Pop-Up Stores Save Holiday Shopping

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WASHINGTON (TheStreet) -- Yes, it's Halloween shopping season, but most pop-up stores opening in October won't have that sexy nurse costume you're looking for.

While holiday outlets and costume shops will continue to fill in Main Street's whitewashed windows and vacant stores, larger retailers such as Best Buy, Borders (Stock Quote: BGP) and Toys R Us will be targeting the mall zombies this Halloween as part of a larger seasonal push. Toys R Us plans to open 600 Toys R Us Express stores alone this holiday season, snatching up small, vacant retail properties across the U.S. and hiring an extra 45,000 seasonal workers to help run them. With the toy-and-games giant building toward an IPO next year and fending off competition from Wal-Mart (Stock Quote: WMT) and Target (Stock Quote: TGT), Toys R Us hopes the pop-up shops can expand upon the success enjoyed by in-store FAO Schwartz boutique shops last holiday season.

"I don't think they would make that kind of commitment and move forward with the number of locations that they have if they didn't think they were going to succeed with that strategy," says Daniel Butler, vice president of retail operations for the National Retail Federation. "Fourth quarter is an important time of year, and I can understand why a lot of businesses would expand their business in that quarter."

For seasonal retailers, the short-timer stores are a longtime tradition. This year, for example, independent retailer Spirit Halloween will open 850 shops in empty storefronts across the United States for exactly one month. For major retailers, however, such shops are usually more about testing the waters than tapping into seasonal spending. Before opening its Herald Square location in New York City last year, J.C. Penney used a pop-up store to take the temperature of its potential customer base. Other retailers from small fashion chains to Calvin Klein have used a similar approach.

"It can be a great way to boost sales and support your existing locations and your website," Butler says. "It's a way you can test new products and formats on a smaller scale before you make an investment on a large scale, but sometimes you just do it for the seasonal boost, depending on your business strategy."

That seasonal boost is a lot more likely if your pop-up shop stocks the stuff everybody wants. Best Buy is opening 150 Best Buy Mobile mini-shops by Thanksgiving, with a focus on phones that includes Apple's iPhone 4, Motorola's Google Android-powered Droid and "Free Phone Fridays" -- when Best Buy offers customers a different smartphone free each week with a two-year service commitment. The Best Buy Mobile shops will also have the iPad, Panasonic 3D televisions, Microsoft Xbox Kinect and Sony PlayStation Move motion-control peripherals and other tech toys that could make the Mobile branches more permanent fixtures.

Borders and its books are a different story. Its slugfest with Amazon and Barnes and Noble has cost the reader-friendly retailer 95% of its share price in the past five years. In an attempt to stanch the bleeding, Borders is opening 25 pop-up stores that will sell top titles, new releases, holiday-themed tchotchkes and its just-released Kobo 2 e-reader through Jan. 31. While Borders' $139 Wi-Fi-enabled Kobo 2 caters to readers smitten with Amazon's $139 Kindle and Barnes and Noble's $149 nook, there's no guarantee it will help pay the rent.

"They have to ask if they have enough product and demand for it to sell enough to justify the location," Butler says. "If you're leasing additional space outside your store, you want to make sure it's profitable and worthwhile."

Though a nice option for retailers and a convenient one for consumers, pop-ups are also a great present for retail property owners this holiday season. The Society of Industrial and Office Realtors estimates that 12.7% of retail property in the U.S. is vacant, up from 12.4% at this time last year. The pop-ups aren't ideal, but they're a lot less scary than three months without a rent check.

"These pop-up stores can be a great way to use dormant real estate, but it's not always the property owners' desire to have that be a mainstay of their portfolio," Butler says. "They'll do it when it works for them, but when they have a full space, they're more likely to want to put them in a common area rather than in a space that can be leased."

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