THE BLOG
10/23/2013 11:47 am ET | Updated Dec 23, 2013

Can You Profit From a Pop-up Shop?

Halloween is right around the corner, and with the arrival of ghouls, goblins, and candy comes the annual appearance of hundreds of seasonal pop-up shops. These retail curiosities are as much of a part of modern-day Halloween as fun-size Snickers bars, and every year I am astonished at how busy these places get. Even though pop-up retail openings typically peak around holidays like Christmas or Halloween when they can feed off the demand for cheaper decorations and gifts, it seems like this particular business model is slowly creeping its way into other markets. The obvious answer to the title question does seem to currently be 'yes, you can,' for business owners, but just how long will these stores continue to pop-up for? And is it worth investing in a temporary retail space, especially if you don't sell seasonal items like oversized candy canes or rubber zombie masks?

Pop-up viability
Temporary retail is an $8-billion a year industry, according to a study by Specialty Retail Report and Alexander Babbage, Inc. And, according to IBISWorld, the total number of pop-up shops grew by 16 percent between 2009 and 2012. Those statistics, along with the annual appearance of these stores, does seem to indicate that this is a viable business model. However, it can be hard to estimate the demand for merchandise -- a major Halloween pop-up chain can probably store any overstock from year-to-year, but a smaller business doesn't have the same resources available. Competing with these major pop-up retailers can be challenging, as you really only have a short amount of time to sell your stock before the season is over and demand dries up. However, opting for smaller, specialty pop-up shops could be a good option for selling stock that doesn't have a demand inextricably tied to the month it is being sold.

The temporary 'wow' factor
Specialty pop-up stores can attract a fair bit of attention and generate some hype. While this attention is fleeting, it can be enough to really help out a small business that may not have had much need for a permanent storefront. For example, selling vintage clothing on Etsy doesn't require you to have an actual brick and mortar store in place. eCommerce just requires a place to put stock until it gets sold online. But if that vintage clothing store's owner mistakenly bought too much, or is staring at a dismal sales period, having a store open for a month can be a real boon. People in the area talk about the new shop for a bit, product gets moved, and when the flow of customers becomes a trickle, the store is packed up.

Getting a slice of the pop-up pie
Plenty of retailers shuttered their windows during the economic downturn, and as a result, landlords are usually happy to get two or three months of rent from a space that would otherwise be empty. So you can get a fairly good deal on the rent and then leave while you are still in the black. But temporary merchandising is tricky, and while it easy to predict that demand for Halloween costumes and candy will be up in October (surprise, surprise), it is harder to gauge interest in other types of products. Christmas is always a time of increased retail activity, so opening up a temporary shop around that time, in a high-traffic area like a mall, could be a good idea. If you notice an increase in sales during a certain period of the year, consider opening up a temporary retail spot and taking advantage of that demand. Plus, if you do run an eCommerce shop, it can even help you spread the word about your online store and bring in repeat business.

Even as the economy recovers and permanent retailers move to take up vacant spaces, I have a feeling pop-up shops are going to continue to be a noticeable part of the retail industry. Not only are people becoming accustomed to going to pop-up shops, but it seems that, no matter how well things are going, there are always going to be empty stores and landlords happy to have someone paying rent, even if it is just temporarily. So, if you run a small, online business and want to give traditional retail a shot, rent out a space for a few months and see it goes. Just remember that it can be hard to merchandise and buy stock for a temporary foray into brick and mortar retail, so tread lightly and then, if things go well, keep popping up.