Why DTC brands are prioritizing permanent retail over pop-ups

The pop-up is coming back down to earth.

Temporary retail spaces built on short-term leases have served as a stepping stone for online brands looking to figure out what physical stores will look like for them, if they’re necessary at all. It turns out, people still like to shop offline. Beyond just getting pieces out into the real world, these online brands, including Allbirds, Naadam Cashmere, Eloquii, Lunya and Modern Citizen, have all found that opening a store in a certain market doesn’t just result in a return on investment by way of a profitable retail channel, but it also drives up online sales in that market.

As a result, the pop-up era of DTC stores is giving way to a new wave of permanent retail. It’s a return to retail normalcy, but also a change of heart. Online retailers like M.Gemi and Everlane once operated on the belief that, as modern-day brands, they could lay out a new business strategy built on online sales, complemented by a series of temporary retail stints — they’d pop up in new markets, host events and build customer awareness before packing up and moving on the next town. Being nimble and moving at the pace of customer data rendered the long-term lease unnecessary. But, as it turns out, customers like consistency, and constantly building up and tearing down retail stores quickly eats up resources.

While brands may initially enter the market in a temporary pop-up, there’s a much clearer means to an end than before. And while pop-ups may have once sat within a retail strategy, they’re quickly shifting to pure marketing plays for brands with the resources to invest in them.

“It’s become more important to consider a long-term future in a space, post pop-up, than it ever was,” said Matt Siegel, founder of Lantern Real Estate. “Brands are much more reluctant to go through the exercise of building a store knowing that it’s a finite, three-month activation and that, even if it works, there’s not future in the space.”

The scramble
Opening a pop-up store is never not a last-minute effort.

Footwear brand M.Gemi secured a location for a temporary holiday store at The Shops at Columbus Circle in Manhattan last November only a few weeks out from its opening date, after the brand learned another tenant had dropped out. After nailing down a space, the team had to build out the infrastructure, stock inventory, hire staff and set up a data collection system on the fly. It didn’t need to be perfect, but it still needed to be on brand, said Cheryl Kaplan, the brand’s president.

The pop-ups are still an investment. While not as expensive as a permanent store,…