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On Wednesday, Kim Kardashian’s vibrant, minimalist beauty brand SKKN By Kim entered physical retail for the first time. In a mall.
Set in Westfield Century City in Los Angeles, the pop-up is meant to “show people a glimpse” of what the 5-month-old brand’s permanent stores will eventually look like. Opening more SKKN By Kim stores is a future step, Kardashian told Glossy.
Westfield Century City’s 8,600-square-foot Atrium space houses the store. Designed to host interactive brand activations and product launches, as well as awards shows, concerts and fashion shows, it’s just one of five spaces the center offers to companies looking to make an impact in the short term. As far as malls go, these retail “relaxes” deliver excitement and foot traffic, not to mention a revenue stream that goes beyond long-term leases.
With the retail landscape recently reaffirming that it is far from stable, plus malls seeking relevance remaining in a state of flux, such pop-ups are catching on as malls’ secret weapon. Of course, they also work to the benefit of brands sold on physical retail value but shy of making commercial commitments. Agile and 10-year contracts don’t exactly mix.
WS Development was an early adopter of the concept, opening The Current retail incubator at the Boston Seaport in 2018. The same year, retail owner Macerich unveiled his own version, dubbed BrandBox, at Tysons Corner Center in Washington, DC In step, Columbus Center-based Easton Town launched Shop/LAB.
More recently, mall developers have been transparent about exploiting pop-ups to fill vacancies. When the New Jersey-based megamall American Dream finally opened in 2019, its creative director at the time, Ken Downing, said 20 of the mall’s first 100 operating stores would be “Dream Drops.” the company’s term for pop-shops with leases starting at one month. In November 2021, the company opened the first Dream Drop in its upscale wing, The Avenue. Still open, the store features a selection of fashion and home decor curated by style icon Iris Apfel.
But according to mall owners, with the return to physical retail, such patches are needed less often; commercial space of any kind is getting harder and harder to come by.
In his November 1 third-quarter earnings call, Tom Ward, head of investor relations at Simon Property Group, noted the company’s “leasing momentum,” saying it has signed more than 3,100 leases since beginning of the first quarter, with average lease rates increasing 10% per year – over the year. CEO David Simon said the average length of the company’s leases is now seven years. While reporting third-quarter earnings on Nov. 10, Brookfield Asset Management Inc. CEO Bruce Flatt pointed to a statistic that retail sales are up 30 percent in malls, compared to pre-Covid levels. Considering their “high-quality” positioning, Brookfield’s centers are poised to see even more of a boost, he said.
However, developers who see the value in pop-ups are keeping the concept on hold, despite the heavier rise of managing back-to-back short-term leases.
To date, WS Development’s pop-ups have largely been driven by a need to activate vacant space, said Carina Donoso, head of retail experience and incubation at the company. The pop-up-focused Current has been the exception, though it’s on its way to becoming a bigger part of the company’s pop-up game: WS Development now has fewer vacancies to fill, particularly in its all-city malls. It is also working to expand the current concept to more properties within its portfolio. A second location will soon open in Palm Beach’s Royal Poinciana Plaza.
Melissa Gonzalez, director of MG2 and founder of The Lionesque Group, which specializes in pop-up design, called pop-ups in shopping malls a win-win: As with any pop-up, they allow brands to test a market or concept with less risk, than opening a permanent shop. Meanwhile, for leasing teams, coupled with the wait time between leases, activations provide an opportunity to “date” with prospective long-term tenants, she said.
“Particularly when it comes to digital native brands entering physical retail for the first time, there are minimal metrics [up front] to determine whether the store will be successful,” he said.
At the same time, malls nationwide are attempting to locate “the next something experiential” that will serve as an anchor to guide people to their property, he said. Pop-ups provide valuable information.
According to Gonzales, leasing teams and developers who have built “turnkey pop-up infrastructure” with multiple brands, such as WS Development with The Current, are doing brands a service. The space becomes a brand and an attraction in itself, eliminating some of the risks associated with pop-ups and incongruous store adjacencies.
Described by Donoso as an “outer village,” the original Current houses nine pop-up spaces of 180 or 300 square feet each. With tenants renting out the pop-up “houses” for 3-6 months at a time, the complex has an average of 27 tenants a year. It attracts both national and local brands, including many digital native businesses looking to learn more about their businesses and customers. Donoso said he emphasizes to such brands the importance of offering a disruptive in-store experience to mimic their “enhanced” digital presence.
Tenants of The Current who have done this right include Brave Daughters, which provided in-store soldering services for its “permanent” jewelry. Another standout was the Project Paulie hat company, which donates a portion of its proceeds to charity. Taking inspiration from an Italian bodega, his shop featured Italian music, candles in the shape of baguettes, and “pizza boxes” for hatboxes.
For brands, The Current’s approach to turnkey retailing includes hiring and training store associates, leveraging its experienced team of visual merchandisers to build the store, and providing a solid marketing plan. In total, onboarding brands is an eight-week process. Executives from just 5 percent of the 100 brands that appeared at Current actually visited the site, instead trusting Donoso and his five-person team to fully manage their presence, he said.
Brands typically spend $2,500-$8,500 on signage, fixtures and other bells and whistles, Donoso said. The biggest investment is in the marketing necessary for the store to be successful.
“Every time a brand emails me saying, ‘I want to do your project,’ I say, ‘Are you ready to market the crap about your business?’ Why can’t you just look and do well, especially if you’re testing a new market,” she said.
Such marketing includes hosting a minimum of three in-store events for the life of the pop-up. Recently, an underperforming Current reseller had $4,500 in sales at its first on-site event.
While Donoso said he continues to send Instagram DMs to exciting brands to introduce to The Current, the property now largely “sells itself.” Since its opening, the Boston Seaport has become home to major technology companies, as well as permanent gyms, restaurants and retail outlets for several DNVB brands. Also, word of mouth is doing wonders to attract tenants to The Current.
For many brands, the pop-up concept serves as a valuable growth lever. And taking a more hands-on approach can have its benefits.
In January 2022, beauty industry veteran Lynn Power launched the Conscious Beauty Collective, with the goal of bringing together independent beauty and wellness brands for co-funded and managed pop-ups for 3-4 months at a time. Brookfield Malls, in San Francisco and Boston, have thus far housed both iterations.
“I had this idea and [interested] brands and Brookfield had space so it was a great fit,” Power said. [partners] and new media in every market – just go somewhere and make an impression. And Brookfield has over 300 malls in premium locations across the U.S.”
Conscious Beauty Collective’s San Francisco store, at Stonestown Galleria, was formerly a storefront for Aveda. However, the latter and the current store, at Boston’s Natick Mall, required more “embellishments” to match the premium price points of the products featured. Power said it was worth it, considering its location across from a Louis Vuitton store and a Nordstrom.
The fact that more brands across all beauty categories are featured in Conscious Beauty Collective stores encourages discovery, Power said. Meanwhile, the store facilitates clean beauty education, which “isn’t mainstream yet.” In addition to serving customers in-store, employees distribute informational postcards and product samples to passers-by in the mall. Also, to promote the store, the Collective leverages Facebook and Google ads and geo-targeted direct mailers, all targeting people within a 15-mile radius of the mall.
Power called the pop-up a “survival tactic” for her brand — a hair-care brand dubbed Masami — as well as the companies of her partner brand’s founders. “These are brands that you can’t get at Sephora or Ulta or Credo yet, because we’re small,” she said. “But it’s the chicken or the egg – we want to be at these retailers to grow our brands, but they want our brands to grow them. [The hope is that] this will allow us to achieve the sweet spot that retailers are looking for, while preparing us for the demands of a large retail partnership.”
He added: “Brookfield would like us to stay [long-term]but they know the deal and are supportive.”
Like Brookfield, WS Development hopes its pop-up tenants become long-term tenants. Donoso’s projects have a 15% conversion rate, he said.
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