BUILDING A BUZZ

October 3, 2010 at 12:00a.m.

Pop-up stores let retailers test waters, adapt to market

McClatchy Newspapers

MIAMI

It’s a low-risk retail experiment: opening a temporary store to test a new concept or build buzz for an established brand.

With the holiday season right around the corner, the pop-up store phenomenon is on the upswing. It’s a perfect antidote for a struggling economy that has seen retail vacancies rising everywhere from strip centers to regional shopping malls.

“You don’t want the stigma of a property being empty for too long,” said Christina Norsig, founder of Pop-Up Insider, the first national online exchange for pop-up real estate, which attempts to match retailers and landlords. “When a store is animated and full of people, it’s much more desirable than a concrete box that’s sitting empty.”

There’s something exciting about a store that’s only around for a matter of weeks. This summer, Gap-owned Piperlime used a New York City location to bring life to the online brand, and Pop-Tarts generated a buzz with its Times Square opening. They both followed the lead of Target, which has been a national trendsetter with the concept. Cartier, Gucci and Y-3 have all used Miami’s Art Basel art show as an opportunity for pop-up stores.

But if there’s ever a sign the pop-up has gone mainstream, it’s that Toys “R” Us plans to open 600 Toys “R” Us Express stores this holiday season and another 10 temporary stores featuring the FAO Schwarz brand.

Chairman and CEO Jerry Storch says if the stores generate enough sales, many of them will continue beyond the holiday season. Last year, Toys “R” Us kept about one-third of its almost 90 holiday locations.

The temporary stores give Toys “R” Us a much broader reach, doubling the brand’s number of locations nationally.

Robert Garcia was surprised when he stumbled on the Toys “R” Us Express at Dolphin Mall in Miami. Although the Express stores carry a limited assortment, they also carry unique products.

“They’ve got a lot of stuff that other stores don’t have,” said Garcia, 33, who lives in Doral, Fla., and collects Transformers. “I’ll definitely be coming here more often. It’s a lot more convenient for me.”

In many cases, the Toys “R” Us locations are filling a void that has been missing at the malls after KB Toys went out of business in 2009.

“The pop-up is a way to keep that use for our shoppers,” said Jory Thomas, assistant general manager at Aventura Mall in Aventura, Fla., which kept its Toys “R” Us Express until this summer and was selected to host an FAO Schwarz this year. “They would like to go permanent here, but we just didn’t have the space for them.”

That’s why temporary holiday tenants such as Spirit Halloween have had no trouble finding vacancies this year, whether in malls or local shopping centers. The company expects to have 850 stores nationally.

“The last couple years, we have benefited from a greater number of large box stores being open across the country,” said Kevin Mahoney, general counsel for Spirit Halloween.

Reaching out to new customers is a critical part of any temporary store strategy.

Lori Karmel, the owner of We Take The Cake in Fort Lauderdale, Fla., is opening a temporary location Oct. 15 at Aventura Mall. It’s a test before she decides whether to roll out a chain first in South Florida and eventually nationally.

“Being tucked away in a Fort Lauderdale strip center, I don’t think as many people know about us as should,” said Karmel, whose brand gained national notoriety in 2004 after its signature Key Lime Bundt Cake was featured by Oprah Winfrey. “Even if they’ve heard our name, most people don’t even realize we’re local.”

Karmel has been lucky enough to land a prime first-floor spot at Aventura Mall, adjacent to the escalator leading up to an AMC movie theater and close to a Cheesecake Factory. She signed a lease through the end of March. If it goes well, she may stay longer. In addition to cakes, the Aventura store will feature specialty dessert items such as ice cream cupcakes, cake truffles and slices of cake.

“This will give us an opportunity to showcase our new product and see how it does,” Karmel said. “If we can’t make it here, there’s something wrong with us.”

The math is also easier for temporary tenants because they pay dramatically less rent than a permanent tenant.

Umit Gurbuz, the owner of Steps New York, decided to switch gears and open temporary stores under a new brand name as a way to generate cash during the recession.

He already had five stores in local malls carrying trendy junior apparel. But Gurbuz opened the temporary store in May at Dolphin under the name Kara New York.

“Our goal was to find a way to make money under this economy,” Gurbuz said. “When you’re looking at rents that are at least 50 percent less, it makes sense. We wanted to turn our inventory as much as possible. This is an ideal way to pay off debt.”

It’s worked so well that Gurbuz has been looking for additional temporary spaces, particularly in high-profile malls that he wouldn’t normally be able to afford.