How the “pop-up store” phenomenon is transforming retail

According to Mark Souris, Managing Director of Periscopic Masingita, pop-up stores are becoming a booming trend that’s broadened thinking in the traditional retail sector.The Magnum store at the Rosebank Mall was a huge success, people queued for half-an-hour to get a customised ice cream, one reflection of this new trend. Mark Souris joined Alec Hogg in the CNBC Africa studio to discuss the trend. 

When I first heard about the Magnum store, I went to Rosebank.  I was the General Manager of the Rosebank Precinct for a good five years, so it was quite pleasant to see something new in terms of the Magnum store.  I sat at Tasha’s, watched them and watched the queue get bigger.  The queue chain came out and I called a waiter across, and I said ‘what is this’, and he told me its ice cream.  I said I know its ice cream, and then he explained it to me.  A comment I passed to some of my colleagues is that they’ve almost become an anchor store in the precinct.

Take us to where the phenomenon began.

It started quite a while back but it was never referred to as a pop-up store.  Especially for an ice cream store, that was quite a new concept.  Many guys who want expand their brands out in the marketplace, would test it in some of the shopping centres where their product was going to sell the best.  If it were a rural market, they would like to try to test it in that, if it was clothing.  A good example of that was a company like Creativity.  A small company that came to us and said ‘we’d like to try this in this particular market’. We were refurbishing a store at a centre.  We had a store that was available.  We put them in an empty store and it was basic.

How long would they come in for?

It was really, a month over Christmas, a year-and-a-half ago.  We couldn’t do anything with the store.  It was going to be demolished sooner or later and it worked so well that they then signed a five-year lease for a 350m2 store that we built for them, where they were originally in 50m2.

Traditionally, most shopping centre owners wouldn’t let you do that but this popup concept is changing.

One hundred percent.  In addition, if you look at the mom & pop sector of the market; they’ve shrunk over the years.

How much?

I can’t tell you exactly what the percentage would be, but you can see it with the people that have retired in the past and then spent their money on a Pie City or a King Pie.  Many of them didn’t work out because they didn’t have the energy or the expertise to do these.  However, then you have the young entrepreneurs that come in and can’t afford the rentals.  They are also, are a lot more techno-savvy than we are at our ages.  They test the market and they did it the right way – by going in, putting in a popup store, seeing if it was going to work, and then gauging the reaction from that.

How receptive are the landlords to this concept?

Well, as a landlord…very receptive.

Why?

It allows two things.  1.  There’s an opportunity.  I call them nursery stores.  If you put them in and they work, you’re going to keep them in your centre.  That then fulfils the problem we sit with, which is finding pop-up stores or finding mom & pop stores.  They difficult at the moment.

What rentals do you charge, relative to permanent tenants?

In many cases, we don’t charge, as we would normally do – a rate per m2.  You’d say ‘it’s R5000.00 for the month’.

Because it’s open and it’s R5000.00, more than you would have earned anyway.

Exactly.  Electricity isn’t going to be that much, depending on the concept obviously, and so it’s a once off.  The person coming into the pop-up store with his goods knows he’s in for R5000.00.  He knows what his target is going to have to be to break even.

The demand must be quite high.

In some cases, it is.  Again, it depends on the market they operate in, but clothing has done particularly well.  A very good example is what happens now over Christmas where people are sitting with stores.  They can’t let them out, so you put people in there that you can, like toys and in many cases, it is the Pakistanis or the Somalians but they’re damned good traders.  Ultimately, they’ve come to South Africa to make a life for themselves.  They work hard.  You can go into the shopping centres now and see the makeup of some of the foreign nationals.  This allows them to test the market because they’re not familiar with the South African market and it works.  It really does work.  You do need to guide them.  You do need to make sure that once they do take a store, there are certain rules and regulations in place, and that they fit it to the standard that the customer would like to see.

If an entrepreneur is watching this and thinking ‘I’d really like to test a concept like the Magnum ice cream guys’, how do they go about even starting to get a shop, perhaps for a month?

Firstly, they have to look at that market and say ‘this is the market I want to be in’.

Do they just phone a shopping centre and say ‘do you have any spare shops’?

Yes, walk around.  I call it ‘walk the roof’.  Get in your car.  Go out there.  Walk through those shopping centres.  Look at what’s available and then go and see the Centre Manager, go and do a deal, and negotiate.  As you said earlier on, R5000.00 is better than nothing.

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