when it comes to our food. We want to know where it came from, if it’s processed, and even how happy the pig was that is now bacon on your plate. What’s better than when the waiter sets butter on table and lets you know it was locally sourced from a farm down the road, was churned in the restaurant and the cow’s name is Betsey? Or when the Chef who just created the beef tartare you’re munching on, comes by to introduce himself? A deep connection with the food is made when we know all of the information.

Pop-up restaurants and food trucks are a large source of experiential dining. Theme Night? Kale Craze? All possible to experiment with when you’re taking over an abandoned warehouse or “space 12” in a parking lot. It also breeds a feeling of exclusivity. Scored tickets for that secret supper club? Time to let Facebook and your friends know how much you’re enjoying your meal that they will never be able to get. Millennial diners have major FOMO (fear of missing out) and 72% have said when they see posts of friends dining out, they wish they could be there with them. Hashtag jealous?

Gone are the days of frozen meals and mystery meat. Here to stay, at least for now, is a communal experiential movement. To all those brave enough to host, good luck keeping us entertained.

It’s all just space: How new ideas are redefining the shopping centre

What is the future of brand? Why are urban farms relevant to me? How do we create meaningful human interactions in commercial spaces? How are brands using pop ups to grow?

These are just some of the questions that will be answered on 22nd March, when brands, leading retailers, agents and leasing experts will be coming together for the annual SPREE Europe innovation day. We Are Pop Up is thrilled to be Chairing the event. The conference is aimed at helping brands and shopping centre professionals learn more about the €6bn specialty retail industry that consists of pop-up stores, kiosks and experiential events. It’s the key annual innovation conference for EU shopping centre operators and developers and we’ll be taking the opportunity as Chair to showcase the bravest and boldest new models. To attend and find out more, all the details are here.

The Programme:
Tuesday 22nd March 2016
Islington Design Centre

9.00
Registration and Networking

9.30
Welcome Address
Clara Maguire: Chief Operating Officer, We Are Pop Up

9.40
10 New Retail Rules
Aaron Shields: Strategy Director Europe & Russia, Fitch

10.10
Immersive Experiences
Rupert Pick: Planning Director & Co-Founder, Hot Pickle
Lucy Johnston: Author, Brand Experience Curator & Founder, The Neon Birdcage
Dr Maggie Atkinson: Think Tank Member, Kidzania
Moderator: Petah Marian, Senior Editor Retail Intelligence, WGSN

10.40
‘Go Local’ Future Malls
Charlie Gent – Marketing Manager, Pop Brixton

11.40
Rise of the Retail Curator
Arianna Cefis: Founder, HC HQ Ltd & Kings Road Concept Store
Elisicia Moore: Founder & Director, Petit Miracles
Kathrine Heiberg: CEO, Re-Team Group & Mytiful Stores
Moderator: Emily Wright, Features & Global Editor, Estates Gazette

12.25
It’s all just space! Uses beyond retail
Fabian Weinlander: Director of Project Development, UrbanFarmers
James Layfield: Founder & CEO, Central Working
Tom Tobia: Co-Founder, Makerversity
Moderator: TBC

12:55
Lunch & Networking

14:10
How I Grew My Brand With Specialty Leasing
Jonny Burt: Co-Founder, The Unit
Daniel Peters: Founder, BBSC
Sandro Abeille: International Expansion, Chiquita Fruit Bar
Moderator:  Dan Innes, Managing Director, Innesco

14.40
Understanding New Brand Behaviour
Leading Brand Agency TBC

15:10 
Break

15.40
The Rise & Rise of F&B
Jonathan Downey, Co-Founder, London Union
Atholl Milton, CEO & Co-Founder, StreetDots
Dimple Lalwani, CEO & Founder, Social Belly
Moderator: Richard Johnson, award-winning food journalist, consultant and founder of the British Street Food Awards

16:25
Weak Signals of New Valuation Models
Speaker from CBRE

17:00
Closing Remarks 

17:15
Networking Drinks Reception
Axis Bar, Hilton London: Angel, Islington

 

We will lift the lid on innovative approaches to space use, consumer engagement, new brand behaviour, underlying drivers of demand, and business models. The programme has been developed based on our belief that retail and public realm space is a platform to unlock new ideas, create jobs, drive economic development, and create exciting places in the heart of communities.

With demand for fractional use of space from brands massive and growing rapidly, by lowering the barriers for entrepreneurs to get into space we are powering the creative retail movement. This is a movement built on connections that give birth to new retail concepts – from brand mash-ups, to collaborative leasing, and it’s being embraced by brands of all sizes, from start-up to global conglomerate.

The intensive one-day programme will address all aspects of the €6bn global specialty leasing sector including top industry trends; innovative immersive experiences; the rise of retail curating and how it can be leveraged to create a unique specialty programme; creative uses for vacant space in shopping centres beyond retail such as urban farming on rooftops, office space and industrial production; case studies from brands who will share how specialty pop-up store space has enabled them to trial new concepts and grow organically; and how food is changing the face of specialty retail.

Guest speakers include the world’s leading retail and brand consultancy Fitch; London Union – the next venture from the Founders of Street Feast and Leon; brand licensing and retail innovation experts Hot Pickle; Neon Birdcage; Kidzania; Pop Brixton; Concept Store Kings Rd; Petite Miracles; Mytiful; Soho success story The Unit; Dead Dolls House; Street Dots; Social Belly and CBRE.

 

“As our Cities swell to accommodate urbanisation – space becomes an increasingly precious commodity. Unlocking its value requires us to move beyond traditional concepts of yield management, long term leasing and retail conglomerates taking on multiple units.

How we enable that shift and make the Shopping Centre relevant to tomorrow’s brands will play a key part in the future viability of these retail assets and the communities they serve.”

(Clara Maguire, We Are Pop Up’s COO)

Patricia Norins, ICSC’s Vice President of Specialty Retail, who launched SPREE Europe in 2015, explains, “The specialty retail industry is making a significant difference in the global retail real estate landscape. ICSC’s SPREE events aim to bring together the leading brands, agents and those executives who are using specialty formats such as kiosks, pop-up stores and sponsorship to drive footfall, diversity and excitement.” She tells us, “We are thrilled to have We Are Pop Up as a 2016 sponsor and their COO, Clara Maguire serving as the SPREE Europe conference chair. Their deep expertise and connections in the pop-up store sector has helped to significantly shape the event by helping ICSC to attract a powerful line-up of innovative industry speakers.”

We are thrilled to be involved too, and would love to see you on the day. To attend or find out more, all the details are here.

 

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Creative retail is now more important than the Internet

On Monday, We Are Pop Up Managing Director Greg Spielberg penned a guest post for WPP-owned global branding agency Brand Union. In his story, Greg revisits a 1996 Harvard Business Review roundtable highlighting the promise of a new innovation: The Internet. As we enter 2016, the 20th anniversary of the HBR roundtable, Spielberg writes that creative retail replaces the Internet as the most interactive form of brand marketing. He points to retail projects from Kiva to Glade, TicTail to Kit & Ace, Refinery 29 to Microsoft.

“Creative retail strategies architect memorable experiences that help consumers understand the world around them and generate product sales. They create stories in real life that allow consumers to participate as actual “people” rather than users, viewers, readers or listeners. There are two primary types of creative retail executions: 1) Nonfiction, or community-based and 2) Fiction, or imagination-based.” Read the full story at Brand Union.

Pop Up Tipping Point! The Only Statistics You Need to Know

This year pop ups are hitting tipping point in the UK and US. They’re becoming everywhere, seeping into retail ecosystems, marketing and media buys, urban planning and economic development strategies. Let’s take a look at the most important numbers driving the swiftly-growing industry into a mainstream staple of 21st century life – the only pop up statistics you need to know.

People
92% of us trust our friends’ recommendations over ad campaigns. The last 8% was likely just clicking through the survey as fast as possible to win an Amazon gift card. People matter more than ads – it’s a statistic that keeps showing up yet doesn’t ever have to be measured again. People like and trust people more than anything anyone can produce online. Since at least 92% of us would rather talk to, hear from and learn from friends, brands have no choice but to be more friendly. Which means, the GOI (growth of investment) in creative retail and pop ups will be massive.

Economy
In the UK, pop ups contribute £2.3 billion a year to the economy, with 12.3% revenue growth in 2015 and 26,000 employed in the industry. In the US, our friends at Pop Up Republic value the national industry at $50 billion, which is 16% of the online retail market. More than enough dollars to bury questions like “are pop ups a trend?”

Imagination
Creativity is an urban economic driver and recruitment tool. A recent Economic Development Quarterly study ties 1.1% growth in “knowledge class” employment to the presence of a metropolitan performing arts center. For cities with two types of PAC (the good kind of PAC), the increase is 1.5% and with three types it’s 2.2%. The short of that statistic is: If you want to recruit smart, creative people, do creative things in real-life space. Creativity means doing something, anything, differently. It keeps our cities fresh and our imaginations satisfied. Pop ups do the same.

Companies
79% of brands say they executed more event and experiential programs in 2015. 65% directly correlate experiential marketing to stronger sales. 84% of companies with $10 million+ marketing budgets are increasing their experiential focus.

Drake
Drake opened his first US store in LA after one in Toronto. If this guy is launching stores, it puts the whole world on a binary: You’re either with Drake or you’re against him. Don’t bet against Drake.

 

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Pop Up Predictions for 2016

Our list of the trends, technologies and creative movements we believe will impact the sector in the coming year.

From a new definition of luxury, to the end of web search as we know it, 2016 is the year the high street truly becomes plug-and-play like the app store, and creative retail reaches new heights. In this short focus, the team at We Are Pop Up and some special guests pioneering future retail outline the ideas that excite them when looking to the year ahead. The predictions we’ve identified are issues which we expect to affect cities globally and which creative retailers can use to their advantage. We hope you enjoy reading them.

Nicholas Russell

Nick

In 2016, the sector reach will be unprecedented

A number of new industries will see that they can use pop ups to reach consumers – from tech, to energy, to government. People will see the power of renting spaces by the day or week, rather than multiple years and a new wave of retail space usage will emerge, from marketing to public health to politics and everything in between.

Nick is the Founder and CEO of We Are Pop Up. Prior to starting the company, he introduced Louis Vuitton to graffiti and hip hop, and helped Unilever dominate an FMCG category within 18 months.

Clara Maguire

Sub-lets become master

As demand increases for fractional use of space, the trend of sharing and subletting space will accelerate. This will challenge traditional leasing structures, and they’ll become shorter, multi-party, and will enable subletting. Master Lease holders looking to maximise value from this new pattern of demand will propel it by creating new leasing structures.

Clara is the COO at We Are Pop Up and is interested in how cities and technology scale entrepreneurship to deliver a more resilient, inclusive economy.

Abigail Freeman

Bloomon

In 2016 luxury will be redefined.

Luxury as we know it will become available to all in a way previously reserved for the ultra-wealthy. From personal fashion-stylists through digital services like Thread.com to Michelin-starred meals on demand via Deliveroo, or flowers by subscription by Bloomon, the range of luxury services and items available to the masses will be unprecedented. And so a new breed of luxury will emerge, redefined to remain a true “luxury” through beautiful, seamless online and offline services and highly exclusive, ephemeral experiences.

Abi is the Director of Marketing and Partnerships at We Are Pop Up and has worked shaping policy that helps creative businesses start up and grow.

Daniel Peters

Menswear comes into its own

Daniel peters

I’m super passionate about fashion as it is, but I think menswear is evolving and turning into its own beast. Emerging designers will coexist alongside established designers in retail spaces. In my own pop ups I try and give new designers a platform and pair them alongside both new and established brands such as Aquascutum or a brand like Lou Dalton who do runway shows, and these brand remixes will become commonplace. Everyone needs to be mixed together in that way.

Daniel is the Founder and Creative Director of BBS Clothing. His latest pop up was a creative collaboration between his own label and Clarks Shoes.

Bertie Herrtage

Crowd

Retail communities will overlap

Dominant retailers on the high street will begin to diversify the use of their space to attract more customers and increase dwell time.
Space on the high street is an expensive asset to keep. With more people doing their shopping online, retailers will expand their offering to reinstate themselves as an experience destination.
In-store partnerships will form between different areas of commerce which share the same customer e.g. clothing shops, cafés and bars who can operate from the same site such as the Heals x Forge & Co workspace collaboration in London.
These retailers are re-imagining the use of their space, where outside the hours of their conventional trading may be an opportunity to host something different, i.e. a gallery, event or workshop.

Bertie heads up Space Acquisition at We Are Pop Up.

Lulu Krause

Lulu

2016 will be about B2We.

Lone brands will form robust collectives and self-curate their retail presence. Power lies in numbers, and as pop ups continue to take the place of traditional retail models, likeminded brands will join forces. Through product innovations like Brand to Brand messaging on We Are Pop Up, designers, artists and retailers will be empowered to strategically co-produce and create cohesive in-store narratives. Through these new collaboration tools, a pop up will be more than a store — it will tell an entire story.

Lulu is the Director of Partnerships for We Are Pop Up NYC.

Peter Jeun Ho Tsang & Julija Bainiaksina, Founders of The Dandy Lab

Dandy portrait

In 2016 tech enabled retail will see the introduction of smart shopping environments across the high street.

Stores will be able to provide the ultimate consumer experience by learning about the individual in real-time, resulting in superior customer service and personalised shopping journeys. By deploying RFID enabled loyalty cards, The Dandy Lab was able to convert 20% of new customers into brand loyal, returning patrons (The Dandy Lab, 2016).

Greg Spielberg

2016 will be the first year that every brand, artist or organisation who wants space can get space.

The topography of our cities are fundamentally different. We’ve moved from closed urban space, available only though five and ten year leases, to open spaces. The shift is as big and beneficial as the movement from the printing press to the blog. Our cities will start to truly reflect the visions, expressions and businesses of its communities rather than just big-budget, corporate stores.

Greg is Managing Director of We Are Pop Up NYC and founder of Imagination in Space, working at the intersection of retail and journalism.

Anna Trotter

2016 will be the year of brand mash-ups and remixes.

Creative businesses, from independent designer-makers to world-famous fashion houses, will pioneer new ways of combining their offers to bring unique inter-brand mash-ups to the high street. No longer just the remit of retail giants like H&M and their hysteria-inducing designer collaborations, projects of all shapes and sizes will join forces to create new retail offerings. We Are Pop Up’s brand to brand messaging tool will sit at the heart of this movement, with infinite possibility. From denim and doughnuts to tea and tech, the future of the hight street will be remixed.

Anna is the Community Manager for We Are Pop Up.

Alastair Moore

Alastair

Search gets smarter.

2016 will see a breakthrough in search and discovery. Platforms will use intelligent search to predict and even pre-empt users’ needs. Search as we know it will decline to be replaced by personalised recommendations and smart curation.

Alastair is Chairman of We Are Pop Up, a UCL PhD computer scientist with 10 years experience in mobile, web and early stage tech innovation, and believes cities will be plug-and-play like app stores.

Daniel O’Connor

Tech

Things get personal.

Retailers will focus on creating a connected retail experience based around the individual shopper. Retail brands will blend online & offline in ways not previously possible to create a seamless and unified shopping experience. In 2016, large retailers will test more and more emerging technologies with the aim of simplifying the shopping experience for consumers whilst enhancing the retailer’s access to offline data. Technology like Cloudtags will become mainstream, and shoppers will embrace beautiful, delightful tech whilst dismissing anything clunky or unintuitive.

Daniel is the Account Manager at We Are Pop Up and speaks to hundreds of creative retailers weekly.

What did we miss? Tell us your 2016 pop-up prediction by tweeting us at @wearepopup using #popuppredict or click here to Tweet.

 

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Flagship Killer: The meteoric rise of OnePlus through pop ups

Mobile device startup OnePlus launched the OnePlus X –  the follow-up to their self-proclaimed ‘Flagship Killer’ the OnePlus 2 – in the UK earlier this month to queues around the block and critical acclaim. But how has the brand powered from zero to a waiting list of millions in little over 18 months, and what can be learned from their global launch campaign? We Are Pop Up caught up with brand OnePlus and space The Dandy Lab to find out more about their UK collaboration.

The beginning of November saw the highly anticipated UK launch of the OnePlus X with a pop-up store at The Dandy Lab in Spitalfields. After the resounding success of the French edition of the OnePlus pop-up tour at Colette in Paris, the hype was equally tangible in London as queues started to form long before the doors opened at The Dandy Lab. For one night only, the pop up provided a unique opportunity for customers to purchase their handsets without the need for one of the OnePlus infamous online invites.

One Plus launch at The Dandy Lab, November 2015

With a queue stretching the length of Spitalfields Market, this level of buzz and exclusivity has become synonymous with the creators of the low-cost rival to the iPhone. Indeed the OnePlus One sold 1 million units between April and December 2014 when the company was less than a year old. In this age of easily-fuelled social media hysteria, exclusive, time-bound retail opportunities such as this hold the power to provide a startup with a 1.6 million pre-reservation list a mere 18 months after launching.

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The pace is astounding when you think about what’s possible today. Apple was founded on 1st April 1976. OnePlus on 16th December 2013. In less than two years OnePlus has achieved what Apple has strived for in 40 with staggering global demand; queues around the block; customers flying in from different countries to access 1-hour pop-up sales. In August the OnePlus 2 sold out of 30,000 units in 64 seconds in a surprise online sale.

Now that OnePlus has reached such success with their coveted e-commerce business, the brand wants to evolve their approach to become more than purely online sales. In an exclusive interview with We Are Pop Up, European Communications Manager Eric Zarshenas explains that For the OnePlus X they have partnered with fashion boutiques in key cities around the world so that fans can touch and experience the phone before they buy it – “people can look at pictures, watch a YouTube video, or read reviews, but nothing is the same as actually holding the phone.” 

“We are always looking for ways of getting our devices in people’s hands, so that they can truly experience our build quality.”

Eric Zarshenas, OnePlus European Communications Manager

One Plus launch at The Dandy Lab, November 2015

This widespread movement of e-commerce brands from online presence to bricks and mortar appearances comes as retail space increasingly becomes thought of as not just a ‘shop’, but a real world manifestation of social media. Just this week, founder of shoe company Toms, Blake Mycoskie, told the New York Times that he was over the word “store”. Instead, Toms ‘Outposts’ offer seating, free Wi-Fi and events like morning yoga classes and movie nights, creating a “lifestyle for the brand”. This reimagining of the retail experience was implemented at the OnePlus X London pop-up at The Dandy Lab – bringing people together in the real world for what was before a purely online experience.

One Plus launch at The Dandy Lab, November 2015

Julija Bainiaksina, co-founder of The Dandy Lab which hosted the OnePlus X London launch, tells us that people are now coming to shops like theirs to not only purchase products but also participate in events. “Here at The Dandy Lab we believe that this is the way forward, it’s time for a shop to become a social hub for brands and customers. The shop is effectively a physical social media space where we can create exciting experiences for our customers.” That’s why in-store they also offer an event space where they host different events and activities including a recent London Terrariums workshop and British wine tasting sessions. “This helps to create better relationships with the customers and encourage loyalty,” adds Bainiaksina.

One Plus launch at The Dandy Lab, November 2015

Zarshenas adds that “over the last 10 years the traditional retail industry has been disrupted by growing online shopping trends and social media. Brick and mortar shops are no longer just sales platforms. They have become media channels that act as showrooms and experience centres where customers can see and touch products, and then buy anytime, anywhere online.”

Images by Justine Trickett.

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What lies beneath: Reflections on behaviour under the head lease

Every year Britain’s property sector comes together to review the data behind commercial property leasing across the country. The data reveals trends and new behaviours and is crucial to understanding the shifting sands of property usage on Britain’s streets and what that means for business of all sizes. 

Now in it’s 17th year, the MSCI and Strutt & Parker’s UK Lease Event Review in partnership with British Property Federation took place in early November. We Are Pop Up’s COO Clara Maguire was thrilled to speak at the event. Here, Clara shares some of the key insights from the day and the data affecting brands, retailers and the property sector at large. 

The core lesson? Flexible leasing is a structural shift, and it’s here to stay.

Brands want shorter leases and more flexibility in where, and how, they engage consumers. A movement that was spurred by the recession caught fire with social media and has now become the norm. Large and small brands are building products and services in new ways.

Business financing options, innovation tools, and risk profiles have all changed. This means brands’ business and operating models are very different.

Sitting in a room with more than 100 property investors from leading institutions such as British Land and AXA, we reflected on both the opportunities and challenges of these shifts.

‘It will be those investors… with a focus on the underlying drivers of demand, who will succeed as the property cycle moves into its next phase’

Andy Martin – UK Lease Events Review – November 2015

Savvy property professionals know there is more to this than meets the eye. It’s not just the lease instrument that is shifting. In order to meet changing demand we need to overhaul our valuation models, risks profiles, and asset management approaches.

The new drivers of demand

Brands want shorter leases:

Screenshot 2015-11-20 13.36.35

Brands want to know they can get out of the lease if they need to:

Screenshot 2015-11-20 13.37.27

Brands will pay more for flexibility:

Screenshot 2015-11-20 13.38.25

The real, underlying drivers of demand

‘In the past year we have seen serviced office operators catapulted into the limelight… they themselves are signing leases of up to 20-years, this of course disguises the fact that the underlying demand for their services is from occupiers taking on much shorter commitments – something not picked up in the data’

Andy Martin – UK Lease Events Review – November 2015

This behaviour isn’t limited to office space. In recent years there has been an explosive growth in demand from brands to share retail space. In global retail cities where location is king, this is how brands access prime retail space.

We are seeing a whole generation of creative retail talent with an entirely different relationship to real estate than their predecessors. We Are Pop Up’s data shows, at granular detail, demand for a single clothes rail in a boutique in Greenwich that costs £9 a day, to a concession in Oxford Street for £300 a day, or on Manhattan’s Lower East Side for $200 a day. We call this behaviour ShopShare.

We can tell you about the nature, scale, and source of underlying demand. We can tell you how frequently brands book, where they book, what they pay. As a tech platform we can tell you what day of the week a particular concession, in a particular part of town, is most likely to book. Every touch-point from sign-up, to enquiry, to booking is captured.

If this analysis is omitted from the data collected by the UK Lease Events Review, we can help. 

The WeWork Effect

Currently valued at $15billion, WeWork’s value is being generated below the head lease.

Once they sign a 20-year lease in a prime location they are able to service underlying demand for fractional and flexible use of space.

At WeWork you can rent 1 to 10 person offices, dedicated desks, shared desks. The WeWork Commons means you can book a desk on a mobile app on a global basis. You can attend and host events. You can access the social network of 30,000+ creatives, and thousands of potential customers.

In this model WeWork act as network aggregators. They service a growing, underlying demand for fractional use of high value real estate, anchored by a social and globally connected community.   

The result? Networks in physical space.

Hidden and untapped value

A demand of a similar nature exists within retail. Shops on We Are Pop Up are listing small modules of their store and are generating thousands of pounds of revenue every month. Boutiques in Shoreditch make £20k renting rails and tables. Another of our shops tells us 50% of revenue is product sales, the other 50% – renting out space on We Are Pop Up.

These retailers cluster in high-value spaces. This makes them the biggest ‘owners’ of high value space and the smart ones know it. They too are acting as network aggregators selling fractional use of their space.

The result? A new role in the ecosystem. We call them Retail Curators.

A shifting business model for retail

A number of drivers are commoditising retail space.

Channels: e-commerce

Before e-commerce, brick and mortar was how you reached customers. Now brands have options. We see that landlords can’t push increasing rents in the same way anymore. The goal now is just to minimise vacancy. The shift is evident with stable vacancy rates and the majority of retailers either paying the same or lower rates.

Screenshot 2015-11-20 13.40.36

With rental uplift sacrificed for higher renewal, supply gets even more constrained. The mindset of minimising vacancy, rather than maximising utilisation is actively preventing future growth opportunities.

Screenshot 2015-11-20 13.42.16

Product sourcing: ShopShare

For many brands ShopShare now replaces trade-shows. Rather than showcase a product to retail buyers at a trade-show, brands buy ShopShare space and face the product directly to consumers, able to invite buyers to the space too. We Are Pop Up allows brands to access high-value space, but we also allow low-value space to approach brands relevant for their stores.

For the retailer, ShopShare de-risks product selection. There is now an alternative to buying large consignments and hoping you’ve got it right, or fronting money for sale and return.

This transforms getting new inventory and fresh in-store content, from a cost centre to a revenue line.

Roles: Retail Curators

Retailers are the biggest space owners, but they’re stale on storytelling. They are paying prime rents and being hit by e-commerce. The retail in itself isn’t necessarily profitable but they need to engage consumers in the real world and drive them back online. They need a physical presence on the high street, and they need a new way to compete for attention anchored in experiences. 

Brands have fresh product and they need channels to market it to consumers. To them ShopShare is social media space and they share that story widely across their networks. Having a presence in a physical space creates new media content. The brands drive the network movement through sharing this content online. The retailer takes advantage of this behavior to anchor the experience in real space – in their real space. This drives footfall, brand awareness, and ultimately sales.

The result, once again is networks in physical space.

It’s the same with The Permanent Pop Up and The Dandy Lab. It’s the same with historic Heal’s flagship store on Tottenham Court Road partnering with coworking space Forge & Co.

Value: Adjacent benefit

Possibly my favourite graph of the day presented by Stephanie McMahon, Head of Research at Strutt & Parker, shows the comparative uplift in asset value in Brixton ‘v’ Clapham post the development of Brixton Village Market.

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The market operator plays the role of aggregator. They offer micro-leases and build a new ‘anchor’ offer, based not on long leases, but on flexible ones. Consumers know there will be authentic and novel experiences and keep coming back for more. This drives footfall and ultimately pushes up the value of adjacent retail assets. The key thing here is the correlation between google hits and rising asset value.

New drivers of value

Taken together we are seeing a powerful set of drivers pointing us toward a new value proposition for commercial real estate. We have some work to do and some mindset shifts to make.

1/ We need to evolve our data models to include the underlying patterns of demand. This means exploring the real behavior shaping the future of commercial real estate that’s happening below the line of the head lease.

2/ Network Aggregators are benefiting from the underlying patterns of demand, inventing new ways to meet it based on fractional use overlaid with networks. They are creating new value and driving supply in a supply constrained market. Institutional investors can help scale this model and share in its benefits.

3/ The fundamental shift needed is to move from asset valuations to use-valuations. In a complicated real estate market where assets are over-leveraged or underpin pension policies, I recognise making this transition is a challenge. However, we do need to make it if we want the asset class to be productive and grow.

The opportunity costs are mounting for landowners, retailers, brands, which is having a knock-on effect at the simple level of job creation and economic growth. What is becoming increasingly apparent is that fewer and fewer benefit from trying to keep things the same. It’s time for a change. 

If you’d like to continue to the conversation over a coffee then contact me at clara@wearepopup.com

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Market Gravity Corporate Entrepreneur Awards nominate WAPU for best new product or service

Wednesday, We Are Pop Up joins Barclays, Hive, DriveNow and Funding Circle as nominees for Market Gravity’s Corporate Entrepreneur Awards. We don’t spend much time thinking about awards, but being recognised for best new product and service gives us a reason for pause. We’ll be joining more than 400 of Europe’s most creative, disruptive and entrepreneurial business leaders at this year’s Market Gravity Corporate Entrepreneur Awards – the biggest yet – to enjoy a night celebrating innovation in business.

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The innovation for which We Are Pop Up has been recognised? Fully automated real-estate transactions. This sophisticated engine sits on the back-end of the wearepopup.com website and powers every single booking between a space and brand. For the first time, brands and spaces can not only discover each other and connect directly, they can also pay and have legal protection as-standard, all included seamlessly in the process. Instead of 10-year leases, we’ve enabled 10-day leases. Or, ten-hour leases. Or a ten hour lease shared with ten brands.

“The acceleration of technology and digitisation has enabled a step change in a company’s ability to deliver innovations at a faster pace than ever before.” Market Gravity.

Funding Circle is a peer-to-peer lending service which allows savers to lend money directly to small and medium sized businesses.

Renting a retail space could take weeks to transact and from the outside, retail property deals looked like a complex web of relationships built on exclusivity clauses and long-term contracts. Working collaboratively with leading real estate legal practice Hogan Lovells LLP, we standardised and digitised the property contract and created the world’s first fully automated commercial property transactions.

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DriveNow is a joint venture between BMW and Sixt that provides carsharing services in several cities in Europe and North America.

Our innovation connects brands directly with spaces, cutting out the middleman and all of the paperwork. Spaces set their own prices and terms. They rent for a day or a year. They can rent a full building, or just a shelf within their shop (an increasingly popular option under We Are Pop Up’s ShopShare) They review, accept, and decline brand requests on mobile phones.

Our rental agreement protects our customers’ bookings. It works by taking the information they provide us and auto-populating the agreement. Both the space or brand’s listing and any direct messages between them form an annex to the rental agreement.

The Hive Active Heating Thermostat and App let you control your heating and hot water from your smartphone, tablet or laptop.

People are literally building businesses on top of the We Are Pop Up platform. As a result, we have over 21,500 brands registered with We Are Pop Up, booking short term retail space for anything from a day to 6 months or more.

We’ve brought down the time it takes to book a retail space too – the record so far has been a 7 minute deal: A brand contacted one of London’s most popular fashion boutiques at 9:55AM and at 10:02AM had booked to pop up.

The Barclays Accelerator powered by Techstars is a three month intensive FinTech startup programme.

Brands and spaces can book 24/7 at times that suit them. 32% of brands and spaces book outside of office hours. Removing the contract negotiation totally changed the nature of landlord / tenant interactions – so much so that we changed our vocabulary from “tenants” and “landlords” to “brands” and “space owners” to reflect the people using our platform.

It turns out, by removing agents, lawyers, and contracts, not only did we remove delays and costs associated, we also changed the inherent nature of the interaction from adversarial to collaborative. And we’re only just getting started.

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Strong and still growing – pop-up retail sector adds billions to the UK economy

The pop-up retail sector now generates £2.3 billion for the UK economy, according to Britain’s Pop-Up Retail Economy 2015, the second annual report from the Centre for Economics and Business Research (Cebr) and EE. Pop-ups now account for 0.76% of total retail turnover in the UK, up from 0.6 % the year before – an increase of more than £200m in sales.

The sector is growing fast, with total turnover increasing by 12.3% compared to 8.4% in the last year. This is caused by a rise in the number of visitors with 44% having visited a pop-up in the last 12 months, and an £8 increase in the average annual spend to approximately £124 per person.

Around 26,200 people across the UK are employed by some 10,500 pop-up shops, with numerous successful ventures going on to become established retailers. In turn this is supporting the growing number of small retail businesses which has increased by 3.2% between 2013 and 2014.

8% of retailers and food and accommodation service providers report having launched a pop-up to complement their permanent location, while 10% plan to open one in the next five years.

The growth of the sector is also acting as a strong catalyst for the regeneration of flagging high streets – 49% of people surveyed believe that pop-ups were a good way to revive the high street.

“Pop-up retail is just getting started. This is the beginning of a trend that will reshape how we use property in cities around the world. 20% of shopping centres will be let on short-term contracts. Most restaurants will start as pop-ups. We’ll see huge cross-border movement with brands entering new markets at extremely low costs.

The biggest winners are consumers – which is basically everyone in the world.”

– Nicholas Russell, CEO, We Are Pop Up

The pop-up retail sector continues to evolve from strength to strength, at growth rates far higher than those of traditional retail outlets. The industry is helping numerous businesses develop into established companies – with permanent shops, online platforms or even further pop-ups. Blurring the line between traditional bricks and mortar and a new generation of creative retail, pop-ups are bringing new ideas to life every day, giving an inclination towards the temporary a much more permanent role in the retail landscape.

Read the report here.

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