If you’re making your way through Toronto’s Union Station while doing your last-minute holiday shopping, you may be surprised at what pops up.
A space in the station devoted to pop-up retail sees a host of start-ups, entrepreneurs and artisans offering a bounty of merchandise, from fashion to food, explains Jessica Lemire, manager of marketing activities and event sponsorship for Osmington Inc., the station’s retail developer.
“Right now, we’re featuring Great Canadian Sox as our holiday pop-up until the end of January.
The site has also featured well-known brands such as Louis Vuitton, Oreo, SodaStream, Kombi, M&M and Bauer,” Ms. Lemire says.
“Having access to such a busy location with impressive foot traffic provides opportunity for smaller brands too. You’ll see start-ups, entrepreneurs or artisans in the space throughout the year as well,” she says.
Temporary, short-term pop-up stores and small-scale versions of larger big box stores are proliferating across North America, as commercial property owners and tenants rethink their retail space.
“The trend is strong,” says Linda Farha, founder and chief connecting officer of pop-up go, which connects businesses seeking pop-up space with landlords.
It’s a longstanding trend, really – if you’ve ever bought a Halloween pumpkin or a Christmas tree at a roadside stall, you’ve been to a pop-up outlet too.
People feel like they’re getting something special that’s only around for a short time, so they have to go there.— Valentino Teoli, commercial real estate broker with CDNGLOBAL Quebec
According to Pop-up Retail Strategies in an Omnichannel Context. published by Toronto Metropolitan University (formerly Ryerson) in 2017 and updated in 2018, short-term retail format dates back many centuries to the earliest known travelling merchants.
The book notes: “More recently however, starting in the early 2000s and growing significantly in popularity since, retailers and brand manufacturers have employed the use of temporary locations as part of an omnichannel strategy to build awareness, launch new products and increase sales by appealing to new customers.”
Short-term shops are changing commercial leasing patterns, Ms. Farha says. “It’s more common for retail tenants opting for longer-term stores to seek five-year leases now, while 10-year leases used to be more common.”
Big landlords are making smaller, short-term-lease spaces available. Since 2017, Yorkdale Shopping Centre has offered a 3,600-square-foot space where the retailers change regularly. Along with many other retail landlords across North America, Yorkdale’s managing owner, Oxford Properties Group, manages queries from prospective pop-ups through an online form.
Since the start of the pandemic in 2020, the reasons consumers shop at pop-ups shopping have changed. “People feel like they’re getting something special that’s only around for a short time, so they have to go there,” says Valentino Teoli, commercial real estate broker with CDNGLOBAL Quebec.
Retailers also find that main streets and malls with pop-ups attract customers, Ms. Farha adds. Even before the pandemic, a 2019 survey found that 80 per cent of global retail companies that opened a pop-up said it was successful and 58 per cent said they were likely use the tactic again.
Short-term shops are used by well-established, well-known brands to showcase new products, as well as by startups that can use pop-ups to introduce themselves on a smaller budget.
For property owners, pop-ups fill a gap by allowing them to lease short-term space that would otherwise remain vacant, Mr. Teoli says.
“We went through a couple of years that were really difficult for shopping centres. Pop-up stores give landlords an opportunity to gain new tenants if things go well and the pop-ups want longer leases,” he says.
For some large retailers, the idea of a temporary outlet has evolved into something more permanent – smaller, downtown versions of larger supermarkets and home furnishing stores.
Major chains such as Loblaw, Sobeys and Metro have all opened smaller urban groceries, and in June, IKEA Canada launched a downtown store at Yonge and Gerrard Sts. in Toronto.
At 66,000 square feet, the downtown IKEA is still large by pop-up standards, but it’s one-quarter the size of the giant IKEAs that shoppers get lost in when they make their way from the dressers and bunk beds to the Swedish meatballs.
“I guess you could say we’ve popped up, but we see it as a long-term plan. We call it extra-small by IKEA standards, but it still gives you the same experience as a big store. The value for us is that it brings us closer to our customers,” says Lisa Huie, spokesperson for IKEA Canada.
The smaller IKEA started as an experiment in test markets such as St. Catharines, Ont., where a smaller IKEA was opened for a several years and then closed in early 2020. Now the company is opening a second, similar outlet in 2023 in Scarborough Town Centre, taking over part of a former Sears store.
Changes to living and working patterns since the start of the pandemic have caused commercial landlords and retailers to adapt and continue to evolve. At the beginning of 2020 many owners and storekeepers feared that people would give up in-person shopping altogether, but in 2022 the opposite has happened, according to a report by Lee & Associates Commercial Real Estate Services in Mississauga.
Through the past year, in-person shopping gained ground on e-commerce in both Canada and the United States, Lee & Associates Q2 2022 Market Report said.
According to the report, “Canadian demand for retail space also strengthened in the first half of 2022. The 3.8 million square feet of net absorption [space that is rented or leased] through Q2 equals total demand for 2020 and is on pace to match the average annual growth of the previous five years.”
The tightest markets are Vancouver and Toronto, where vacancy rates are 1.2 per cent and 1.7 per cent, respectively, according to the report. The metropolitan areas also have the highest retail rents in Canada, the report notes.
The consumer dynamic with shopping and stores is still evolving, Ms. Farha says. In addition to potentially finding unusual or unique items not carried in regular stores, shoppers are “looking for novel experiences beyond simply buying something, which they can do online,” she explains.
In addition to the instant gratification of purchasing on site, seeing products firsthand is still significant.
For retailers, pop-ups used to be just a way to entice people to the mall, she adds.
“Now it’s also about offering shoppers new experiences, to generate some FOMO [fear of missing out].”