Connecting brands with retail space

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Storefront likes to call itself the Airbnb of short-term retail space. Since it was founded six years ago, the New York startup has become the world’s largest marketplace for brands to connect with retail spaces. It currently has more than 10,000 listings representing more than $1.2 billion of annual rental value across three continents, with active listings in New York, San Francisco, Los Angeles, London, Paris, Amsterdam and Hong Kong.

CEO and co-founder Mohamed Haouache left the high-pressure world of New York hedge funds and risk management to create Storefront, shortly after he was unable to find a single short-term retail rental space for a friend. Originally from France, Haouache is a French citizen and U.S. resident now living in New York City. He discussed the future of pop-ups with STORES freelance writer Bruce Horovitz.

How are pop-up stores changing?

When we launched Storefront in 2013, most pop-ups were from traditional retailers. Today, it’s ecommerce players who are mostly using this format to communicate. Pop-ups are becoming a mainstream media channel when it comes to retailing.

What’s a mainstream media channel?

Historically, when you look at retail marketing, the main driver of retail is sales per square foot. But because of the way customers are behaving the past few years with the big push of social media and the influence of millennials, we’ve seen a transition from physical retail as a channel of sales to a channel of communication or experience.

More and more brands are communicating through pop-up stores. They’re not just trying to sell goods but to connect with customers. It’s the idea that commerce isn’t online or off-line, but a blurry area — you can touch in physical retail but buy online.

Can you provide an example?

Google opened a pop-up store in SoHo. This store isn’t for people to necessarily buy things, though they can, but for Google to advertise its products and for people to feel and connect with the brand.

When did the pop-up phenomenon begin?

The grandfather of pop-up stores was Swatch founder Nick Hayek and his Swatch stores. This was followed by the financial crisis of 2007-08 … but the technology wasn’t ready for this marketplace.

On one hand, the economic crisis pushed brands to find more flexibility. But it’s really about the technology. Millennials are simply not buying the way their parents were buying.

Is Storefront taking advantage of mall owners trying to fill empty retail space?

We bring life to empty, vacant spaces in cities. We work with successful mall companies who want more excitement in their retail mix. We work with real estate brokers who are trying to keep vacancies as low as possible. We also have social benefits: If you walk down a street that has five vacant retail spaces, it has negative impact. We keep older retail spaces alive. Certainly, it’s better to have two pop-up stores on the street than two empty spaces.

When was your lightbulb moment for Storefront?

The idea came out of necessity. I was trying to help a friend who was looking for a place to sell her designer watches for the short-term. I contacted my brother, who is a commercial real estate broker, to help. He had no interest in helping for this booking, but he had me contact his real estate friends. None of them wanted to help me, either.

I ended up going on Craigslist and found the keyword “pop-up store.” I only found one or two. I asked my brother what was wrong. He said short-term retail rental commissions are too low. He told me that brokers get short-term requests all the time. That’s how I got the idea.

How big is Storefront in sales?

I can’t comment on our specific sales, but I can comment on our percentage growth. Year over year, the company is growing at a rate of 500 percent. We’ve grown from a company with a few stores to the world’s largest pop-up network. We have 10,000 listings in three continents.

How big will you grow?

By 2023, we want to be a $1 billion company. We hope to add another 20,000 more listings in the next 24 months.

Where will most of that growth be over the next two years?

The company will open in China over the next 24 months. We also plan to expand in Canada, Australia, Hong Kong and Singapore and plan to open in South Korea.

What pop-up categories are the most successful?

High-end boutiques. But they don’t have to be name brands.

What pop-up categories don’t work well?

Any brands that are trying to sell without having social media activity. It’s very hard for a brand without many followers to create interest. You must have visibility online.

What percentage of pop-up stores become permanent locations?

About 15 percent.

What’s the average length of the typical pop-up store contract?

Twelve to 15 days.

How much of pop-up activity is seasonal?

More than 60 percent. The biggest driver is Halloween, but Christmas does well and so does New York Fashion Week.

Are pop-ups confusing to consumers?

Not anymore. Consumers are getting used to pop-ups. There’s a sense of exclusivity. A lot of teens will sleep on the street to be the first one to arrive at a new pop-up store.

What’s the hardest part about your job?

We still have to educate the market on the benefits of pop-up stores.

What are your five most critical tips to run a successful pop-up store?

Make sure you use social media. Don’t overload your space with too many goods. Be truthful if you want to collect information from consumers. Besides social media, use flyers to advertise the store. And location is still everything.

Who are some big names that Storefront has booked into pop-ups?

Facebook. Nike. Chanel. Google.

How big is the pop-up market right now — and how big can it get?

We estimate about $30 billion globally and this should move to $50 billion by 2022.

As an entrepreneur, what’s your vision for pop-ups?

It’s hard for entrepreneurs to find retail space to sell their products. My vision is to make pop-ups more accessible. I want renting retail space to be as easy as booking a room on Airbnb. We are changing the way retail works.

Bruce Horovitz, a freelance writer, is a former USA Today marketing reporter and Los Angeles Times marketing columnist. He can be reached at brucehorovitz@gmail.com.

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