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Popups: The Events of Real Estate

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One can argue that the advent of popups came before even that of real estate itself, and that when history’s earliest merchants who set up shop in a busy street corner or when the first bazaars and marketplaces were coordinated to appear amongst a collective of these merchants in conjunction with the local governments, that the idea of the popup was already born. Perhaps on a macro level, mankind has been moved by a pendulum swing of economic optimization: when the combination of construction costs, government policies, and consumer demands of the industrial revolution enabled major retail distributors to become some of the most prolific commercial real estate owners in the world, pop-ups were imaginably seen as a far less-than business model. Today however, the pendulum is swinging back around.

Popup retail is emerging as a tremendously popular business model in urban centers like New York City. A popup is, in its essence, an event production for retail distribution. A producer of a pop-up makes the profit margins between the cost to stage a pop-up (space rental, marketing cost, setup labor, material staging, on-site staffing) and the revenues made from that pop-up (sales). These pop-ups typically take place over the course of a few days to a week, and then disappears without a trace.

There are a few factors in today’s world that are enabling a radical reimagination of what popups can be. Chief among these factors is urbanization. Unlike retail stores that can be built as urban amenities to anchor a neighborhood or drive tourism, a popup must take advantage of existing foot traffic when choosing its location simply because it doesn’t have the years of time a regular store could have to “gain traction”. Another critical factor is digitization. Most popup shops are operations that exist primarily as online shops, and the popup itself become the event mechanism to create face to face customer engagement for the operators. The digital presence of these popup shops also run the critical function of marketing the popup, a process that’s conceptually identical to promoting any type of event, whether a concert, movie premier, product launch or anything.

But to zoom out of the exact operations of any specific popup, the overall phenomenon is I believe driven by this economic enablement for optimizing land use. Popups typically rent spaces that are unused lofts, or sometimes public properties where they set up temporary structures. The grassroots nature of this cost structure enable popups to serve the critical function in the pipeline of many industries — particularly the fashion, food, and art industries — of allowing newer and less established brands to be discovered. In some instances, popups serve as micro-experiments for the business operators to determine if they have a viable product to warrant a permanent store at some point down the line. In other instances, operators make an entire business model out of specializing in producing popup events. In any case, popups have become a familiar institution in 21st Century urban centers, and is an institution that combines the mindset of event production with the sensitivities of urban real estate.

See you at the next exploration!

Harry

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