Written by Amanda Maher
Pop-up retail is not a new phenomenon. The temporary boutiques and vendors that set up in malls and storefronts during the holidays are an obvious example. But increasingly, these “craft fair”-type strategies are transforming urban communities by providing entrepreneurs with low-cost storefront space with the potential to drive traffic and bring the company success—enough success to move into a more permanent location, while engaging the neighborhood in the interim.
Cleveland and Oakland are two cities experimenting in this manner. In Cleveland’s historic Warehouse District, retailers struggled to afford the large department store spaces that large national chains once occupied. When restaurants and nightclubs, the only businesses that seemed able to afford the rent, moved in, many existing buildings were razed to provide additional parking. Neighborhood retailers became almost nonexistent. Though retail demand remained strong, few small stores were able to survive.
Recently, a local civic action agency stepped in to try to pave the way for more retail in the neighborhood. The Historic Warehouse District Development Corporation launched an initiative to bring a more dynamic ground floor commercial mix to the district, an effort they hoped would make the neighborhood livelier and more inviting. If a lack of affordable space was the primary reason retail was not surviving in the neighborhood, the organization would bring affordable space to the retailers.
The “Small Box” project, as it’s called, uses salvaged shipping containers that are retrofitted into movable, programmable retail space. The organization set up three boxes in a vacant parking lot on a street corner with substantial foot traffic. The tenants now include a Cleveland Browns gift shop and two boutique clothing stores, Banyan Box and The Wardrobe.
Despite their small size (160 square feet) and simple design (a box with a door cut into it), the shipping container strategy seems to be working; residents are turning out in droves to visit these unique stores, even during Cleveland’s harsh winter. And it’s breathing new life into a downtown neighborhood that was otherwise starved for retail. “The economic effects have been overwhelming, more significant than I imagined,” said Thomas Starinsky of the Warehouse District Development Corporation. “Just the fact that we have three new businesses downtown, and we’re actually adding jobs to the community.” Today, more than 40 businesses are on the waiting list for similar retail space. The CDC hopes to add two more retail boxes this spring.
Oakland is experimenting with a similar strategy, but using vacant storefronts that have plagued the city’s downtown in lieu of shipping containers. The effort is led by entrepreneurs Sarah Filley and Alfonso Dominguez, who co-founded “popuphood” – a small business incubator that pairs startup companies with free retail space in high-traffic downtown neighborhoods as means of stimulating Oakland’s economy. A local commercial landlord has partnered with popuphood to provide merchants with free six-month leases, with the goal of signing a longer-term lease once the companies are up and running. During that time, popuphood provides technical assistance to the retailers to help them stabilize and grow their businesses. The project provides Oakland entrepreneurs with an opportunity to engage in a low-risk crash course to determine their businesses’ viability, and because most of these storefronts were vacant already, it benefits both landlords and the city by filling empty storefronts.
In its first month, six small businesses – including a jewelry store and a bike shop – opened along one downtown Oakland street. Kate Ellen, owner of jewelry store Crown Nine, is one of the entrepreneurs to find success using this model. Though she had long been interested in opening a permanent retail outlet, the startup costs would have taken her several years to save. Free rent lowered the entry costs, allowing the company to earn back all its startup costs within just three weeks of opening her storefront.
“The concept of simultaneously curated retailers that open all at once removes several of the barriers to entry right away,” explained Filley. “One is being the lone pioneer in a transitional neighborhood. Another is the initial capital of buildout, rent and staffing. The third barrier is, doing it on your own, you don’t necessarily have a retail community. You can’t control who comes in next to you. In this case, the retailers have [neighbors] that they know will complement their business.”
The strategy appears to be working. At the time of its 2011 launch, the economy was still wavering and Oakland struggled with high unemployment. The environment was inhospitable to the risks of opening a new business. Today, the pop-up retail strategy is attracting business to some of Oakland’s most depressed commercial districts, and creating an ecosystem that has strengthened existing businesses in the area.