Analyst Insight by Rob Walker.
Boxpark, dubbed the UK's first pop-up shopping mall, is a bid to dilute the homogeneity of High Street retail and create a platform for smaller, unsung fashion labels. But, paradoxically, it might also encourage a bolder retail strategy among the mainstream stores it seeks to challenge. Euromonitor International explains.
Here today, gone tomorrow
In recent years, pop-up (or guerrilla) clothing stores have proved a hit in the US and Western Europe, springing up overnight like pieces of trendy urban graffiti. The concept is especially popular with premium clothing brands. Comme des Garçons, for example, was one of the pioneers of guerrilla stores, opening its first in Berlin in 2004.
Comme des Garçons deliberately sought out space in less fashionable urban areas, while other brands have tended to favour more trendsetting locations. Kate Spade is a case in point, opening a pop-up store in the centre of London's Covent Garden between October and November 2010.
The basic premise of pop-up retail is short term, with an outlet staying open anything from one day to one year. There is negligible spending on interior design (although in the case of Kate Spade's Covent Garden store, a beautiful Georgian townhouse provided a classy backdrop) and rents are often low.
The concept is more about creating a 'buzz' rather than generating sales. It is also a way for clothing brands to engage directly with consumers and test the water for a more long-term retail commitment.
So, what should we make of plans for the UK's first pop-up shopping mall, which is set to open in August 2011? Known as Boxpark, in recognition of its roots in the Boxfresh fashion label, it will comprise around 18,000 sq ft of selling space in London's trendy Shoreditch area. Will it spark a wave of guerrilla shopping malls in some of the UK's trendiest urban settings? And should High Street fashion be nervous?
High Street fashion need not apply
Boxpark is the brainchild of Roger Wade, the founder of Boxfresh street fashion back in the late 1980s (Wade sold Boxfresh in 2005 to Pentland Brands). Boxfresh tapped into an eclectic mix of underground youth culture, characterised by the UK's pre-millennium fad for acid jazz, trip hop and garage. Boxpark is more ideological than Boxfresh in terms of its ambition as it aims to challenge the growing uniformity of UK high streets and give a potential retail lifeline to cash-strapped fashion labels.
High Street fashion brands will not be welcome at Boxpark unless they are prepared to do something different (such as a one-off catwalk collection). Rather, Boxpark will promote itself as a retail showcase for small and underground brands, as well as for a cluster of well-established premium labels (Fred Perry is a probable participant). If you were to adapt the concept for the grocery channel, it would be a bit like creating a shopping mall for the butchers, bakers and fishmongers that have been put out of business by the growth of supermarkets and convenience stores.
Although Boxpark is being touted as a pop-up mall, it aims to be open for at least five years. It will, however, retain the stripped down profile of guerrilla stores, using shipping containers as sales space for an estimated 60 brands.
These brands will rent space (around 300 sq ft per unit) for a minimum of one year and at potentially knockdown rates, probably coming in at less than 50% of standard store rentals in this area of London. Competitive rents and trendsetting retail visibility do not normally go hand in hand, so there is almost certain to be considerable interest.
Indeed, located in the upwardly mobile demographic of London's Shoreditch, where disposable spending power is still strong despite the economic downturn, the location is a perfect fit for this type of project. In addition, there is limited mainstream retail competition in the immediate surrounding area.
Although High Street clothing brands are unlikely to be quaking in their boots at the prospect of Boxpark's first venture, they can ill afford to be over-complacent, especially if the concept starts to take off. There are plans, for example, to launch similar shipping container malls in UK towns such as Manchester and Brighton. In these smaller urban locations, there would be a bigger threat to mainstream clothing retail, including fast fashion, as the stores would be competing in a more cheek-to-jowl operating environment.
Turning a threat into an opportunity
High Street fashion, and fast fashion in particular, should keep a watchful eye on Boxpark, not least because there is an opportunity to piggyback the model. In fact, a concept inspired by a desire to restrain the growth of High Street fashion could ultimately trigger a new window of opportunity for some of Europe's big-name fast-fashion brands.
Having hung its hat on low price fundamentals, it is not a big leap of faith to imagine fast fashion segmenting into its own pop-up malls, especially considering the potential for 'cool factor' kudos.
Fast fashion might be colonising Britain's high streets, but there are still plenty of low- footfall urban locations where brands such as Primark, Zara, H&M and Gap are yet to stake a claim. Crucially, these types of locations tend to be unviable as an investment for new stores.
However, they are potentially much more attractive as short-term retail forays and this is where the pop-up concept might be worth a closer look. There are few better ways of generating new business than by tapping into virgin retail territory.
Short-term pop-up retail could also bolster the trendsetting credibility of fast fashion, without necessarily cannibalising High Street sales. The channel would need to be more flexible in its branding, not least in terms of the uniformity of interior designs.
And it would probably need to position even more competitively in these types of stores. But, given the potentially protracted period of belt-tightening facing consumers in developed markets, there is also no better time to come up with innovative ways of keeping retail prices down.
The wider issue is whether or not leading High Street brands have the desire, not to mention the audacity, to play the pop-up retail card. It would be unwise to rule anything out. The UK and other parts of Western Europe could, after all, be at the tipping point of a new pop-up consumption culture.
Fast fashion should also learn from some of the mistakes made by the supermarket channel and be wary of engaging too dispassionately with the consumer. If ever there was a time to engage more directly and personably with young, cash-conscious shoppers, it is now. And pop-up retail might be the answer.