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Is Pop-Up Store Bubble About to Burst?

Friday, 2 Sep 2011 | 2:48 PM ET

Over the past few years it seemed every time you turned around there was another new pop-up store as retailers took advantage of low rents to put up temporary stores.

Toys R Us Holiday Express store
Source: Toys R Us
Toys R Us Holiday Express store

The pop-up stores helped build buzz, tested new markets and took advantage of seasonal demand to juice sales. They even spread to other industries, with chefs trying out the concept of pop-up restaurants.

But now rising rent for retail space is threatening to burst the pop-up store bubble.

Toys 'R Us, the largest U.S. toy maker, one of the biggest users of pop-up stores, is scaling back the number of temporary stores it will open this holiday season.

Exactly how many hasn't yet been determined, according to the company. More light will likely be shed on this question at its annual holiday preview event in mid-September.

Last year, the toy retailer opened 600 temporary stores, which was more than six times the number it opened in 2009.

But even as Toys 'R Us pulls back from the number of temporary spaces it's committing to, there remains a role for the pop-up store—albeit a potentially smaller one.

According to American Public Media's Marketplace Morning Report, retail space is getting pricier. Eric Anton, president of PopUpInsider, a firm that matches landlords with temporary tenants, said rents have risen over the past 12 months. However, he expects the pop-up will live on as concept stores that build buzz and test consumer preferences.

Take this year's Fashion's Night Outas an example. In its third year, Fashion's Night Out is an evening to celebrate fashion and encourage shopping, and it coincides with the kick-off of Fashion Week on Sept. 8 in New York.

To make the most of this event, which draws thousands of fashion-hungry consumers, there will be a number pop-up stores springing up from both major companies such as Target and designers looking to stir up some buzz.

Target has used pop-up stores from time to time, including in major cities during the holiday season. Although these pop-ups ring up some additional sales, they serve perhaps a more important purpose as billboards for the brand.

Target's pop-up will be in New York's Bryant Park and it will feature the products in its Missoni for Target collection. The store will open at 6 p.m. ET on Sept. 8 and stay open for two days after the Fashion's Night Out event.

The rest of the highly anticipated Missoni collection hits Target stores and online on Sept. 13 for a limited time.

But other Fashion's Night Out pop-ups even more clearly demonstrate that these shops are much more about marketing than they are about commerce.

Thierry Mugler designer and Lady Gaga stylist Nicola Formichetti worked with architects Mark Foster Gage and Marc Clemenceau Bailly to create a pop-up shop that looks like the shattered pieces of a disco ball.
Bruce Weber, the photographer behind several Abercrombie & Fitch and Calvin Klein ad campaigns, is transforming the Standard Hotel Biergarten into a pop-up shop that will sell the underwear he also designs.

Questions? Comments? Email us at consumernation@cnbc.com. Follow Christina Cheddar Berk on Twitter @ccheddarberk.

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