Since Covid-19, Jennifer Thomas, the Senior Director of National Speciality Leasing with Morguard, has seen a demand for short-term leasing for brands and she does not see the trend winding down. Thomas talks about the future of speciality leasing in Canada, how we compare to other countries, and what makes a pop-up successful.
“After the pandemic, we saw an incredible surge of inquiries for pop-up space coming from specialty retailers, local retailers, and national brands – it was more interest than we had experienced in a number of years,” says Thomas. “We went from having vacancy concerns to quickly having limited space in some centres, as we found that pop-ups were the solution for many brands coming out of the pandemic. I believe we are going to continue to see strong demand for pop-ups in 2023 in Canada and we are also going to see an increase in brands offering more interactive experiences to drive traffic.”
In the past Thomas said pop-ups were used for experimentation with new locations before brands committed to a long-term lease, but since the pandemic she has seen a push to support local and pop-ups became a great way to bring local brands into shopping centres. As smaller businesses were impacted more because of the lockdown, Thomas said local brands have been looking for a new way to showcase their products and she has seen a surge of small businesses interested in specialty leasing because of this. Thomas has also seen an increase of online brands using the same concept.
“Online companies started looking for locations because they wanted to merge their online presence with a physical store. Brands that were traditionally online were now altering their business strategy by coming to us to experiment with short term leasing. They saw value in offering traditional face to face services, being able to fulfill orders in-store and increasing their brand awareness – it caught us off guard because after a strong surge in online sales during the pandemic, we were pleasantly surprised that these retailers were recognizing the value of having a physical location in addition to their online presence.”
A traditional store Thomas says is usually up for around three months or less, but varies with each brand, but she is also seeing an increased amount of brands staying longer compared to before the pandemic.
Why is Canada Specialty Leasing Different?
When comparing Canadian pop-ups to other countries, such as in Europe or Asia, consumers might notice the difference and wonder why we don’t have the same experiences. For instance, Balenciaga’s pop-up in London has pink fuzzy interiors, Adidas store in Spain is created to look like a shoe box, Tiffany & Co opened a short-term store in Los Angeles and is designed as its blue gift box, Dior’s pop-up in NYC is designed as a perfume bottle, and Polestar opened its first specialty store in Finland and the building was made out of snow and ice.
There also have been instances where luxury brands, such as Louis Vuitton and Dior, have used handbags as a design for its storefronts. We have also seen several brands use digital storefronts to increase consumer engagement – so why are we not seeing this creativity in Canada?
Thomas says pop-ups internationally are designed to be “visually striking, Instagram worthy, and to drive traffic” and says this happens in Canada as well, but on a smaller scale due to the lack of budget. She also suggested some brands in Canada look at specialty leasing as only a revenue generation and not as a marketing tool – and “it needs to be both.”
“International pop-ups benefit from large marketing budgets and grand installations, which we traditionally don’t see in Canada. There seems to be a different focus on budget here, which makes it challenging for our brands to compete with international ones. We also don’t have the urban density in Canada that they do overseas and that is why we see these elaborate experiences internationally versus here such as a giant purse pop-up, or brands using AI to create amazing spaces – but this doesn’t mean we can’t be successful here.”
The Specialty Leasing Potential
Thomas says even with a small budget, the key for pop-ups to be successful is to be more interactive.
“They need to focus on creating unique and engaging experiences for shoppers. Pop-ups have evolved now to create more of an opportunity for shoppers and provide them with unique offerings and new experiences, and it is going to continue to be trendy going forward. Brands need to create something that consumers will associate with the brand, create a memory, and get the consumer involved.”
Thomas suggests brands create artistic components or a photo wall for consumers to share their experience on Instagram. One pop-up concept she mentioned was Pick-Me-Up by MilkUP, a pop-up shop in Toronto in 2021 where instead of paying with money, consumers would pay with a social media post. This is one example how the brand was actively engaging with consumers and using the concept as an interactive marketing tool. Thomas said this is one trend, paying with media posts, is becoming popular. Thomas also recommends brands to create a personalized or memorable experience in Pop-Ups.
Pop-ups failures are usually because the brand fails to provide a unique consumer experience, are too fast establishing a viable business model, are in the wrong location, or over-stay their welcome.
“Brands can sometimes get excited and they open for too long. We all know that pop-ups create this sense of excitement and urgency and sometimes that gets diluted. If a brand pops up for too long in a shopping centre, they overstay their welcome. So we have seen a lot of success for brands that pop in and pop out. They know the duration and know when the novelty wears off, then it is time to move onto the next location.”
As pop-ups continue to be a popular trend in Canada, Thomas recommends brands to make sure they have a strong marketing plan, right location, right products, and always have an interactive component for consumers. Just because we can’t compete with international speciality leasing does not mean we can’t use the same ideas but on a smaller scale.