Pop-up shops find a permanent home at the mall

Key Points
  • Simon Property Group, working with Appear Here, is set to unveil "The Edit@Roosevelt Field," a permanent house for pop-up retail.
  • Some of the first brands to be featured on the platform include Raden Smart Luggage, Vitaly, Rhone, Winky Lux, JARS by Dani and Uprise Art.
  • Washington Prime Group, another U.S. mall landlord, is finalizing plans to launch its own pop-up marketplace called Tangible.
The Edit@Roosevelt Field will launch in November 2017.
Source: Simon Property Group

Imagine a permanent house for pop-up shops.

That's what Simon Property Group, the largest mall operator in the U.S., is preparing to unveil next month at one of its properties on Long Island, New York.

The platform, known as "The Edit@Roosevelt Field," offers retailers early on in their businesses the opportunity to set up shop, typically on a quarterly basis, in spaces that span 20 to 200 square feet. All spaces will be enclosed in a dedicated portion of the mall.

"We needed to create a new product category to allow brands to come earlier on in their life cycle to physical retail," Zach Beloff, national director of business development at Simon, told CNBC. "Brands are looking for the ability to scale, and to scale quickly, and Simon is looking for ways to partner with brands to facilitate that ability to scale."

At Roosevelt Field, some of the first brands to be featured via Simon will include Raden Smart Luggage, menswear brand Vitaly, athletic apparel retailer Rhone, beauty brand Winky Lux, dessert company JARS by Dani, and contemporary art gallery Uprise Art.

In bringing the idea to fruition, Simon also partnered with Appear Here, a global marketplace for helping tenants find short-term retail space.

Just earlier this year, Appear Here announced it had raised $12 million in Series B funding — a round led by Octopus Ventures and including participation from Simon Venture Group.

"We see Simon on the forefront of this space, building a community and experiences," said Elizabeth Layne, Appear Here's chief marketing officer. "Malls present a really interesting opportunity, with a high density of people."

The Wall Street Journal reported last week that Fifth Wall Ventures, which is backed by big real estate names such as CBRE Group and Macerich, has made a "significant" investment in Appear Here, according to Brendan Wallace, Fifth Wall's managing partner.

Appear Here has already successfully worked with some of the biggest retail landlords in the United Kingdom, only just tapping into the New York market earlier this year. One of the company's key initiatives is to make it as easy as possible for incoming tenants to sign short-term leases, using a credit card online and without a broker.

More than 100,000 brands, including Coca-Cola, Spotify, Kanye West and Moleskine, have used Appear Here to find real estate.

Simon has made a significant investment in the Edit platform — something that's been under development for years, Beloff said. Shoppers visiting The Edit are expected to boost the entire mall "ecosystem" and drive sales to other stores, he added.

In an unorthodox way, the pop-up concept is beginning to find permanent homes and not only at Simon's malls.

Washington Prime Group, another U.S. mall landlord, is finalizing plans to launch a marketplace called Tangible.

"We take six to eight e-commerce purveyors, some may never want a permanent space, or it may just be a beta test for the next Lululemon," WPG Chief Executive Lou Conforti told CNBC.

Every 45 to 60 days, he said, those retailers will rotate throughout the Tangible marketplace at a WPG property.

"In an interesting way, this is why TJ Maxx and Nordstrom Rack and Saks Off Fifth generally do quite well," Conforti said. "There's a treasure hunt aspect."

As many of America's biggest department store anchors struggle to grow sales, modular spaces with rotating up-and-coming retailers offer one solution to fill the gaps. With Appear Here now growing rapidly in the U.S., the future of retail looks to include more pop-ups.