Nov. 27 (Bloomberg) -- With a seventh of storefronts in Britain’s malls and town centers standing empty, U.K. merchants are filling the spaces with temporary outlets to help salvage a difficult year.
The highest level of vacancies in more than 12 months means there’s ample room for so-called pop-up stores, which usually stay in business for just a few weeks or months.
“The opportunity is there because there is so much space available,” said Maureen Hinton, retail director at Verdict Research in London. The number of pop-ups is “definitely increasing,” she said, without providing an estimate.
After a year of deteriorating consumer confidence and lower incomes, stores more than ever need a boost for the holidays, when retailers in some sectors can make more than a third of their annual sales.
No longer just a publicity stunt, pop-ups are providing retailers with a way to get their toes wet in a market without committing to a longer lease. While some decide to stay on beyond the pop-up term, others will pack up their wares and enjoy the short-term sales increase.
Fashion chain Hobbs is among those that have opened makeshift stores for the first time this year, while CD and DVD retailer HMV Group Plc is adding more than usual for the holiday in an effort to win business. The phenomenon is spreading, with such outlets also popping up at Heathrow airport and inside the Selfridges department store.
Pop-ups “are becoming more prevalent around seasonal events, and Christmas is the biggest,” said Neil Mason, head of retail research at Mintel International in London.
Average U.K. retail sales this year have risen less than inflation, meaning shoppers are buying less, according to the British Retail Consortium. December spending will rise by 3 percent, Mintel forecasts, providing an extra boost to shopkeepers with temporary outlets.
Pop-up stores typically pay landlords little or no rent outside of services such as electricity and construction costs. For property owners, the aim is to add retailers that can bring in more customers and improve the shopping experience.
HMV says it plans to open about 15 pop-ups for the holiday, versus 8-10 in recent years. Closely-held Hobbs is seeking to add as many as four of them in the run-up to Christmas after turning its first pop-up, in London’s Spitalfields market, into a permanent location.
The additional space “allows us to increase the profile of the brand at an important time of year,” said Hobbs Chief Executive Officer Nicky Dulieu.
About 14 percent of U.K. retail outlets are empty, up slightly from last year, according to researcher Local Data Company, which says an average of 20 stores closed daily in the country’s top 500 town centers during the first half of 2012.
That means landlords are more willing to offer shorter leases, according to Rosie Cann, director of Popupspace Ltd, a consulting firm that has brokered deals for as little as one day and as long as a year.
“I’ve seen the effect of empty space on landlords,” Cann said. “They are much more amenable and flexible now.”
Harvey Nichols, the luxury London department store, opened three pop-up food outlets in northern and central England for the Christmas rush. The upscale retailer sees the temporary units as a way of introducing its hampers and gift sets to a wider audience, said Iain Mackenzie, the retailer’s acting director for pop-ups.
In the stores, 9.50-pound tea and biscuit gift packs sit alongside 500-pound Let it Snow Christmas hampers packed with brandy butter, Christmas pudding, marzipan fruits and Champagne.
Selfridges offers pop-up space to fashion brands inside its London flagship for six to eight weeks so the store regularly has new products, said Creative Director Linda Hewson. It currently has six, including a Hermes scarf range designed by digital artist Miguel Chevalier.
Hewson said she expects pop-ups to become a growing phenomenon in U.K. town centers, a sentiment shared by Johnnie Boden, founder of the online and mail-order fashion retailer that bears his name.
A pop-up “definitely drives sales,” Boden said. His company has a six-month lease on a former Karen Millen store at the Bullring shopping center in Birmingham where it’s showcasing clothes that most customers only see on the Web or in catalogs.
Once mostly the domain of charity shops and inventory clearances, pop-ups aren’t just about boosting revenue. John Lewis Partnership Plc’s first such store in Exeter was about marketing a new outlet in the city, Managing Director Andy Street said.
Makeshift shops are also springing up at U.K. airports as retailers seek short-term leases to reach wealthy, gift-buying travelers. At Heathrow’s Terminal Five, an Omega James Bond theme store showcases products worn in the Skyfall movie. Crystal-ornament maker Swarovski also has pop-up space there, while fashion brand Ted Baker and fragrance maker Chanel are taking up temporary space at Terminal One.
Brands such as Jack Wills Ltd. that wouldn’t previously have been offered stores at Heathrow have opened pop-ups there to prove they have sufficient appeal, according to Muriel Zingraff, the airport’s retail concessions director.
“We wouldn’t have been comfortable giving them space without giving them a pop-up space before,” Zingraff said. Now, she said, Wills will “definitely be considered.”
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