Economy & Politics

Retail pop-up stores: a lifeline for city centers

The Corona crisis could increasingly cause vacancies in city centers.imago images / imagebroker

The Corona crisis could significantly change German city centers. The retail sector is complaining about a massive drop in sales; according to the HDE trade association, a third of retailers have found themselves in dire straits due to the pandemic. Bankruptcies and vacancies could be the result. “In the future, we will see more vacant commercial properties, which many cities find it difficult to occupy again,” says Michael Reink, city center expert at the HDE trade association. Numerous cities such as Hanau, Meppen, Verden or Hanover rely on pop-up stores to combat vacancies.

Pop-up stores are basically temporary stores. They are stationary stores that show up for a limited period of time and then disappear again or move to another location. The concept originally comes from the USA. The first pop-up store opened there in 1997, when trendy clothing was sold there for a day. The idea became known through the entrepreneur Russell Miller, who opened the first pop-up store in New York with his company Vacant in 2000. Even internet giants like Amazon now and then rely on the concept.

The short-term stores could in any case contribute to a revival, says Reink: “Pop-up stores always bring something new and fresh”. The surrounding shops could also benefit from this: the more commercial space is rented, the greater the supply and the more attractive the inner cities are for consumers. The concept of pop-up stores first appeared in Germany three to four years ago, according to Reink. Even if there are now some established companies in this area, pop-up stores are still a niche product. “With government aid, however, it is likely that we will see these concepts more frequently in the future,” says Reink.

Hanau relies on pop-up stores

The city of Hanau has turned the pop-up stores into an urban planning concept. “Even before the Corona period, we saw with concern that the wind was blowing in the face of stationary retail and chains,” says Martin Bieberle, Managing Director of Hanau Marketing GmbH. Further rentals have become difficult. The city has therefore launched a concept that also relies on pop-up stores. The idea: People should run businesses who “do more than move goods from right to left, but who fulfill a mission with passion”, says Bieberle. The city started buying properties and entering into leases. Retailers who want to move into the pop-up store can sign a sublease contract with the city. “We provide the basic equipment and, depending on the turnover, the shop owners pay ten, twelve or 15 percent rent,” says Bieberle.

Pop-up store in Hanau. Source: Hanau Marketing GmbH

In September, Sanaz Ghorbani and her company for unusual dog accessories moved into the pop-up store as the first tenant – at a time when the retail sector was suffering massively from the pandemic. “For us it was a way to test whether our company would also work in a store,” she says. She has been selling her goods online for more than five years. Before opening the pop-up shop, she didn’t think about opening a shop because that always comes with big obligations. “The pop-up store was very attractive to us because the rental price is subsidized,” she says. Despite the very challenging Corona period for retailers, she received good feedback from customers.

Pop-up gastronomy in Hanau. Source: Hanau Marketing GmbH

Hanau is pursuing a second pop-up concept with a restaurant in the courtyard of a listed building in the city. Until the restaurants had to close again due to Corona, Uwe and Cornelia Kannengießer ran the pop-up restaurant “Wirtschaft im Hof” there with transparent houses in the outdoor area, in which guests could eat in accordance with Corona. “We are playing with the idea of ​​going to the restaurant business anyway,” says Uwe Kannengießer. “That was of course pushed back by Corona.” The pop-up gastronomy was an interesting challenge for her. “We have the opportunity to try it out here,” he says. The beginning was rocky due to the Corona crisis. “But I think we are on the right track.”

“The only chance”

The pop-up stores are a way for the city of Hanau to compensate for vacancies caused by the Corona crisis. “But of course that is only one of many building blocks,” says Bieberle. He also sees the challenges posed by the Corona crisis: “Generally speaking, it is of course the worst possible time for something like this. Nevertheless, and precisely for that reason, you have to do it now. ”Large chains would not open any new shops in the next few years and hardly anyone would now link their existence to stationary retail. His balance sheet therefore reads: “It is certainly worth the effort, the energy and the resources, because you can get such interesting points in the city center that ensure that people look for the city center as an experience at all.” Therefore, the city is planning that To continue the project throughout 2021 and possibly even start further projects.

Pop-up stores subsidized by cities and municipalities are a “win-win situation”, says HDE inner city expert Reink: “The vacancy rates may decrease and retailers have the opportunity to try out the market”.

In the corona crisis, pop-up stores could be a temporary solution to bridge new vacancies, says Joachim Stumpf, managing director of Munich trading consultancy BBE and IPH Handelsimmobilien GmbH. “We even recommend it to owners at the moment because retailers in the non-food sector are currently not ready to sign long-term contracts.” They would first have to sort out their financial situation. In this situation, it is a mistake for both sides to sign a long-term lease, says Stumpf. “These interim solutions like pop-ups are awesome.”

Less attractive to property owners

For Stumpf, however, one thing is certain: “A pop-up store is a popular addition to well-frequented locations, but not the solution to a structural problem.” Because of the variety, the concept is interesting for consumers and also for small businesses and start-ups. ups attractive because you can link tests on the stationary area with the online business and thus achieve scaling effects.

For property owners, however, the concept is mostly of no interest: “The space is very management-intensive because the contracts are only short-term and the rent is usually below the market rent.” The concept could be attractive for shopping centers. Property owners would control the entire mix of industries here, says Stumpf: “It is interesting for the owner if he subsidizes a flexibly designed area, but increases the attractiveness of the center and can earn more elsewhere.”

HDE calls for start-up centers as a long-term measure

So far, pop-up stores have been a good means of combating vacancies, says HDE city center expert Bieberle. Because of the increasing risk of vacancies due to the Corona crisis, the HDE is now calling for a concept derived from pop-up stores: so-called decentralized start-up centers.

A municipality rents retail space in pedestrian zones and sublet it to start-ups – at the beginning for a symbolic rent that increases piece by piece to the market rent. At the same time, according to Reink, retailers can be trained – in marketing, in the design of shop windows, in online trading. So you can do something sustainably for the inner cities and try to control the mix of industries in the city and provide more variety.

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