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Pop-Up Stores Earn a Permanent Place in Retail Strategy

They’re becoming more collaborative and are gaining in popularity with bigger stores and brands.

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Illustration: Xavier Lalanne-Tauzia for Bloomberg Businessweek

The next time you sink into a modular couch at Costco—use your imagination—know that you’re sitting in the middle of a retail paradigm shift. This fall, 700Lovesac pop-up stores will appear inside the warehouses across the U.S. for 10 days, selling the adaptable sectionals the company is known for. “We have 200-square-foot branded environments with our own trained demo expert ready to sell you a $2,000 to $3,000 couch set,” says Chief Executive Officer Shawn Nelson. Yet those simple setups, which Lovesac has ramped up, starting with 200 in 2017 and 500 last year, “bring in very high revenues,” Nelson says. In fact, 10% of Lovesac Co.’s annual sales come from pop-ups.

Just three years ago, pop-ups were mostly used for three purposes: experiential marketing exploits, fashion-week stunts, or e-brands making the leap to brick-and-mortar. The latter filled empty storefronts in New York’s SoHo district and downtown Los Angeles, selling then-unknown brands such as U.K. clothing retailer Boohoo.com Plc and dog food delivery service Ollie. The staff often included the founder. “I would get calls from a lot of emerging brands that were on Etsy and barely had their own website, and they wanted to do a one-off holiday pop-up for two weeks,” says Melissa Gonzalez, of the pop-up architecture company Lion’esque Group.